BILL NUMBER: AB 1160 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Fong
(Principal coauthor: Senator Cedillo)
(Coauthors: Assembly Members Coto, Fuentes, Furutani, Lieu, and
Torres)
(Coauthor: Senator Yee)
FEBRUARY 27, 2009
An act to amend Section 1632 of the Civil Code, relating to
contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 1160, as introduced, Fong. Contracts: translation.
Existing law requires a person in a trade or business who
negotiates specified contracts or agreements primarily in the
languages of Spanish, Chinese, Tagalog, Vietnamese, or Korean to
deliver to the other party, prior to execution of the contract or
agreement, a translation of the contract or agreement in the
applicable foreign language, except as specified. Under existing law,
failure to comply with these provisions entitles the aggrieved party
to rescind the contract or agreement. Under existing law, these
provisions apply to specified loans or extensions of credit subject
to the Industrial Loan Law and the California Finance Lenders Law.
This bill would expand the scope of those provisions to instead
require any person in a trade or business who, in the course of
entering into any of the specified contracts or agreements,
negotiates any material term in those languages, to deliver a
translation, as described above, or a translation of one or more of
the approved disclosures or forms, as specified. The bill would also
make specified translation requirements applicable to loans or
extensions of credit secured by real property and leases, subleases,
and rental contracts or agreements, as specified. The bill would
authorize civil penalties against any person who fails to deliver the
translation, to be imposed by a court in an action commenced within
3 years of the transaction. The bill would provide for administrative
penalties against specified licensed persons for violations of these
provisions. The bill would require the Department of Corporations
and the Department of Financial Institutions to create new forms for
these purposes based on specified forms of the Department of Real
Estate. The bill would exempt federally chartered banks and credit
unions from these provisions.
These provisions would be operative on January 1, 2010, or 60 days
following the issuance of forms by both the Department of
Corporations and the Department of Financial Institutions, whichever
is later.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1632 of the Civil Code, as amended by Section 1
of Chapter 278 of the Statutes of 2008, is amended to read:
1632. (a) The Legislature hereby finds and declares all of the
following:
(1) This section was enacted in 1976 to increase consumer
information and protections for the state's sizeable and growing
Spanish-speaking population.
(2) Since 1976, the state's population has become increasingly
diverse and the number of Californians who speak languages other than
English as their primary language at home has increased
dramatically.
(3) According to data from the United States Census of 2000, of
the more than 12 million Californians who speak a language other than
English in the home, approximately 4.3 million speak an Asian
dialect or another language other than Spanish. The top five
languages other than English most widely spoken by Californians in
their homes are Spanish, Chinese, Tagalog, Vietnamese, and Korean.
Together, these languages are spoken by approximately 83 percent of
all Californians who speak a language other than English in their
homes.
(b) Any person engaged in a trade or business who
negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or
Korean, orally or in writing, in the course of entering
into any of the following, contracts or
agreements listed in paragraphs (1) to (7), inclusive, of this
subdivision and negotiates any material terms in Spanish, Chinese,
Tagalog, Vietnamese, or Korean, whether orally or in
writing, shall deliver to the other party to the contract or
agreement and prior to the execution thereof, either (1) a
translation of the contract or agreement in the language in which
the contract or agreement was negotiated, which includes a
translation of every term and condition in that contract or
agreement: agreement, or (2) a translation of one or
more of the approved disclosures, forms, or both discussed in
subdivisions (c) to (e), inclusive, and (m), as applicable to the
specific contract or agreement at issue. Each translation shall bear
an acknowledgment of receipt to be signed by the contracting consumer
prior to consummation of the transaction. Persons subject to this
subdivision shall retain a true and correct copy of all signed
transactions on file for a period of five years or the length of the
contract or agreement, whichever is longer.
(1) A contract or agreement subject to the provisions of Title 2
(commencing with Section 1801) of, and Chapter 2b (commencing with
Section 2981) and Chapter 2d (commencing with Section 2985.7) of
Title 14 of, Part 4 of Division 3.
(2) A loan or extension of credit secured other than by real
property, or unsecured, for use primarily for personal, family or
household purposes.
