§ 108.205. Improvements on Property Acquired in Settlement of Loans.

(a) The improvements made by the association on real property acquired under Section 6707 in settlement of loans may be classified as Section 6705 property subject to the following conditions:

(1) The expenditures for the improvement must be greater than the amount carried on the books of the association pursuant to Section 108 hereof for the real property acquired by foreclosure or by deed in lieu of foreclosure. The improvements must be of a type that changes the characteristics of the property, and as such excludes costs of rehabilitation of existing improvements and the costs of completion of partially completed improvements.

(2) Associations wishing to classify such improvements as Section 6705 property must obtain the prior written approval of the Commissioner.

(3) Improvements classified as Section 6705 property may not be reclassified again as Section 6707 property and are subject to all the limitations relating to such property, including the five-year holding period and percent of assets or net worth limitations.

(b) When the real property (foreclosed real property and Section 6705 property improvements) is sold for consideration other than cash or cash and an original loan, the use of Section 6701 for a loan to facilitate is inappropriate. The loan for such a sale shall be classified under Sections 6705.2, 6705.4 or 6705.6.

HISTORY

1. Change without regulatory effect renumbering former Section 243.5 to Section 108.205 (Register 87, No. 14). For prior history, see Register 76, No. 20.

Note

Note: Authority cited: Section 5255, Financial Code. Reference: Sections 6705-6705.6 and 6706, Financial Code.