BILL NUMBER: AB 1160	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 11, 2009
	AMENDED IN ASSEMBLY  JUNE 2, 2009
	AMENDED IN ASSEMBLY  MAY 5, 2009
	AMENDED IN ASSEMBLY  APRIL 22, 2009
	AMENDED IN ASSEMBLY  APRIL 2, 2009

INTRODUCED BY   Assembly Member Fong
   (Principal coauthor: Senator Cedillo)
   (Coauthors: Assembly Members Coto, Eng, Fuentes, Furutani, Lieu,
 and Torres   Nava,   Torres, 
 and Tran  )
   (Coauthor: Senator Yee)

                        FEBRUARY 27, 2009

   An act to  amend Section 1632 of   add
Section 1632.5 to  the Civil Code, relating to contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1160, as amended, 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  
require a supervised financial organization, as defined, that
negotiates primarily in those languages in the course of entering
into a contract or agreement for a loan or extension of credit
secured by residential real property  , 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 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   ,   as provided  .

   These provisions would  be   become 
operative beginning  60   on July 1, 2010, or 90
 days after issuance of the forms, as provided,  or on
July 1, 2010,  whichever  is   occurs
 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 1632.5 is added to the 
 Civil Code   , to read:  
   1632.5.  (a) A supervised financial organization that negotiates
primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean,
whether orally or in writing, in the course of entering into a
contract or agreement for a loan or extension of credit secured by
residential real property, shall deliver to the other party to that
contract or agreement prior to the execution of the contract or
agreement the form described in subdivision (i) for that language.
   (b) For purposes of this section:
   (1) "Contract" or "agreement" shall have the same meaning as
defined in subdivision (g) of Section 1632.
   (2) "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 Division 7 (commencing with Section 18000),
Division 9 (commencing with Section 22000), or Division 20
(commencing with Section 50000) of the Financial Code.
   (c) With respect to a contract or agreement for a loan or
extension of credit secured by residential real property as described
in subdivision (a), a supervised financial organization that
complies with this section shall be deemed in compliance with Section
1632.
   (d) The supervised financial organization shall provide the form
to the borrower no later than three business days after receipt of
the written application, and if any of the loan terms summarized
materially change after provision of the translation but prior to
consummation of the loan, the supervised financial organization shall
provide an updated version of the form prior to consummation of the
loan.
   (e) (1) This section does not apply to a supervised financial
organization that negotiates primarily in a language other than
English, as described by subdivision (a), if the party with whom the
supervised financial organization is negotiating, negotiates the
terms of the contract through his or her own interpreter.
   (2) For purposes of 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 one of the languages
specified in subdivision (a) that is the language in which the
contract was negotiated, who is not employed by, and whose services
are not made available through, the person engaged in the trade or
business.
   (f) Notwithstanding subdivision (a), a translation may retain any
of the following elements of the executed English-language contract
or agreement without translation:
   (1) Names and titles of individuals and other persons.
   (2) Addresses, brand names, trade names, trademarks, or registered
service marks.
   (3) Full or abbreviated designations of the make and model of
goods or services.
   (4) Alphanumeric codes.
   (5) Individual words or expressions having no generally accepted
non-English translation.
   (g) 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 forms
required by subdivision (a) 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.
   (h) (1) A licensing agency may, by order, after appropriate notice
and opportunity for hearing, levy administrative penalties against a
supervised financial organization that violates any provision of
this section, and the supervised financial organization may be liable
for administrative penalties, up to the amounts of two thousand five
hundred dollars ($2,500) for the first violation, five thousand
dollars ($5,000) for the second violation, and ten thousand dollars
($10,000) for each subsequent violation. 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.
   (2) 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.
   (3) Any supervised financial organization that violates any
provision of this section shall be deemed to have violated its
licensing law.
   (4) Nothing in this section shall be construed to impair or impede
the Attorney General from bringing an action to enforce this
division.
   (i) The Department of Corporations and the Department of Financial
Institutions shall create a form to be made available in each of the
languages set forth in subdivision (a) for use by a supervised
financial organization to summarize the terms of a mortgage loan
pursuant to subdivision (a). In creating the forms, the Department of
Corporations and the Department of Financial Institutions may use as
guidance the United States Department of Housing and Urban
Development's Good Faith Estimate disclosure form.
   (j) This section shall not apply to federally chartered banks,
credit unions, savings banks, or thrifts. 
   SEC. 2.    This section shall become operative
beginning on July 1, 2010, or 90 days following the issuance of forms
by both the Department of Corporations and the Department of
Financial Institutions pursuant to subdivision (i), whichever occurs
later.  
  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 in the course of
entering into any of the contracts or agreements listed in
paragraphs (1) to (7), inclusive, of this subdivision and negotiates
primarily 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, 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.
   (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) 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 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) This section shall not apply to federally chartered banks or
credit unions.
   (c) 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
statements, disclosures, or both to the borrower required by 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) 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) At the time and place where an applicable contract or
agreement is executed, a notice in the language that the contract or
agreement was negotiated, shall be clearly and conspicuously
displayed in an unobstructed view, 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.
   (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 to the effect that the person described in
subdivision (b) is required to provide a contract or agreement in the
language in which the contractor agreement was negotiated, or a
translation of the disclosure required by law in the language in
which the contract or agreement was negotiated, as the case may be.
   (h) (1) As used in this section, "contract" or "agreement," 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. "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.
   (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).
   (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."
   (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.
   (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, and whose services are not
made available through, the person engaged in the trade or business.
   (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.
   (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 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
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) "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).
   (2) (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, up to the
amounts of two thousand five hundred dollars ($2,500) for the first
violation, five thousand dollars ($5,000) for the second violation,
and ten thousand dollars ($10,000) for each subsequent violation.
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.
   (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) Nothing in this section shall be construed to impair or impede
the Attorney General from bringing an action to enforce this
division.
   (m) The Department of Corporations and the Department of Financial
Institutions shall create forms to 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). In creating the forms, the Department of
Corporations and the Department of Financial Institutions may
modify, or use as guidance, the Department of Real Estate's Forms 883
and 885.  
  SEC. 2.    The requirements applying to supervised
financial organizations, as well as all other amendments herein,
shall be operative beginning 60 days after issuance of the forms
specified in subdivision (m) by the Department of Corporations and
the Department of Financial Institutions, or on July 1, 2010,
whichever is later.  
  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.