(3) A lease, sublease, rental contract or agreement, or other term
of tenancy contract or agreement, for a period of longer than one
month, covering a dwelling, an apartment, or mobilehome, or other
dwelling unit normally occupied as a residence.
(4) Notwithstanding paragraph (2), a A
loan or extension of credit for use primarily for
personal, family or household purposes where the loan or extension of
credit is subject to the provisions of Article 7 (commencing with
Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business
and Professions Code, or Division 7 (commencing with Section
18000), or Division 9 (commencing with Section 22000) of the
Financial Code. is made by a supervised financial
organization.
(5) Notwithstanding paragraph (2), a reverse mortgage as described
in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of
Division 3.
(6) A contract or agreement, containing a statement of fees or
charges, entered into for the purpose of obtaining legal services,
when the person who is engaged in business is currently licensed to
practice law pursuant to Chapter 4 (commencing with Section 6000) of
Division 3 of the Business and Professions Code.
(7) A foreclosure consulting contract subject to Article 1.5
(commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of
Division 3.
(7) This section shall not apply to federally chartered banks or
credit unions.
(c) Notwithstanding subdivision (b), for
For a loan subject to this part and to Article 7
(commencing with Section 10240) of Chapter 3 of Part 1 of Division 4
of the Business and Professions Code, the delivery of a translation
of the statement statements, disclosures, or
both to the borrower required by Section 10240
Section 10240 or 10241 of the Business and
Professions Code in any of the languages specified in subdivision (b)
in which the contract or agreement was negotiated, is in compliance
with subdivision (b).
(d) At the time and place where a lease, sublease, or rental
contract or agreement described in subdivision (b) is executed,
notice in any of the languages specified in subdivision (b) in which
the contract or agreement was negotiated shall be provided to the
lessee or tenant.
(e) Provision by a supervised financial organization of a
translation of the disclosures required by Regulation M or Regulation
Z, and, if applicable, Division 7 (commencing with Section 18000) or
Division 9 (commencing with Section 22000) of the Financial Code in
any of the languages specified in subdivision (b) in which the
contract or agreement was negotiated, prior to the execution of the
contract or agreement, shall also be deemed in compliance with the
requirements of subdivision (b) with regard to the original contract
or agreement.
(d) For a loan or extension of credit secured other than by real
property, or unsecured for use primarily for personal, family, or
household purposes, delivery by a supervised financial organization
of a translation of the disclosures required by Regulation M or
Regulation Z, and, if applicable, Division 7 (commencing with Section
18000) or Division 9 (commencing with Section 22000) of the
Financial Code in any of the languages specified in subdivision (b)
in which the contract or agreement was negotiated, prior to the
execution of the contract or agreement, is in compliance with
subdivision (b).
(1) "Regulation M" and "Regulation Z" mean any rule, regulation,
or interpretation promulgated by the Board of Governors of the
Federal Reserve System and any interpretation or approval issued by
an official or employee duly authorized by the board to issue
interpretations or approvals dealing with, respectively, consumer
leasing or consumer lending, pursuant to the Federal Truth in Lending
Act, as amended (15 U.S.C. Sec. 1601 et seq.).
(2) As used in this section, "supervised financial organization"
means a bank, savings association as defined in Section 5102 of the
Financial Code, credit union, or holding company, affiliate, or
subsidiary thereof, or any person subject to Article 7 (commencing
with Section 10240) of Chapter 3 of Part 1 of Division 4 of the
Business and Professions Code, or Division 7 (commencing with Section
18000) or Division 9 (commencing with Section 22000) , or
Division 20 (commencing with Section 50000) of the Financial
Code.
(e) For a loan or extension of credit secured by real property
made by a supervised financial organization, as described in
paragraph (4) of subdivision (b), delivery of the form disclosures
described in subdivision (m) is in compliance with subdivision (b).
Delivery of such disclosures is required whether or not the
transaction is also subject to the requirements of Article 7
(commencing with Section 10240) of Chapter 3 of Part 1 of Division 4
of the Business and Professions Code, and subdivision (c) of this
section.
