text:
(a) It is a violation for any person subject to this division or any director, stockholder, trustee, officer, agent, or employee of any such person to do any of the following:

(1) Knowingly or recklessly disburse or cause the disbursal of escrow funds otherwise than in accordance with escrow instructions, or knowingly or recklessly to direct, participate in, or aid or abet in a material way, any activity which constitutes theft or fraud in connection with any escrow transaction.

(2) Knowingly or recklessly make or cause to be made any misstatement or omission to state a material fact, orally or in writing, in escrow books, accounts, files, reports, exhibits, statements, or any other document pertaining to an escrow or escrow affairs.

(b) Any director, officer, stockholder, trustee, employee, or agent of an escrow agent, who abstracts or willfully misappropriates money, funds, trust obligations or property deposited with an escrow agent, is guilty of a felony. Upon conviction, of an offense under this section or similar offenses specified in Chapter 4 (commencing with Section 470), Chapter 5 (commencing with Section 484), or Chapter 6 (commencing with Section 503) of Title 13 of Part 1 of the Penal Code, the court shall, in addition to any other punishment imposed, order the person to make full restitution, first to the escrow agent and then to Fidelity Corporation, to the extent it has indemnified the escrow agent. Nothing in this section shall be deemed or construed to repeal, amend, or impair any existing provision of law prescribing a punishment for such an offense.

(c) Any person subject to this division who knows of a person’s involvement in an abstraction or misappropriation of money, funds, trust obligations, or property deposited with a licensed escrow agent shall immediately report the abstraction or misappropriation in writing to the commissioner and to Fidelity Corporation. No person shall be civilly liable for reporting as required under this subdivision, unless the information provided in the report is false and the person providing false information does so with knowledge and malice. The reports filed under this section, including the identity of the person making the filing, shall remain confidential pursuant to state law.

history: (History: Amended by Stats. 1994, Ch. 423, Sec. 2. Effective January 1, 1995.)


kind: section

code: FIN

text:
(a) Any person who has been convicted of or pleaded nolo contendere to any crime specified in subdivision (b) within the past 10 years, or has been held liable in any civil action by final judgment or any administrative judgment by any public agency within the past 7 years, of any of the provisions specified in subdivision (b) shall not serve in any capacity as an officer, director, stockholder, trustee, agent, or employee of an escrow agent, or in any position involving any duties with an escrow agent, in this state. This subdivision shall not apply to any person whose office, employment, ownership interest, or other participation in the business of a licensed escrow agent commenced prior to January 1, 1992.

(b) (1) Subdivision (a) applies to criminal convictions of, pleas of nolo contendere to, or civil or administrative judgments entered for, any of the following offenses:

(A) Offenses specified in Chapter 10 (commencing with Section 1320) of Division 1.1.

(B) Offenses specified in Article 4 (commencing with Section 5300) of Chapter 1 of Division 2.

(C) Offenses specified in Article 8 (commencing with Section 14750) of Chapter 4 of Division 5.

(D) Offenses specified in Chapter 3 (commencing with Section 17400), and Chapter 7 (commencing with Section 17700) of Division 6.

(E) Offenses specified in Chapter 6 (commencing with Section 18435) of Division 7.

(F) Offenses specified in provisions of the laws of the United States added or amended by the federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 (Public Law 101-73).

(G) Offenses involving robbery, burglary, theft, embezzlement, fraud, fraudulent conversion or misappropriation of property, forgery, bookmaking, receiving stolen property, counterfeiting, extortion, checks, credit cards, or computer violations specified in Section 502 of the Penal Code.

(2) For the purpose of this subdivision, an offense does not include a conviction for which the person has obtained a certificate of rehabilitation from a court of competent jurisdiction under Section 1203.4 or 4852.13 of the Penal Code or a similar certificate of rehabilitation obtained in a foreign jurisdiction.

(c) On and after January 1, 1992, any person who seeks employment by, or an ownership interest in, or other participation in the business of a licensed escrow agent shall, as a condition to obtaining that employment, interest, or participation, authorize Fidelity Corporation and the commissioner, or both, to have access to that person’s state and federal summary criminal history information, as defined in Section 11105 of the Penal Code, for purposes of determining whether the person has a prior conviction of, or pleaded nolo contendere to, a criminal offense specified in subdivision (b).

(d) On or before the 10th day of employment, each escrow agent shall obtain and forward to the commissioner the fingerprint images and related information of persons seeking employment by an escrow agent. The fingerprint images and related information may be submitted by certified mail, return receipt requested, or transmitted electronically, using the process established by the Department of Justice for requesting state and federal summary criminal history information. Persons who have previously submitted fingerprints or fingerprint images and related information to the commissioner may so notify the commissioner and need not submit additional fingerprint images and related information unless requested to do so by the commissioner. The commissioner shall provide written notice to both the escrow agent and to the person if any of the information received pursuant to this division shows that the person’s employment would be in violation of Section 17414.1, and the escrow agent shall deny the person the employment. A person whose employment is in violation of subdivision (a) shall not have access to trust funds or sign checks or otherwise perform any activities related to the processing of escrow transactions after the licensed escrow agent has been notified by the commissioner that the person’s employment is in violation of subdivision (a).

(e) Any state and federal summary criminal history information obtained pursuant to this section shall be kept confidential and a recipient shall not disclose the contents other than for the purpose of determining eligibility for employment by, acquisition of an ownership interest in, or other participation in, the business of a licensed escrow agent.

(f) The authority granted by this section to the commissioner or to Fidelity Corporation shall be in addition to any other authority granted by law to obtain information about any person who is subject to this division. This section shall not be construed to limit any authority of the commissioner or Fidelity Corporation otherwise provided by law.

(g) Any person who knowingly violates subdivision (a) or (d), including, but not limited to, any escrow agent who permits employment by, an ownership interest in, or other participation in, the business of an escrow agent in violation of subdivision (a) or (d) shall, upon conviction, be subject to punishment pursuant to Section 17700. Any person who knows of a violation of subdivision (a) or (d) shall immediately report the violation in writing to the commissioner. A person shall not be civilly liable for reporting as required under this subdivision unless the information provided in the report is false, and the person providing false information does so with knowledge and malice. The reports filed under this section, including the identity of the person making the filing, shall remain confidential pursuant to state law.

(h) This section shall not be construed to permit the reinstatement of any person barred by the commissioner pursuant to Section 17423 nor to prohibit the commissioner from bringing any action pursuant to Section 17423.

(i) If any provision of this section or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of this section which can be given effect without the invalid provision or application, and to this end the provisions of this section are severable.

history: (History: Amended by Stats. 2022, Ch. 846, Sec. 1. (SB 1348) Effective January 1, 2023.)

division: 6. ESCROW AGENTS

chapter: 3. Escrow Regulations

path: 6. ESCROW AGENTS > 3. Escrow Regulations


text:
(a) In response to any written request by an escrow agent or by Fidelity Corporation, any bank, savings association, credit union, any other financial institution, or any other exempt person specified in Section 17006, an escrow agent or Fidelity Corporation may provide a written employment reference that advises of the person’s involvement in a crime or act specified in Section 17414 or subdivision (b) of Section 17414.1, or any theft, embezzlement, misappropriation, or other defalcation which has been reported to federal authorities pursuant to federal banking guidelines, or that has been reported to the commissioner or Fidelity Corporation, pursuant to this division. In order for the immunity provided in subdivision (b) to apply, a copy of the written employment reference shall be sent concurrently by the Fidelity Corporation, person, entity, escrow agent, bank, savings association, credit union, any other financial institution, or exempt person specified in Section 17006 providing the reference, to the last known address of the person concerning whom the reference is provided.

(b) No licensed escrow agent, bank, savings association, credit union, any other financial institution, exempt person specified in Section 17006, or Fidelity Corporation shall be civilly liable for providing an employment reference as specified in subdivision (a), unless the information provided is false and the licensed escrow agent, bank, savings association, credit union, any other financial institution, or exempt person specified in Section 17006, or Fidelity Corporation providing false information does so with knowledge and malice.

history: (History: Added by Stats. 1991, Ch. 1221, Sec. 5.)


text:
(a) If the commissioner, as a result of any examination or from any report made to the commissioner, shall find that any person subject to this division is in an insolvent condition, is conducting or has conducted escrow business in such an unsafe or injurious manner as to render further operations hazardous to the public or to customers, is failing or has failed to comply with the provisions of Section 17212.1 or 17414.1, is permitting or has permitted its tangible net worth to be lower than the minimum required by law, is failing or has failed to maintain its liquid assets in excess of current liabilities as set forth in Section 17210, or is failing or has failed to comply with the bonding requirements of Chapter 2 (commencing with Section 17200) of this division, the commissioner may, by an order addressed to and served by registered or certified mail or by personal service on such person and on any other person having in their possession or control any escrowed funds, trust funds, or other property deposited in escrow with said person, direct discontinuance of the disbursement of trust funds by the parties or any of them, the receipt of trust funds, the delivery or recording of documents received in escrow, or other business operations. No person having in their possession any of these funds or documents shall be liable for failure to comply with the order unless they received written notice of the order. Subject to subdivision (b), the order shall remain in effect until set aside by the commissioner in whole or in part, the person is the subject of an order for relief in bankruptcy, or pursuant to Chapter 6 (commencing with Section 17621) of this division the commissioner has assumed possession of the escrow agent.

