California Civil Code

§ 2954.85

CIV § 2954.85 Effective Aug 29, 2025Div. 3 · Title 14 · Part 4 · Ch. 2 · Art. 2

Statute text

(a)A financial institution that makes loans upon the security of real property containing only a one- to four-family residence and located in this state or purchases obligations secured by the property and that holds hazard insurance proceeds in a loss draft account pending property rebuilding or repair shall pay interest on those funds at a rate of at least 2 percent simple interest per annum. That interest shall be credited to the loss draft account annually or upon termination of the account, whichever is earlier.

(b)A financial institution shall not impose a fee or charge in connection with the maintenance or disbursement of hazard insurance proceeds held in a loss draft account pending rebuilding or repair of the real property securing loans made by the financial institution that will result in an interest rate of less than 2 percent per annum being paid on the hazard insurance proceeds held.

(c)For the purposes of this section, “financial institution” means a bank, savings and loan association, or credit union chartered under the laws of this state or the United States, or any other person or organization making loans upon the security of real property containing only a one- to four-family residence.

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Legislative history

Added by Stats. 2025, Ch. 103, Sec. 1. (AB 493) Effective August 29, 2025.