The supervised financial organization shall provide the forms to
the borrower no later than seven calendar days before closing, and,
if any of the loan terms summarized change after provision of the
translation but prior to consummation of the loan, the supervised
financial organization shall provide an updated version of the forms
before closing.
(f) (1) At the time and place where
a an applicable contract or agreement
described in paragraph (1) or (2) of subdivision (b) is executed, a
notice in any of the languages specified in subdivision (b) in which
the contract or agreement was negotiated shall be conspicuously
displayed to the effect that the person described in subdivision (b)
is required to provide a contract or agreement in the language in
which the contract or agreement was negotiated, or a translation of
the disclosures required by law in the language in which the contract
or agreement was negotiated, as the case may be. If a person
described in subdivision (b) is executed, a notice in
the language that the contract or agreement was negotiated, shall be
conspicuously displayed, that states the translation requirements in
subdivision (b). If the person does business at more than one
location or branch, the requirements of this section shall apply only
with respect to the location or branch at which the language in
which the contract or agreement was negotiated is used.
(2) For any loan or extension of credit secured by real property
covered by this section, every English contract or agreement shall
include the following statement in no smaller than 10-point font and
contained in a demarcated rectangle, at the top of the first page of
the contract or agreement, translated into Spanish, Chinese, Tagalog,
Vietnamese, and Korean: "If you negotiated any important term of
this contract in [language], you are entitled by law to have the
contract, or a summary of important terms, translated into
[language]." This paragraph applies to all contracts specified in
this section, regardless of whether any term was negotiated in one of
these five languages, and regardless of whether the business person
conducts business in any one of these five languages.
(g) At the time and place where a lease, sublease, or rental
contract or agreement described in subdivision (b) is executed,
notice in any of the languages specified in subdivision (b), in which
the contract or agreement was negotiated, shall be provided to the
lessee or tenant.
(g) The term
(h) (1) As used
in this section, "contract" or "agreement," as used in
this section, means the document creating the rights and
obligations of the parties and includes any subsequent document
making substantial changes in the rights and obligations of the
parties. The term "contract" "Contract"
or "agreement" does not include any subsequent documents authorized
or contemplated by the original document such as periodic statements,
sales slips or invoices representing purchases made pursuant to a
credit card agreement, a retail installment contract or account or
other revolving sales or loan account, memoranda of purchases in an
add-on sale, or refinancing of a purchase as provided by, or pursuant
to, the original document.
The term "contract"
(2) "Contract" or "agreement"
does not include a home improvement contract as defined in Sections
7151.2 and 7159 of the Business and Professions Code, nor does it
include plans, specifications, description of work to be done and
materials to be used, or collateral security taken or to be taken for
the retail buyer's obligation contained in a contract for the
installation of goods by a contractor licensed pursuant to Chapter 9
(commencing with Section 7000) of Division 3 of the Business and
Professions Code, if the home improvement contract or installation
contract is otherwise a part of a contract described in subdivision
(b).
Matters
(3) Matters ordinarily
incorporated by reference in contracts or agreements as described in
paragraph (3) of subdivision (b), including, but not limited to,
rules and regulations governing a tenancy and inventories of
furnishings to be provided by the person described in subdivision
(b), are not included in the term "contract" or "agreement."
(h)
(i) (1) This section does not
apply to any person engaged in a trade or business who negotiates
primarily in a language other than English, as described by
subdivision (b), if the party with whom he or she is negotiating is a
buyer of goods or services, or receives a loan or extension of
credit, or enters an agreement obligating himself or herself as a
tenant, lessee, or sublessee, or similarly obligates himself or
herself by contract or lease, and the party negotiates the terms of
the contract, lease, or other obligation through his or her own
interpreter.
As
(2) As used in this subdivision,
"his or her own interpreter" means a person, not a minor, able to
speak fluently and read with full understanding both the English
language and any of the languages specified in subdivision (b) in
which the contract or agreement was negotiated, and who is not
employed by, or whose service is and whose
services are not made available through, the person engaged in
the trade or business.