(b) Within 15 days from the date of an order pursuant to subdivision (a), the person may request a hearing under the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Division 3 of Title 2 of the Government Code. Upon receipt of a request, the matter shall be set for hearing to commence within 30 days after such receipt unless the person subject to this division consents to a later date. If no hearing is requested within 15 days after the mailing or service of such notice and none is ordered by the commissioner, the failure to request a hearing shall constitute a waiver of the right to a hearing. Neither the request for a hearing nor the hearing itself shall stay the order issued by the commissioner under subdivision (a).

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 9. (AB 2433) Effective January 1, 2023.)


text: Whenever in the opinion of the commissioner any person, except as named in Section 17006, is engaged, either actually or through subterfuge, in the business of receiving escrows for deposit or delivery as defined in this division, without a license from the commissioner the commissioner may order that person to desist and to refrain from engaging in that business. If, within 30 days after such an order is served, a request for a hearing is filed in writing and the hearing is not held within 60 days thereafter, the order is rescinded.

history: (History: Amended by Stats. 1987, Ch. 564, Sec. 4.)


text:
On and after January 1, 1992, any person seeking employment with an escrow agent shall complete an employment application on or before the first day of employment which includes, at least, the following information. A copy of the employment application shall be forwarded to the commissioner on or before the first day of the applicant’s employment. Persons required to file a statement of identity and questionnaire pursuant to subdivision (g) of Section 17209 or Section 17212.1 are not required to file the employment application set forth in this section. Each person completing the employment application shall be given the notice required by the Information Practices Act (Section 1798.17 of the Civil Code), copies of which may be obtained from the commissioner. Nothing in this section shall limit an escrow agent from requesting additional information from an applicant. STATEMENT OF IDENTITY AND EMPLOYMENT APPLICATIONName of Escrow Company:Escrow Agent License Number:1. Exact Full Name: (Please Print or Type)First NameMiddle NameLast Name(Do not use initials or nicknames) Title of position to be filled in connection with the preparation of this employment application.

2. Employment for the last 10 years:FromToEmployer Name and AddressOccupation and DutiesPresent NOTE: Attach separate schedule if space is not adequate. 3. Residence addresses for the last 10 years:FromToStreetCityStatePresent NOTE: Attach separate schedule if space is not adequate. 4. Have you ever been named in any order, judgment or decree of any court or any governmental agency or administrator, temporarily or permanently restraining or enjoining you from engaging in or continuing any conduct, practice or employment?( ) Yes ( ) NoIf the answer is “Yes,” please complete the following:Date of Suit:Location of Court (City, County, State):Nature of Suit: Note: Attach a certified copy of any order, judgment, or decree. 5. Have you ever been refused a license to engage in any business in this state or any other state, or has any such license ever been suspended or revoked?( ) Yes( ) NoIf the answer is “Yes,” please complete the following: State: Title of State Department: Nature of License and Number:

Note: Attach a certified copy of any order, judgment, or decree. 6. Have you ever been convicted of or pleaded nolo contendere to a crime other than minor traffic citations that do not constitute a misdemeanor or felony offense?NOTE: A conviction is a plea or verdict of guilty or a conviction following a plea of nolo contendere. A conviction also includes an order granting probation and suspending the imposition of sentence, notwithstanding a subsequent order pursuant to Sections 1203.4 or 1203.4a of the Penal Code permitting the person to withdraw his or her plea of guilty, or dismissing the accusation, information, or indictment.( ) Yes( ) NoIf the answer is “Yes,” please complete the following:Date of Case:Location of Court (City, County, State):Nature of Case:Note: Attach a certified copy of any order, judgment, or decree. 7. Have you ever been a defendant in a civil court action other than divorce, condemnation or personal injury?( ) Yes( ) No If the answer is “Yes,” please complete the following:Date of Suit:Location of Court (City, County, State):Nature of Suit:Note: Attach a certified copy of any order, judgment, or decree. 8. Have you ever changed your name or ever been known by any name other than that herein listed?(Including a woman’s maiden name) ( ) Yes( ) No If so, explain. Change in name through marriage or court order should also be listed. EXACT DATE OF EACH NAME CHANGE MUST BE LISTED.

9. Have you ever done business under a fictitious firm name either as an individual or in the partnership or corporate form?( ) Yes( ) No If the answer is “Yes,” set forth particulars: 10. Have you ever been a subject of a bankruptcy or a petition in bankruptcy?( ) Yes( ) No If the answer is “Yes,” give date, title of case, location of bankruptcy filing: 11. Have you ever been refused a bond, or have you ever had a bond revoked or canceled?( ) Yes( ) NoIf the answer is “Yes,” give details: 12.In what capacity will you be employed? (e.g., Clerk, Escrow Officer, Receptionist, etc.) 13. Do you expect to be a party to, or broker or salesperson in connection with, escrows conducted by the escrow company which is employing you?( ) Yes( ) No If the answer is “Yes,” please explain: NOTE: Attach separate schedule if space is not adequate.VERIFICATIONI, the undersigned, state that I am the person named in the foregoing Statement of Identity and Employment Application; that I have read and signed the Statement of Identity and Employment Application and know the contents thereof, including all exhibits attached thereto, and that the statements made therein, including any exhibits attached thereto, are true.Any person who knows or should have known of a violation of this section shall immediately report the violation in writing to the commissioner.I certify/declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed at(City)(County)(State)thisday of, 20__.(Signature of Declarant)

history: (History: Amended by Stats. 2007, Ch. 130, Sec. 94. Effective January 1, 2008.)


text:
Except for the normal compensation of his own employees, it shall be a violation of this division for any person subject to this division to pay over to any other person any commission, fee, or other consideration as compensation for referring, soliciting, handling, or servicing escrow customers or accounts.

It shall also be a violation for any person to enter into any arrangement, either of his own making or of a subsidiary nature, or through any other person having a dual capacity, or through any person having a direct or indirect interest in the escrow, or other device permitting any fee, commission, or compensation which is contingent upon the performance of any act, condition, or instruction set forth in an escrow to be drawn or paid, either in whole or in part, or in kind or its equivalent, prior to the actual closing and completion of the escrow.

history: (History: Amended by Stats. 1961, Ch. 475.)


text: Notwithstanding the provisions of Section 17420, a disbursal, other than for a fee, commission or compensation may be advanced or paid out prior to the close of an escrow if the written instructions of all parties to the transaction so provide.

history: (History: Added by Stats. 1963, Ch. 996.)


text:
(a) Notwithstanding Section 17420, a licensee may charge a fee for administering an escrow that has been postponed for at least two months from the most recent closing date agreed upon by the parties in the written instructions or has been canceled if all of the following requirements are met:

(1) The postponement or cancellation resulted from the acts or omissions of the parties to the escrow transaction.

(2) The fee was disclosed in the written instructions in not less than 8-point bold type on the face or front page of the instructions.

(3) The principal parties to the escrow transaction have executed the written fee instructions by initialing those instructions.

(b) This section shall apply to written instructions made on and after January 1, 2008.

history: (History: Added by Stats. 2007, Ch. 237, Sec. 4. Effective January 1, 2008.)


text: A joint control agent, unless acting pursuant to written instructions of his principals, shall not disburse funds for the payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in the construction of improvements upon real property until such time as he determines that the person furnishing such labor, materials, services, permits, fees, or other items has substantially complied with the specifications contained in the control agreement.

history: (History: Added by Stats. 1965, Ch. 1205.)


text:
(a) The commissioner may, after appropriate notice and opportunity for hearing, by order, censure or suspend for a period not exceeding 12 months, or bar from any position of employment, management, or control any escrow agent, or any other person, if the commissioner finds either of the following:

(1) That the censure, suspension, or bar is in the public interest and that the person has committed or caused a violation of this division or rule or order of the commissioner, which violation was either known or should have been known by the person committing or causing it or has caused material damage to the escrow agent or to the public.

(2) That the person has been convicted of or pleaded nolo contendere to any crime, or has been held liable in any civil action by final judgment, or any administrative judgment by any public agency, if that crime or civil or administrative judgment involved any offense specified in subdivision (b) of Section 17414.1, or any other offense reasonably related to the qualifications, functions, or duties of a person engaged in the business in accordance with the provisions of this division.

