California Business and Professions Code 7159.2 – (a) No home improvement goods or services contract of a value of …
(a) No home improvement goods or services contract of a value of five thousand dollars ($5,000) or less shall provide for a security interest in real property, except for a mechanic’s lien or other interest in property that arises by operation of law. Any lien in violation of this subdivision is void and unenforceable.
(b) When the proceeds of a loan secured by a mortgage on real property are used to fund goods or services pursuant to a home improvement goods or services contract of more than five thousand dollars ($5,000), the person or entity making the loan shall only pay a contractor under the home improvement goods or services contract from the proceeds of the loan by either of the following methods:
Terms Used In California Business and Professions Code 7159.2
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Person: as used in this article is limited to natural persons, notwithstanding the definition of person in Section 7025. See California Business and Professions Code 7150
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Senior citizen: means an individual who is 65 years of age or older. See California Business and Professions Code 7150
- Subdivision: means a subdivision of the section in which that term occurs, unless some other section is expressly mentioned. See California Business and Professions Code 15
(1) By an instrument payable to the borrower or jointly to the borrower and the contractor.
(2) At the election of the borrower, through a third-party escrow agent pursuant to the terms of a written agreement signed by the borrower, the person or entity making the loan, and the contractor prior to the disbursement.
(c) Any person or entity who violates any provision of this section shall be liable for actual damages suffered by the borrower for damages that proximately result from the violation.
(d) Any person or entity who intentionally or as a pattern or practice violates any provision of this section shall be additionally liable for three times the contract price for the home improvement.
(e) Any person who is a senior citizen or disabled person, as defined in subdivisions (f) and (g) of § 1761 of the Civil Code, as part of any action for a violation of this section, may seek and be awarded, in addition to the remedies provided in this section, up to five thousand dollars ($5,000) as provided in subdivision (b) of § 1780 of the Civil Code.
(f) The court shall award court costs and attorney’s fees to a prevailing plaintiff in an action brought pursuant to this section. Reasonable attorney’s fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff’s prosecution of the action was not in good faith.
(Amended by Stats. 1999, Ch. 512, Sec. 1. Effective January 1, 2000.)