(i)
(j) Notwithstanding subdivision (b), a translation may
retain the following elements of the executed English-language
contract or agreement without translation: names and titles of
individuals and other persons, addresses, brand names, trade names,
trademarks, registered service marks, full or abbreviated
designations of the make and model of goods or services, alphanumeric
codes, numerals, dollar amounts expressed in numerals, dates, and
individual words or expressions having no generally accepted
non-English translation. It is permissible, but not
required, that this translation be signed.
(j)
(k) The terms of the contract or agreement which is
executed in the English language shall determine the rights and
obligations of the parties. However, the translation of the contract
or the disclosures required by subdivision (e)
subdivisions (c) to (e), inclusive, and (m), in any of the
languages specified in subdivision (b) in which the contract or
agreement was negotiated shall be admissible in evidence
only to show that no contract was entered into because of a
substantial difference in the material terms and conditions of the
contract and the translation.
(l) (1) Any person who fails, prior to execution of the contract
or agreement, to deliver the translation required by subdivision (b),
is liable to the person aggrieved, in an amount equal to the sum of:
(A) Any actual damage sustained by the person as a result of the
failure.
(B) (i) In the case of a loan or extension of credit secured other
than by real property, or unsecured, for use primarily for personal,
family, or household purposes, in an amount equal to 50 percent of
the total amount of payments under the loan or extension of credit,
except that the liability under this subparagraph shall not be less
than two hundred dollars ($200) nor greater than five thousand
dollars ($5,000) per violation; (ii) in the case of a loan or
extension of credit secured by real property, in an amount not less
than five hundred dollars ($500) nor greater than ten thousand
dollars ($10,000) per violation; and (iii) in the case of any other
contract or agreement, in an amount not less than two hundred dollars
($200) nor greater than three thousand dollars ($3,000) per
violation.
(C) In the case of any successful action to enforce the foregoing
liability or in any action in which a person is determined to have a
right of rescission under paragraph (6) of this subdivision, the
costs of the action, together with a reasonable attorney's fee as
determined by the court.
(2) Any person who fails to comply with the notice requirements of
either subdivision (f) or (g) is liable to the contracting consumer
in an amount equal to five hundred dollars ($500) per violation, plus
the costs of the action, together with a reasonable attorney's fee
as determined by the court.
(3) Any action brought under paragraphs (1) and (2) shall be
commenced not more than four years from the date of the transaction.
(4) (A) In addition to any civil liability, upon a finding that
any licensed person has violated subdivision (b), a court shall
impose a penalty in the amount of two thousand five hundred dollars
($2,500) for the first violation, five thousand dollars ($5,000) for
the second violation, ten thousand dollars ($10,000) for the third
violation, and twenty-five thousand dollars ($25,000) each for each
subsequent violation.
(B) In addition to any civil liability, upon a finding that any
licensed person has violated subdivision (f) or (g), a court shall
impose a penalty in the amount of one thousand dollars ($1,000) for
the first violation, two thousand five hundred dollars ($2,500) for
the second violation, five thousand dollars ($5,000) for the third
violation, and ten thousand dollars ($10,000) each for each
subsequent violation.
(C) The amounts collected under subparagraph (A) or (B) of
paragraph (4) shall be deposited in the appropriate fund of the
licensing agency to be used by that licensing agency, subject to
appropriation by the Legislature, for the purposes of education and
enforcement in connection with this section.
(D) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), a
residential mortgage lender licensed under the California Residential
Mortgage Lending Act (Division 20 (commencing with Section 50000) of
the Financial Code), a commercial or industrial bank organized under
the Banking Law (Division 1 (commencing with Section 99) of the
Financial Code), a savings association organized under the Savings
Association Law (Division 2 (commencing with Section 5000) of the
Financial Code), and a credit union organized under the California
Credit Union Law (Division 5 (commencing with Section 14000) of the
Financial Code).
Nothing in this section shall be construed to prevent any
enforcement by a governmental entity against any person who
originates a loan and who is exempt or excluded from licensure by all
of the licensing agencies, based on a violation of any provision of
this section. Nothing in this section shall be construed to prevent
the Department of Real Estate from enforcing this section against a
licensed salesperson employed by a licensed real estate broker as if
that salesperson were a licensed person under this section. A
licensed person includes any person engaged in any practice governed
by the aforementioned laws for which a license is required, but whose
license is invalid, suspended, or revoked, or where no license has
been obtained.