(b) Within 15 days from the date of a notice of intention to issue an order pursuant to subdivision (a), the person may request a hearing under the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Division 3 of Title 2 of the Government Code). Upon receipt of a request, the matter shall be set for hearing to commence within 30 days after such receipt unless the person subject to this division consents to a later date. If no hearing is requested within 15 days after the mailing or service of such notice and none is ordered by the commissioner, the failure to request a hearing shall constitute a waiver of the right to a hearing.

(c) Upon receipt of a notice of intention to issue an order pursuant to this section, the person who is the subject of the proposed order is immediately prohibited from engaging in any escrow processing activities, including disbursing any trust funds in the escrow agent’s possession, custody or control, and the financial institution holding trust funds shall be so notified by service of the notice, accusation and other administrative pleadings. The prohibition against disbursement of trust funds may be set aside, in whole or in part, by the commissioner for good cause.

(d) Fidelity Corporation shall disclose to all licensees the identity of persons who have been censured, suspended, or barred from any position of employment, management, or control.

(e) Persons suspended or barred under this section are prohibited from participating in any business activity of a licensed escrow agent and from engaging in any business activity on the premises where a licensed escrow agent is conducting escrow business. This subdivision shall not be construed to prohibit suspended or barred persons from having their personal escrow transactions processed by a licensed escrow agent.

(f) This section shall apply to any violation, conviction, plea, or judgment occurring at any time prior to and after the enactment of this section.

(g) The provisions of Section 17414.1 exempting convictions for which a person has obtained a certificate of rehabilitation from the prohibition against serving as an officer, director, stockholder, trustee, agent, or employee of an escrow agent, or in any position involving any duties with an escrow agent, shall not apply to permit the reinstatement of any person barred by the commissioner pursuant to this section, nor to prohibit the commissioner from bringing any action pursuant to this section.

(h) If any provision of this section or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of this section which can be given effect without the invalid provision or application, and to this end the provisions of this section are severable.

history: (History: Amended by Stats. 1993, Ch. 625, Sec. 4. Effective January 1, 1994.)


text:
(a) (1) Whenever the commissioner takes any enforcement or disciplinary action pursuant to Section 17423, upon the action becoming final the commissioner shall notify the Real Estate Commissioner and the Insurance Commissioner of the action or actions taken. The purpose of this notification is to alert the departments that enforcement or disciplinary action has been taken, if the person seeks or obtains employment with entities regulated by the departments.

(2) The commissioner shall provide the Real Estate Commissioner and the Insurance Commissioner, in addition to the notification of the action taken, with a copy of the written accusation, statement of issues, or order issued or filed in the matter and, at the request of the Real Estate Commissioner or Insurance Commissioner, with any underlying factual material relevant to the enforcement or disciplinary action. Any confidential information provided by the commissioner to the Insurance Commissioner or the Real Estate Commissioner shall not be made public pursuant to this section. Notwithstanding any other provision of law, the disclosure of any underlying factual material to the Insurance Commissioner or the Real Estate Commissioner shall not operate as a waiver of confidentiality or any privilege that the commissioner may assert.

(b) The commissioner shall establish and maintain, on the internet website maintained by the Department of Financial Protection and Innovation, a separate and readily identifiable database of all persons who have been subject to any enforcement or disciplinary action that triggers the notification requirements of this section. The database shall also contain a direct link to the databases, described in Section 10176.1 of the Business and Professions Code and Section 12414.31 of the Insurance Code and required to be maintained on the Web sites of the Bureau of Real Estate and the Department of Insurance, respectively, of persons who have been subject to enforcement or disciplinary action for malfeasance or misconduct related to the escrow industry by the Insurance Commissioner and the Real Estate Commissioner.

(c) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the Department of Financial Protection and Innovation, the Commissioner of Financial Protection and Innovation, any other state agency, or any officer, agent, employee, consultant, or contractor of the state, for the release of any false or unauthorized information pursuant to this section, unless the release of that information was done with knowledge and malice, or for the failure to release any information pursuant to this section.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 126. (SB 1498) Effective January 1, 2023.)


text:
(a) For any licensee, a disciplinary action taken by the State of California, another state, an agency of the federal government, or another country for an action substantially related to the activity regulated under this division may be grounds for disciplinary action by the commissioner. A certified copy of the record of the disciplinary action taken against the licensee by the State of California, other state, agency of the federal government, or other country shall be conclusive evidence of the events related therein.

(b) Nothing in this section shall preclude the commissioner from applying a specific statutory provision in this division providing for discipline against a licensee as a result of disciplinary action taken against a licensee by the State of California, another state, an agency of the federal government, or another country.

history: (History: Added by Stats. 2003, Ch. 473, Sec. 19. Effective January 1, 2004.)


text: Any person subject to this division or any director, stockholder, trustee, officer, agent, or employee of that person who violates any provision of the federal Real Estate Settlement Procedures Act, as amended (12 U.S.C. Sec. 2601 et seq.), or any regulation promulgated thereunder, violates this division.

history: (History: Added by Stats. 2007, Ch. 237, Sec. 5. Effective January 1, 2008.)


text:
(a) An escrow agent’s license remains in effect until surrendered, revoked, or suspended.

(b) A licensee that ceases to engage in the business regulated by this division and desires to no longer be licensed shall notify the commissioner in writing and, at that time, tender the license and all other indicia of licensure to the commissioner. Within 105 days of the written notice to the commissioner, the licensee shall submit to the commissioner, at its own expense, a closing audit report as of the date the license is tendered to the commissioner for surrender, or for another period as the commissioner may specify, to be performed by an independent certified public accountant. The closing audit shall include, but not be limited to, information required by the commissioner, a bank reconciliation of the trust account, and a verified statement from a certified public accountant confirming lawful disbursement of funds. A license is not surrendered until the commissioner has reviewed and accepted the closing audit report, a determination has been made by the commissioner that acceptance of the surrender is in the public interest, and tender of the license is accepted in writing by the commissioner.

history: (History: Amended by Stats. 2009, Ch. 568, Sec. 3. (SB 204) Effective January 1, 2010.)

chapter: 4. Revocation of License

path: 6. ESCROW AGENTS > 4. Revocation of License


text: If the commissioner has reason to believe that any escrow agent is violating the provisions of this division, the commissioner may investigate the escrow agent’s business and examine the books, accounts, records, and files used in the business of every escrow agent and of every person who acts or claims to act as principal or agent under or without the authority of this division. For the purposes of examination the commissioner and representatives of the commissioner shall have free access to the offices and places of business, books, accounts, records, papers, files, safes, and vaults of all persons examined. The cost of any investigation, inspection, and examination of a licensee under this section shall be paid to the commissioner as provided in Section 17405.1.

history: (History: Amended by Stats. 1996, Ch. 670, Sec. 4. Effective January 1, 1997.)


text: If it appears to the commissioner that any licensed escrow agent is violating or has violated its articles of incorporation, or any law or rule binding upon it, the commissioner shall, by written order addressed to the agent direct the discontinuance of such violation. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 17604.

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 10. (AB 2433) Effective January 1, 2023.)


text: If any licensed escrow agent fails to make any reports required by law or by the commissioner within ten (10) days from the day designated for the making of the reports, or within any extension of time granted by the commissioner, or fails to include therein any matter required by law or by the commissioner, such failure shall constitute grounds for the suspension or revocation of the license held by such escrow agent.

history: (History: Added by Stats. 1961, Ch. 475.)


text: If it appears to the commissioner that any licensed escrow agent is conducting or has conducted business in an unsafe or injurious manner, the commissioner shall, by written order addressed to the agent direct the discontinuance of such unsafe or injurious practices. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 17604.

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 11. (AB 2433) Effective January 1, 2023.)


text: No order issued pursuant to Sections 17602 or 17603 may become final except after notice to any licensed escrow agent affected thereby of the intention of the commissioner to make such order final and of the reasons therefor and that upon receipt of a request the matter will be set down for hearing to commence within 15 business days after such receipt unless the licensed agent affected consents to a later date. If no hearing is requested within 30 days after the mailing of such notice and none is ordered by the commissioner, the order may become final without hearing and the licensed escrow agent shall immediately discontinue the practices named in the order. If a hearing is requested or ordered, it shall be held in accordance with the provisions of 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 commissioner shall have all of the powers granted thereunder. If upon the hearing, it appears to the commissioner that the licensed agent is conducting or has conducted business in an unsafe and injurious manner or is violating or has violated its articles of incorporation or any law of this state, or any rule binding upon it, the commissioner shall make the order of discontinuance final and the licensed escrow agent shall immediately discontinue the practices named in the order.

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 12. (AB 2433) Effective January 1, 2023.)


text: The licensed escrow agent has ten (10) days after an order is made final in which to commence action to restrain enforcement of such order, and unless such action is commenced, and the enforcement of such order is enjoined within ten (10) days by the court in which the suit is brought, the licensed escrow agent shall comply with the order.


text: The commissioner may immediately revoke by order the escrow agent’s license if the licensee fails to comply with any order, unless the escrow agent secures a court order restraining the enforcement of the commissioner’s revocation order.

history: (History: Amended by Stats. 2002, Ch. 772, Sec. 12. Effective January 1, 2003.)


text: The license of an escrow agent shall be deemed revoked upon the completion or closure of a court approved liquidation of the business of the escrow agent, whether pursuant to Section 17635 or 17636, or otherwise, unless the escrow agent within 10 days of the court’s order approving the closing or completion of liquidation secures a court order restraining the revocation from taking effect.

history: (History: Added by Stats. 1994, Ch. 423, Sec. 3. Effective January 1, 1995.)


text:
(a) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this division or any rule or order hereunder, the commissioner may in the commissioner’s discretion bring an action in the name of the people of the State of California in the superior court to enjoin the acts or practices or to enforce compliance with this law or any rule or order hereunder. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted and a receiver, monitor, conservator, or other designated fiduciary or officer of the court, which may include the commissioner, may be appointed for the defendant or the defendant’s assets, or any other ancillary relief may be granted as appropriate.

A receiver, monitor, conservator, or other designated fiduciary or officer of the court appointed by the superior court pursuant to this section may, with the approval of the court, exercise any or all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court, by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the superior court.

(b) If the commissioner determines it is in the public interest, the commissioner may include in any action authorized by subdivision (a) a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award additional relief.

history: (History: Repealed and added by Stats. 1990, Ch. 1186, Sec. 7.)


text:
The commissioner may, after notice and a reasonable opportunity to be heard, suspend or revoke any license if he finds that:

(a) The licensee has failed to maintain in effect a bond required under the provisions of this division.

(b) The licensee has violated any provision of this division or any rule made by the commissioner under and within the authority of this division.

(c) Any fact or condition exists which, if it had existed at the time of the original application for such license, reasonably would have warranted the commissioner in refusing originally to issue such license.

history: (History: Amended by Stats. 1973, Ch. 705.)


text: The revocation, suspension, surrender or expiration of an escrow agent’s license does not impair or affect pre-existing escrows lawfully contracted, but nothing contained in this division shall be deemed to authorize the acceptance of further funds or documents into escrow subsequent to such revocation, surrender or expiration or during any period of suspension.

history: (History: Amended by Stats. 1955, Ch. 261.)


text: The power of investigation and examination by the commissioner is not terminated by the surrender, suspension, or revocation of any license issued by him.

history: (History: Added by Stats. 1973, Ch. 705.)


text: Whenever the commissioner deems it necessary for the general welfare of the public, the commissioner has continuous authority to exercise the powers set forth in this division whether or not an application for a license has been filed with the commissioner, any license has been issued, or if issued, has been surrendered, suspended, or revoked.

history: (History: Amended by Stats. 2002, Ch. 772, Sec. 13. Effective January 1, 2003.)


text: The commissioner, and all persons designated by him, may administer oaths, take the testimony of witnesses, and issue subpenas requiring the attendance of witnesses and the production of books, documents, and other things under their control, at any examination, investigation, or hearing in any part of the State.

history: (History: Enacted by Stats. 1951, Ch. 364.)

chapter: 5. Hearings

path: 6. ESCROW AGENTS > 5. Hearings


text:
(a) The commissioner may make such investigations as he or she deems necessary to determine whether any person has violated or is about to violate any provision of this division or any rule or order hereunder or to aid in the enforcement of this division. The commissioner may publish information concerning any violation of this division or any rule or order hereunder.

(b) In making any investigation authorized by subdivision (a), the commissioner may, for a reasonable time not exceeding 30 days, take possession of the books, records, accounts, and other papers pertaining to the business of any escrow agent or joint control agent and place a keeper in exclusive charge of them in the place where they are usually kept. During such possession no person shall remove or attempt to remove any of the books, records, accounts, or other papers except pursuant to a court order or with the consent of the commissioner. However, the directors, officers, partners, and employees of the escrow agent or joint control agent may examine the books, records, accounts, or other papers and the employees shall be permitted to make entries therein reflecting current transactions.

(c) For the purpose of any investigation or proceeding under this division, the commissioner or any officer designated by the commissioner may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the commissioner deems relevant or material to the inquiry.

(d) In case of contumacy by, or refusal to obey a subpoena issued to, any person, the superior court, upon application of the commissioner, may issue to the person an order requiring him or her to appear before the commissioner, or the officer designated by the commissioner, there to produce documentary evidence, if so ordered, or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt.

(e) No person is excused from attending and testifying or from producing any document or record before the commissioner, or in obedience to the subpoena of the commissioner, or any officer designated by the commissioner, or in any proceeding instituted by the commissioner, on the ground that the testimony or evidence (documentary or otherwise) required by the commissioner may tend to incriminate the person or subject him or her to a penalty or forfeiture. However, no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he or she is compelled, after validly claiming his or her privilege against self-incrimination, to testify or produce evidence (documentary or otherwise), except that the individual testimony is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

history: (History: Repealed and added by Stats. 1982, Ch. 663, Sec. 14.)


text: The authority to make or conduct any examination, investigation, or hearing, including the authority to administer oaths and to subpena witnesses, and to take their testimony may be delegated by the commissioner to any deputy, investigator, or auditor appointed by him for that purpose. The appointment shall be made by an instrument in writing, signed by the commissioner. Upon any examination, investigation, or hearing the instrument shall be produced by the deputy, investigator, or auditor at any time upon demand.


text: All hearings provided for in this division shall be conducted in accordance with the provisions of Chapter 5, Part 1, Division 3, Title 2, of the Government Code, and the commissioner has all the powers granted therein, except that a hearing held in accordance with Section 17604 may be presided over by a hearing officer qualified under Section 11502 of the Government Code, or by any deputy designated by the commissioner.

history: (History: Amended by Stats. 1953, Ch. 1076.)


text: Every order, decision, license or other official act of the commissioner is subject to review, in accordance with law.


text: Whenever it appears to the commissioner that any escrow agent subject to this division:(a) Is in an insolvent condition;(b) Is conducting escrow business in an unsafe or unauthorized manner;(c) Has violated its charter or any law of the State of California;(d) Refuses to submit its books, papers and affairs to the inspection of any examiner;(e) Neglects or refuses to observe any order of the commissioner made pursuant to the provisions of this division, within the time specified therein, unless the enforcement of such order is restrained in a proceeding brought by the escrow agent;(f) Any officer, director, or trustee of such escrow agent refuses to be examined upon oath touching the business of such escrow agent;(g) Any officer, director, stockholder, or trustee of such escrow agent, or attorney in fact of such escrow agent has embezzled, sequestered, or willfully diverted the assets or trust funds of such escrow agent;(h) Has permitted its tangible net worth to be lower than the minimum required by law;(i) Has failed to comply with the bonding requirements of Chapter 2 of this divisionthe commissioner shall dispatch a written notice and summary of findings, as referred to in Section 17415, to the principal officer of the escrow agent involved or to its manager of record; and such escrow agent shall be afforded a reasonable opportunity to comply or otherwise effect such remedies as the commissioner may deem acceptable. However, should the escrow agent so notified fail to comply within five days of receipt of the notice, or as soon as it appears to the commissioner that no compliance is possible, or in the event prompt delivery of the prescribed written notice is impossible, the commissioner may forthwith take possession of the property and business of such escrow agent and retain possession until such escrow agent resumes business or its affairs be finally liquidated as provided in this chapter. The escrow agent, with the consent of the commissioner, may resume business upon such conditions as the commissioner may prescribe.

history: (History: Amended by Stats. 1981, Ch. 773, Sec. 8.)

chapter: 6. Liquidation and Conservatorship

article: 1. Possession by Commissioner

path: 6. ESCROW AGENTS > 6. Liquidation and Conservatorship > 1. Possession by Commissioner


text: Whenever the commissioner has taken possession of any licensee, such licensee, within 10 days after such taking, if it deems it is aggrieved thereby, may apply to the superior court in the county in which the head office of the licensee is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination of the facts upon the merits may dismiss such application or enjoin the commissioner from further proceeding and direct him to surrender the property and business to the licensee, or make such further order as may be just.

history: (History: Added by Stats. 1963, Ch. 2130.)