(5) (A) A licensing agency may, after appropriate notice and
opportunity for hearing, by order levy administrative penalties
against a person who violates any provision of this section, and the
person shall be liable for administrative penalties, in the amounts
described in subparagraphs (A) and (B) of paragraph (4). Except for
licensing agencies exempt from the provisions of the Administrative
Procedure Act, any hearing shall be held in accordance with the
Administrative Procedure Act (Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code),
and the licensing agency shall have all the powers granted under that
act. A licensing agency may not impose any penalty for a particular
violation if a court has already imposed a penalty for that violation
pursuant to subparagraphs (A) and (B) of paragraph (4).
(B) A licensing agency may exercise any and all authority and
powers available to it under any other provisions of law, to
administer and enforce this section, including, but not limited to,
investigating and examining the licensed person's books and records,
and charging and collecting the reasonable costs for these
activities. The licensing agency shall not charge a licensed person
twice for the same service. Any civil, criminal, and administrative
authority and remedies available to the licensing agency pursuant to
its licensing law may be sought and employed in any combination
deemed advisable by the licensing agency to enforce the provisions of
this section.
(C) Any licensed person who violates any provision of this section
shall be deemed to have violated that person's licensing law.
(D) After any action under this subdivision resulting in a finding
of liability or any administrative action pursuant to this
paragraph, the licensing agency may bring a proceeding to suspend the
license of the licensed person for not less than six months and not
more than three years. After any action under this subdivision
resulting in a second or subsequent finding of liability, or any
administrative action pursuant to this paragraph on a second or
subsequent violation of this section, the licensing agency may bring
a proceeding to permanently revoke the license of the licensed person
or impose any lesser licensed sanction for at least three years.
(6) (A) In addition to the civil liability set forth in paragraphs
(1) and (2), prior to execution of the contract or agreement, to
deliver a materially complete translation of the contract, or of any
of the approved alternative disclosures, forms, or both required by
subdivision (b), the person aggrieved may rescind the contract or
agreement in the manner provided by this section. When the contract
for a consumer credit sale or consumer lease which has been sold and
assigned to a financial institution is rescinded pursuant to this
section, the consumer shall make restitution to and have restitution
made by the person with whom he or she made the contract, and shall
give notice of rescission to the assignee. Notwithstanding that the
contract was assigned without recourse, the assignment shall be
deemed rescinded and the assignor shall promptly repurchase the
contract from the assignee.
(B) With respect to mortgage loan contracts covered by this
section, the aggrieved person's right to rescind shall expire ten
years after the date of the contract, or, for any adjustable rate
mortgage contracts, the right to rescind shall expire after ten
years, or ninety days following the expiration of the fixed rate
term, whichever is later.
(m) The Department of Corporations and the Department of Financial
Institutions shall modify the Department of Real Estate's Forms 883
and 885 solely to delete information that is inapplicable to
lender-originated loans or that is otherwise inapplicable. These
modified forms shall be made available in each of the languages set
forth in subdivision (b) for use by a supervised financial
organization to summarize the terms of a mortgage loan pursuant to
subdivision (e).
(k)
(n) Upon a failure to comply with the provisions of
this section, the person aggrieved may rescind the contract or
agreement in the manner provided by this chapter. When the contract
for a consumer credit sale or consumer lease which has been sold and
assigned to a financial institution is rescinded pursuant to this
subdivision, the consumer shall make restitution to and have
restitution made by the person with whom he or she made the contract,
and shall give notice of rescission to the assignee. Notwithstanding
that the contract was assigned without recourse, the assignment
shall be deemed rescinded and the assignor shall promptly repurchase
the contract from the assignee.
SEC. 2. The requirements applying to supervised financial
organizations, as well as all other amendments herein, shall be
operative beginning on January 1, 2010, or 60 days following issuance
of forms by the Department of Corporations and the Department of
Financial Institutions, whichever is earlier.
SEC. 3. The provisions of this act are severable. If any provision
of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.