article: 1. Possession by Commissioner


text: An appeal from a judgment enjoining the commissioner from further proceedings and directing the commissioner to surrender the business, property, and assets to the licensee does not operate as a stay of the judgment, unless the trial court in its discretion so orders. If the judgment dismisses the action an appeal therefrom does not operate as a stay of the judgment but the court rendering the judgment may, in its discretion enjoin the commissioner pending the appeal, from further proceedings and direct the commissioner, pending the appeal, to surrender the business, property, and assets to the licensee, if an undertaking is given as required by Chapter 2 (commencing with Section 916) of Title 13 of Part 2 of the Code of Civil Procedure.

history: (History: Amended by Stats. 1982, Ch. 517, Sec. 225.)

article: 1. Possession by Commissioner


text: If the commissioner’s demand for the possession of the property, business and assets is not complied with within 24 hours after service of the demand, the commissioner may call to his assistance the sheriff of the county in which the principal place of business of such licensee is located, by giving the sheriff written demand the sheriff shall enforce the demands of the commissioner.

article: 1. Possession by Commissioner


text: When the commissioner takes possession of the property, business and assets of any licensee, such licensee or the president and secretary of such licensee shall make and deliver to the commissioner verified schedules of its property, assets, and funds held in escrow. The commissioner may at any time examine under oath any licensee, or any officer, director, trustee, agent, or employee of such licensee, to determine whether or not all such property, assets, and funds held in escrow have been transferred and delivered to his possession.

article: 1. Possession by Commissioner


text: The commissioner may issue subpoenas and require the attendance of parties for examination under this article as provided for in this chapter.

history: (History: Amended by Stats. 2002, Ch. 772, Sec. 14. Effective January 1, 2003.)

article: 1. Possession by Commissioner


text: When the commissioner takes possession of the business, property, and assets of a licensee, he may appoint a custodian. The commissioner may require a good and sufficient bond from the custodian and place him in charge as his representative.

article: 1. Possession by Commissioner


text: When the commissioner takes possession of the property, business, and assets of a licensee, he may collect all money due to such licensee and give receipt therefor. The commissioner may do such other acts as are necessary or expedient to collect, conserve, or protect the licensee’s business, property, and assets.

article: 1. Possession by Commissioner


text: If any facts occur which would entitle the commissioner under Section 17621 to take possession of the property, business and assets of a licensee the commissioner may appoint a conservator of a licensee and require of him such bond as the commissioner deems proper. The commissioner may also, upon the request of the board of directors of a licensee, appoint a conservator of such licensee and require of him such bond as the commissioner deems proper. The conservator, under the direction of the commissioner, shall take possession of the property, business and assets of the licensee and take such action as he may deem necessary to conserve the assets of such licensee pending further disposition of its business. The conservator shall retain such possession until the property, business and assets of the licensee are returned to the licensee or until further order of the commissioner.

article: 2. Conservatorship

path: 6. ESCROW AGENTS > 6. Liquidation and Conservatorship > 2. Conservatorship


text: Subject to the other provisions of this article, a conservator, while in possession of the property, business and assets of a licensee, has the same powers and rights and is subject to the same duties and obligations as the commissioner while in possession of the property, business and assets of a licensee; and during such time the rights of a licensee and of all persons with respect thereto, subject to the other provisions of this article, are the same as if the commissioner had taken possession of such property, business and assets. A conservator, while in possession of the property, business and assets of a licensee, shall have all the rights, powers and privileges of the licensee, its officers and directors. All expenses of any such conservatorship shall be paid out of the assets of the licensee and shall be a lien thereon which shall be prior to any other lien. The conservator shall receive a salary, fixed by the commissioners, in an amount no greater than that which would be paid by the commissioner to a special deputy in charge of the liquidation of the licensee.

article: 2. Conservatorship


text: Upon appointing a conservator the commissioner shall cause to be made and completed at the earliest possible date such an examination of the affairs of the licensee as shall be necessary to inform him as to its financial condition.

article: 2. Conservatorship


text: A conservator, while in possession of the property, business and assets of a licensee, may call, upon the notice required by the licensee’s bylaws, a meeting of the investors of the licensee who are entitled to vote, for any purpose, including without limitation the election of a board of directors, and upon the holding of a meeting for such purpose the terms of office of all directors shall expire, or may call, upon the notice required by the licensee’s bylaws, a meeting of the board of directors for any purpose, including without limitation the filling of vacancies on the board of directors or the removal and election or the removal or election of officers. Each such meeting shall be supervised by the conservator.

article: 2. Conservatorship


text: If the commissioner becomes satisfied that it may be done safely and in the public interest, he may terminate the conservatorship and permit the licensee for which a conservator was appointed to resume its business under direction of its board of directors, subject to such terms, conditions, restrictions and limitations as he may prescribe.

article: 2. Conservatorship


text: If at any time after taking possession of the property and business of a licensee it shall appear to the commissioner that it would be futile to proceed as conservator with the conduct of the business of such person he may apply to the superior court of the county in which is located the principal office of such person in this State for an order to liquidate and wind up the business of said person. Upon a full hearing of such application, the court may make an order directing the winding up and liquidation of the business of such person by the commissioner, as liquidator.

article: 3. Liquidation by the Commissioner

path: 6. ESCROW AGENTS > 6. Liquidation and Conservatorship > 3. Liquidation by the Commissioner


text: Whenever the commissioner has taken possession of the property and business of a licensee he may petition the superior court for the appointment of a receiver to liquidate the affairs of the licensee.

article: 3. Liquidation by the Commissioner


text: The commissioner may appoint one or more special deputies to assist in the duties of liquidation and distribution under his direction and may also employ such special legal counsel, accountants, and assistants as may be needed and required and fix their salaries and compensation. All such salaries and compensation with other reasonable and necessary expenses as may be incurred in the liquidation shall be paid by the commissioner from the funds of the licensee in his hands. Such expenses shall include, among other things, that part of the salary of the commissioner and of his deputies, auditors, accountants, appraisers and other assistants, and that part of the general expenses of the commissioner’s office, as fairly represent, in the opinion of the commissioner, the proportion properly attributable to such liquidation.

article: 3. Liquidation by the Commissioner


text:
In liquidating the affairs of a licensee the commissioner may:

(a) Collect all money due to, and claims of, the licensee and give receipt therefor.

(b) Approve and pay all just and equitable claims.

(c) Commence and prosecute all actions and proceedings necessary to enforce liquidation.

(d) Compound bad or doubtful debts or claims, borrow money, sell, convey, or transfer real or personal property, on order of the superior court of the county in this State in which the principal office of the licensee is located. The order shall be made after hearing and on such notice as the court prescribes.

article: 3. Liquidation by the Commissioner


text:
After the issuance of an order of liquidation under Section 17635, any of the following transactions occurring within four months prior to the application for such order shall be voidable by the commissioner if such transaction has the effect of giving to or enabling any creditor of the licensee to obtain a preference over any other creditor, or to obtain a greater percentage of his debt than any other creditor:

(a) A transfer of property of the licensee.

(b) The creation of a lien upon the property of the licensee.

(c) The suffering of a judgment against such person.

article: 3. Liquidation by the Commissioner


text:
If the commissioner is in possession of the business, property, and assets of a licensee, whether or not he is liquidating the affairs of such licensee, the commissioner may:

(a) Apply to the superior court of the county in this State in which the principal office of the licensee is located for an order confirming any action taken by the commissioner, or authorizing the commissioner to do any act or execute any instrument not expressly authorized by this part. The order shall be given after a hearing on such notice as the court prescribes.

(b) Pay and discharge any secured claims against the licensee, whether or not such claims have been presented for payment. No secured claim shall be paid in an amount larger than the value of the security at the time of payment.

article: 3. Liquidation by the Commissioner


text: Claims for damages resulting from the disaffirmance of an executory contract or lease by the commissioner may be filed and allowed. No claim of a landlord for damages resulting from the disaffirmance of an unexpired lease of real property or under any covenant of such lease shall be allowed in an amount exceeding the rent reserved by the lease, without acceleration, for the year succeeding the date of the surrender of the premises plus the amount of any unpaid accrued rent without acceleration. Any such claim must be filed within 30 days of the date of such disaffirmance.

article: 3. Liquidation by the Commissioner


text: When the commissioner determines to liquidate a licensee, he shall cause an inventory of all the assets of the licensee to be made in duplicate, file the original with the court, and file the duplicate in his office.

article: 3. Liquidation by the Commissioner


text: When the commissioner determines to liquidate a licensee he shall cause notice to be given by publication once a week for four successive weeks in some newspaper of general circulation published at or near the principal place of business in this State of such licensee, to all persons having claims against the licensee as creditors, investors, or otherwise, requiring them to present and file their claims and make legal proof thereof at a place and within a time designated in such publication. The time shall be not less than six months after the first publication. Within 10 days after the first publication the commissioner shall cause a copy of such notice to be mailed to all persons whose names appear of record upon the licensee’s books as creditors, or as parties to an uncompleted escrow transaction.

article: 3. Liquidation by the Commissioner


text: All claims, demands, or causes of action of creditors, and persons other than the parties to an escrow transaction against the licensee or against any property owned or held by it in trust or otherwise, must be presented to the commissioner in writing, verified by the claimant, or someone in his behalf, within the period specified in the notice for the presentation of claims, whether or not an action is pending to enforce any such claim or demand. The commissioner shall not approve any claim not so presented, and any such claim, demand or cause of action not so presented is forever barred.

article: 3. Liquidation by the Commissioner


text: Upon the expiration of the time fixed for the presentation of claims, the commissioner shall prepare in duplicate a full and complete schedule of all claims presented, specifying by classes those that have been approved and those that have been disapproved and shall file the original with the court and the duplicate in his office.

article: 3. Liquidation by the Commissioner


text: Not later than five days after the time of filing the schedule of claims with the court, written notice shall be mailed to all claimants whose claims have been rejected. Action to enforce the payment of or to establish any rejected claim must be brought and service had within four months from and after the date of filing of the schedule of claims with the proper court or all such actions are forever barred.

article: 3. Liquidation by the Commissioner


text: Regardless of any law of this state, the judges of the superior court of the county in this state in which the principal office of the licensee is located may, whenever the judges deem it necessary or advisable, hold hearings relating to the sale, exchange, or other disposition of any real property or any personal property of the licensee regardless of the location of the property. The hearings shall be held at the county seat of any county in this state or at the places in the home county of the superior court at which sessions are held.

history: (History: Amended by Stats. 2003, Ch. 149, Sec. 12. Effective January 1, 2004.)

article: 3. Liquidation by the Commissioner


text: If it appears improbable that anything can be realized from any property of the licensee and that the cost of maintaining, preserving, or protecting the property would probably be lost, the court may direct the commissioner to abandon the property.

article: 3. Liquidation by the Commissioner


text: For the purpose of executing and performing any of the powers and duties conferred upon him by this article, the commissioner may in the name of the licensee or in his own name prosecute and defend any suit or other legal proceeding and may in the name of the licensee or in his own name as commissioner execute, acknowledge, and deliver any and all deeds, assignments, releases, requests for reconveyance, and other instruments necessary and proper to effectuate any sale of real or personal property or other transaction in connection with the liquidation of the licensee. Any deed, assignment, release, request for reconveyance, or other instrument executed pursuant to this section is valid and effectual for all purposes as though it was executed by the officers of such licensee with the authority of its board of directors.

article: 3. Liquidation by the Commissioner


text: If any real property of the licensee sold by the commissioner is located in a county other than the county in which the application to the court for permission to sell the property was made, the commissioner shall cause a certified copy of the order authorizing or ratifying such sale to be recorded in the office of the recorder of the county in which the real property is located.

article: 3. Liquidation by the Commissioner


text: When the commissioner has (a) fully liquidated all claims other than claims of stockholders, and (b) made due provision for any and all known but unclaimed liabilities, excepting claims of stockholders, and (c) paid all expenses of liquidation, then upon the written request of the holders of a majority of the stock of such licensee he shall deliver to the licensee or its trustees any surplus that then remains in his hands, together with all the records and effects. The licensee or its trustees shall have title to such surplus, records, and effects free from any claim of the commissioner.

article: 3. Liquidation by the Commissioner


text: Upon the payment of a final dividend in liquidation, the commissioner shall prepare and file with the court a full and final statement of the liquidation, including a summary of the receipts and disbursements, and a duplicate of such statement shall be filed in the office of the commissioner. After hearing and approval by the court, the liquidation shall be closed.

article: 3. Liquidation by the Commissioner


text: In making its order approving the commissioner’s final statement of the liquidation of a licensee, the court shall determine the amounts of the liquidating dividends to which claimants and investors are entitled but that then remain unpaid or unclaimed in the hands of the commissioner. The order of the court shall direct the commissioner to deposit the amounts with the Controller. All amounts so deposited shall be deemed to be deposited with the Controller under Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure, and may be recovered in the manner prescribed in that chapter.

history: (History: Amended by Stats. 1996, Ch. 860, Sec. 6. Effective January 1, 1997.)

article: 3. Liquidation by the Commissioner


text: The order of the court approving the final statement on liquidation shall provide for the destruction or other disposition of the books and records of the licensee or pertaining to the liquidation of the licensee, and the court may declare the licensee dissolved as a corporation.

article: 3. Liquidation by the Commissioner


text: Any person who willfully violates any provision of this division, or who willfully violates any rule or order under this division, shall, upon conviction, be fined not more than ten thousand dollars ($10,000), imprisoned in a county jail for not more than one year, imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or be punished by both that fine and imprisonment, but no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not preclude the commissioner from exercising the authority provided in Section 17423.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 109. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

chapter: 7. Crimes and Civil Penalties

path: 6. ESCROW AGENTS > 7. Crimes and Civil Penalties


text:
(a) Any person who violates any provision of this division, or who violates any rule or order under this division, shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the commissioner in any court of competent jurisdiction.

(b) As applied to the penalties for acts in violation of this division, the remedies provided by this section and by other sections of this division are not exclusive, and may be sought and employed in any combination to enforce the provisions of this division.

history: (History: Added by Stats. 1985, Ch. 1560, Sec. 42. Effective October 2, 1985.)


text: It is unlawful for any person to willfully make any untrue statement of a material fact in any application, notice, or report filed with the commissioner under this division or the regulations issued thereunder, or to willfully omit any material fact which is required to be stated in any application, notice, or report.

history: (History: Added by Stats. 1988, Ch. 1300, Sec. 2.)


text:
(a) It is unlawful for any person to knowingly alter, destroy, mutilate, conceal, cover up, falsify, or make a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the administration or enforcement of any provision of this division.

(b) It is unlawful for any person to knowingly make an untrue statement to the commissioner during the course of licensing, investigation, or examination, with the intent to impede, obstruct, or influence the administration or enforcement of any provision of this division.

history: (History: Added by Stats. 2007, Ch. 101, Sec. 17. Effective January 1, 2008.)


text: This division shall be known and may be cited as the “Industrial Loan Law,” the “Industrial Banking Law,” or the “Thrift and Loan Law.”

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 2. Effective January 1, 1999.)

division: 7. INDUSTRIAL LOAN COMPANIES

chapter: 1. General Provisions

article: 1. Definitions

path: 7. INDUSTRIAL LOAN COMPANIES > 1. General Provisions > 1. Definitions


text: The definitions given in this article govern the construction of this division unless the context otherwise requires.

history: (History: Repealed and added by Stats. 1976, Ch. 964.)

article: 1. Definitions


text: “Commissioner” means the Commissioner of Financial Protection and Innovation.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 127. (SB 1498) Effective January 1, 2023.)

article: 1. Definitions


text: “Department” means the Department of Financial Protection and Innovation.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 128. (SB 1498) Effective January 1, 2023.)

article: 1. Definitions


text: “Industrial loan company,” “thrift and loan company,” or “company” as used in this division means a premium finance agency as defined in Section 18560. Notwithstanding any other provision of this chapter, these terms and this division do not apply to an industrial bank subject to, and governed by, Chapter 15 (commencing with Section 1530) of Division 1.1.

history: (History: Amended by Stats. 2013, Ch. 334, Sec. 66. (SB 537) Effective January 1, 2014.)

article: 1. Definitions


text: “Investment and loan” means an industrial loan company.

history: (History: Added by Stats. 1990, Ch. 623, Sec. 2.)

article: 1. Definitions


text:
(a)Any reference in a provision of any statute or regulation of this state to an industrial loan company or a thrift and loan company means an insurance premium finance agency as defined in Section 18560.

(b) Subdivision (a) does not apply in any of the following cases:

(1) In case the provision or a related provision expressly provides otherwise.

(2) In the case of any provision of Division 1 (commencing with Section 99) or Division 1.5 (commencing with Section 4800).

history: (History: Added by Stats. 2000, Ch. 1015, Sec. 52. Effective September 30, 2000.)

article: 1. Definitions


text:
(a) When used with respect to an industrial loan company, “insured” means an industrial loan company that is insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).

(b) When used with respect to an investment certificate, “insured” means an investment certificate that is insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).

history: (History: Repealed and added by Stats. 1998, Ch. 827, Sec. 4. Effective January 1, 1999.)

article: 1. Definitions


text: “Certificate of deposit” as that term is used by an industrial loan company licensed under this division means an investment certificate representing the obligation of an industrial loan company to repay a nondemand deposit as deposit is defined in Section 3(1) of the Federal Deposit Insurance Act.

history: (History: Added by Stats. 1994, Ch. 129, Sec. 1. Effective January 1, 1995.)

article: 1. Definitions


text: “Demand deposit” means investment or thrift certificates in account, passbook, or certificate form which are redeemable and payable upon demand to the owner.

history: (History: Added by Stats. 1999, Ch. 345, Sec. 1. Effective January 1, 2000.)

article: 1. Definitions


text: “Borrower” means the person receiving the proceeds or benefits of a loan.

article: 1. Definitions


text: “Consumer loan or consumer obligation” means a loan made to, or an obligation incurred by, a natural person in which the money loaned, or the property delivered or service rendered under the obligation is primarily for personal, family, or household purposes.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 1. Definitions


text: “Primarily secured by real property”, as used in this division, means the fair market value of the real property less prior encumbrances, at the time the loan is made or other obligation is acquired, is more than 50 percent of the principal amount owing on the loan or obligation.

article: 1. Definitions


text: “Charges”, as used in this division, include the aggregate interest, fees, bonuses, commissions, brokerage, discounts, expenses, and other forms of costs charged, contracted for, or received by an industrial loan company or any other person in connection with the investigating, arranging, negotiating, procuring, guaranteeing, making, servicing, collecting, or enforcing of a loan, or for forbearance of money, credit, goods, things in action, or any other service or services rendered.

article: 1. Definitions


text: “Charges” also include any profit or advantage of any kind that any person may contract for, collect, receive, or in any manner obtain by a collateral sale, purchase, or agreement, in connection with the negotiating, arranging, making, or otherwise in connection with any loan, except commissions received on insurance sold as provided in this division.

article: 1. Definitions


text: “Principal amount”, as used in this division, means the net amount of money, credit, goods, or things in action received by the debtor or borrower or disbursed on the borrower’s instructions at the time of entering into the transaction.

article: 1. Definitions


text: “Principal balance”, and “face amount” as used in this division, means the unpaid balance of a loan or other obligation.

history: (History: Amended by Stats. 1979, Ch. 270.)

article: 1. Definitions


text: “Affiliated company”, as used in this division, is a company under substantially the same management or control, directly or indirectly, as the industrial loan company.

article: 1. Definitions


text: “Affiliate” means an affiliated company or a person who, directly or indirectly, controls over 10 percent of the voting stock of an industrial loan company.

history: (History: Added by Stats. 1996, Ch. 467, Sec. 1. Effective January 1, 1997.)

article: 1. Definitions


text: “Corporate Securities Law” means the Corporate Securities Law of 1968, Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code.

article: 1. Definitions


text: “Outstanding loans and obligations,” as used in this division, means total outstanding loans and obligations, including lease obligations, less unearned interest or charges, unearned discount, reserve or allowance for losses, and other applicable allowances or deductions as determined by regulation of the commissioner.

history: (History: Amended by Stats. 1979, Ch. 911.)

article: 1. Definitions


text: “Obligation” as used in Sections 18265, 18271, 18272, and 18343 includes lease obligations as authorized by Section 18310.

history: (History: Added by Stats. 1979, Ch. 911.)

article: 1. Definitions


text: “Lease obligation” as used in this division, means a lease contract entered into by an industrial loan company as lessor.

article: 1. Definitions


text: “Investment certificates ratio”, as used in this division, means the ratio of the aggregate sum of all of the outstanding investment certificates, exclusive of those hypothecated with the company issuing them, of a company to the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus declared not available for dividends pursuant to Section 18319.

history: (History: Added by renumbering Section 18373 by Stats. 1985, Ch. 142, Sec. 7. Effective July 1, 1985.)

article: 1. Definitions


text: “Premium finance agency” has the meaning set forth in Section 18560.

history: (History: Added by Stats. 1998, Ch. 827, Sec. 5. Effective January 1, 1999.)

article: 1. Definitions


text: “Assets,” as used in this division, means all assets excluding intangibles.

history: (History: Added by Stats. 1986, Ch. 680, Sec. 1.)

article: 1. Definitions


text:
“Capital,” as used in this division, consists of all of the following:

(a) Capital stock.

(b) Primary capital to the extent not included in capital stock.

(c) Secondary capital.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Primary capital,” as used in this division, means the sum of common stock, perpetual preferred stock, capital surplus, undivided profits, capital reserves, and mandatory convertible debt (to the extent of 20 percent of primary capital exclusive of that debt).

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.1. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Secondary capital,” as used in this division, means the sum of mandatory convertible debt that is not included in primary capital, limited life preferred stock, and subordinated notes and debentures, all in an amount up to 50 percent of primary capital. Issues of limited life preferred stock and subordinated notes and debentures, except mandatory convertible debt, shall have original weighted average maturities of at least seven years to be included within capital surplus under primary capital.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.2. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Perpetual preferred stock,” as used in this division, means a preferred stock that does not have a stated maturity date or that can not be redeemed at the option of the holder. It includes those issues of preferred stock that automatically convert into common stock at a stated date. It excludes those issues, the rate on which increases, or can increase, in such a manner that would effectively require the issuer to redeem the issue.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.3. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Mandatory convertible debt,” as used in this division, means a subordinated debt instrument which requires the issuer to convert that instrument into common or perpetual preferred stock by a date at or before the maturity of the debt instrument. The maturity of those instruments shall be 12 years or less.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.4. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Limited life preferred,” as used in this division, means preferred stock which has a maturity or which may be redeemed at the option of the holder.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.5. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text:
“Subordinated notes and debentures,” as used in this division, means an obligation other than an investment certificate obligation that:

(a) Bears on its face, in boldface type no smaller than the largest size type used in the obligation, the following: “this obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation.”

(b) (1) Has a maturity of at least seven years, or (2) in the case of an obligation or issue that provides for scheduled repayments of principal, has an average maturity of at least seven years; however, the commissioner may permit the issuance of an obligation or issue with a shorter maturity or average maturity if the commissioner has determined that exigent circumstances require the issuance of that obligation or issue. This subdivision shall not apply to mandatory convertible obligations or issues.

(c) States expressly that the obligation is subordinated and junior in right of payment to the issuing industrial loan company’s obligations to its investment certificate holders and to the industrial loan company’s other obligations to its general and secured creditors, and is ineligible as collateral for a loan by the issuing industrial loan company.

(d) Is unsecured.

(e) States expressly that the issuing industrial loan company may not retire any part of its obligation without the prior written consent of the commissioner.

(f) Includes, if the obligation is issued to a depository institution, a specific waiver of the right of offset by the lending depository institution.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 1.6. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: “Capital Stock,” as used in this division, means one-class voting common stock.

history: (History: Added by Stats. 1989, Ch. 663, Sec. 2. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. Definitions


text: An industrial loan company shall not appoint or continue in office any officer, director or management personnel who do not have the qualifications required by Section 18117 (d).

article: 2. General Provisions

path: 7. INDUSTRIAL LOAN COMPANIES > 1. General Provisions > 2. General Provisions


text:
(a) An industrial loan company shall not deposit its funds except with a bank, trust company, or savings association authorized to do business in this state, except as provided in subdivision (b).

(b) An industrial loan company which is insured, as that term is defined in Section 18003.5, may also deposit its funds in an out-of-state financial institution, the accounts of which are insured by the Federal Deposit Insurance Corporation.

(c) Funds deposited in an out-of-state financial institution shall not in any case exceed the applicable amount of federal deposit insurance.

(d) The depository shall be approved by a majority vote of the board of directors or the executive committee, exclusive of the vote of any director who is an officer, director, trustee, or shareholder of the depository so designated. An out-of-state savings association subject to the Management Consignment Program of the Office of Thrift Supervision shall not be used as a depository.

(e) An industrial loan company shall furnish an authorization for disclosure to the commissioner of the financial records of deposits pursuant to Section 7473 of the Government Code. No deposit shall be made in an out-of-state financial institution unless that institution agrees in writing to disclose financial records of the industrial loan company to the commissioner.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 583. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. General Provisions


text: No industrial loan company shall invest any of its funds, except as authorized in this division. Industrial loan companies may invest their funds in investments that are legal investments for commercial banks, including the capital stock, obligations, or other securities of one or more corporations, subject to rules and orders prescribed by the commissioner. Companies may also invest their funds in the choses in action issued by any other industrial loan company.

history: (History: Amended by Stats. 1996, Ch. 223, Sec. 1. Effective January 1, 1997.)

article: 2. General Provisions


text:
(a) An industrial loan company may organize, sponsor, operate, control, or render investment advice to, an investment company, or underwrite, distribute, or sell securities of any investment company which has qualified to sell its securities in this state pursuant to Part 2 (commencing with Section 25100) of Division 1, Title 4 of the Corporations Code, if the officers and employees of the industrial loan company who sell these securities meet such standards with respect to training experience, and sales practices as established by the commissioner or the commissioner’s designee. For the purpose of this section, “investment company” means an investment company as defined in the Investment Company Act of 1940 (15 U.S.C., Sec. 80a-1 et seq.).

(b) The amendments made to this section by the act adding this subdivision shall become operative on July 1, 2026.

history: (History: Amended by Stats. 2026, Ch. 28, Sec. 19. (SB 170) Effective June 29, 2026. Operative July 1, 2026, by its own provisions.)

article: 2. General Provisions


text: If an industrial loan company has investment or thrift certificates outstanding, then such company shall not borrow, except by the sale of investment or thrift certificates, in an amount in excess of 300 percent of the amount represented by its outstanding capital stock, surplus and undivided profits, without the written consent of the commissioner. All sums so borrowed in excess of 150 percent of outstanding capital stock, surplus and undivided profits shall be unsecured borrowings or, if secured, approved in writing by the commissioner in advance of the borrowings, and be included as investment or thrift certificates for purposes of computing the ratio allowed under Sections 18319 and 18320.

history: (History: Amended by Stats. 1985, Ch. 142, Sec. 1. Effective July 1, 1985.)

article: 2. General Provisions


text: In addition to the borrowings under Section 18023, an industrial loan company may borrow funds from the Federal Home Loan Bank, the Federal Deposit Insurance Corporation, or a Federal Reserve Bank, which borrowed funds shall not be included in the borrowing limitations contained in Section 18023.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 6. Effective January 1, 1999.)

article: 2. General Provisions


text: An industrial loan company shall not transact business or make any loan provided for by this division under any other name than that set forth in the articles of incorporation as filed with the commissioner.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 2. General Provisions


text: No person shall use a holding company or any other device for the purpose of evading or avoiding any of the provisions of this division. This section shall not affect the right of a holding company to issue preferred stock or debentures when permitted to do so under the Corporate Securities Law of 1968. “Holding company” means any company which directly or through one or more intervening subsidiaries, whether or not wholly owned, controls or has the power to control a majority of the shares of an industrial loan company.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 1.)

article: 2. General Provisions


text: Corporations subject to this division are not subject to the provisions or regulations of the California Financing Law (Division 9 (commencing with Section 22000)).

history: (History: Amended by Stats. 2020, Ch. 370, Sec. 117. (SB 1371) Effective January 1, 2021.)

article: 2. General Provisions


text: All corporations formed under the provisions of this division are taxed in the same manner and at the same rates as other corporations are taxed pursuant to Section 27 of Article XIII of the Constitution of this state.

history: (History: Amended by Stats. 1983, Ch. 725, Sec. 1.)

article: 2. General Provisions


text: Each industrial loan company shall keep and use in its business, books, accounts, and records which will enable the commissioner to determine if the company is complying with the provisions of this division and with the rules and regulations made by the commissioner.

article: 2. General Provisions


text: Each industrial loan company shall preserve the books, accounts, and records, including cards used in the card system, if any, for a least two years after making the final entry on any loan or purchased obligation recorded therein.

article: 2. General Provisions


text:
An industrial loan company may purchase, hold and convey real property for the following purposes only:

(a) Real property conveyed to it in satisfaction of debts previously contracted in the course of its business.

(b) Real property purchased at sale under judgments, decrees or mortgage foreclosures or foreclosures of or trustees’ sales under deeds of trust under securities held by it. No company shall bid at any such sale a larger amount than is necessary to satisfy its debt and costs.

(c) Real property necessary as premises for the transaction of its business. No company shall invest directly or indirectly an amount exceeding one-third of its paid-up capital stock and surplus not available for dividends as provided in Section 18319 in the lot and building in which the business of the company is carried on, leasehold improvements, furniture, fixtures, vaults, automobiles, and other personal property, necessary and proper to carry on its business.

(d) The provisions of this section shall not apply to property acquired and held for lease pursuant to Section 18310.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 3. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 3. Real Property Held

path: 7. INDUSTRIAL LOAN COMPANIES > 1. General Provisions > 3. Real Property Held


text:
(a) The commissioner may establish rules and regulations regarding the sale of any real property acquired pursuant to subdivision (a) or (b) of Section 18040, consistent with what constitutes sound business practices for industrial loan companies.

(b) Real property acquired pursuant to subdivision (a) or (b) of Section 18040 shall not be held for a longer period than five years without the written consent of the commissioner.

history: (History: Amended by Stats. 1984, Ch. 873, Sec. 1.)

article: 3. Real Property Held


text: The authority of a three-fourths vote of all the directors is necessary to authorize the purchase of a lot and building necessary as premises for the transaction of business as an industrial loan company or to authorize the construction of such building.

article: 3. Real Property Held


text: Real property held by an industrial loan company shall be conveyed by an instrument under the corporate seal of the corporation, signed by the president or vice president, and the secretary or assistant secretary.

article: 3. Real Property Held


text: No person shall advertise, print, display, publish, distribute, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner in connection with the business of an industrial loan company any statement or representation with regard to the rates, terms, or conditions for making or negotiating loans, or with regard to investment certificates, which is false, misleading, or deceptive.

article: 4. Advertising

path: 7. INDUSTRIAL LOAN COMPANIES > 1. General Provisions > 4. Advertising


text: An industrial loan company shall not use any advertising which refers to the supervision of such company by the state or any department or official thereof.

article: 4. Advertising


text: An industrial loan company shall not use any advertising nor make any representations which indicate, imply or might lead a person to believe that the company is a savings association.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 585. Effective January 1, 1997. Operative July 1, 1997.)

article: 4. Advertising


text: An industrial loan company shall not use any advertising nor make any representations which indicate, infer or might lead a person to believe that investment certificates are insured unless such is the fact.

article: 4. Advertising


text:
(a) Except as provided in subdivision (b), industrial loan company which issues thrift certificates shall not use any thrift advertisement which refers to the industrial loan company’s ownership by, or affiliation with, any other entity unless the advertisement also discloses in as prominent a manner and as large a type size as the referenced ownership or affiliation was stated, whether or not the owner or affiliate so named guarantees thrift certificates issued by the industrial loan company.

(b) (1) Subdivision (a) applies to an insured company when the other entity guarantees the thrift certificates issued by the insured company.

(2) Subdivision (a) does not apply to an insured company when the other entity does not guarantee the thrift certificates issued by the insured company and the advertisement referring to the insured company’s ownership by, or affiliation with, the other entity does not state or imply that the assets or reserves of the other entity may be used to guarantee thrift certificates of the insured company.

history: (History: Amended by Stats. 1986, Ch. 1011, Sec. 2. Effective September 23, 1986.)

article: 4. Advertising


text: If an industrial loan company refers in any advertisement to rates of charge, discount, charges or costs of loans, those charges shall be stated fully and clearly in a manner as may be necessary to prevent misunderstanding thereof by prospective borrowers and to give adequate information to prospective borrowers. If the rates or costs advertised do not apply to loans of all classes, this fact shall be clearly indicated in the advertisement.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 8. Effective January 1, 1999.)

article: 4. Advertising


text: An industrial loan company shall not use any advertisement after its use has been disapproved by the commissioner and the industrial loan company has been notified in writing of the disapproval. Commencing July 1, 1990, the commissioner may require a company to obtain written or oral approval of any advertisement for investment or thrift certificates prior to publication thereof in order to avoid false, misleading, or deceptive advertising.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 173. Effective January 1, 2007.)

article: 4. Advertising


text: The commissioner may require an industrial loan company to maintain a file of all advertising copy for a period of 12 months from the date of its use. The file shall be available to the commissioner upon request.

article: 4. Advertising


text: When authorized by the commissioner as provided in this chapter, a corporation may be organized under the laws of this state, or an existing California corporation may amend its articles of incorporation, to engage in an industrial loan business. Except as otherwise provided in this division, an industrial loan company may be incorporated pursuant to Division 1 (commencing with Section 100), Title 1, of the Corporations Code.

chapter: 2. Formation and Organization

article: 1. General

path: 7. INDUSTRIAL LOAN COMPANIES > 2. Formation and Organization > 1. General


text: Each industrial loan company, other than a premium finance agency, that has issued and has outstanding thrift obligations shall, as a condition to its authority to conduct business under this division, participate as a member of the Federal Deposit Insurance Corporation.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 9. Effective January 1, 1999.)

article: 1. General


text: If the commissioner approves an application to engage in business as an industrial loan company filed pursuant to Article 2 (commencing with Section 18115) of this chapter, he shall issue a certificate in duplicate authorizing the organization of the corporation, or the amendment of its articles of incorporation, and specifying the date on which, and the conditions under which, it may commence business as an industrial loan company, including the place where it will be located.

article: 1. General


text: Upon filing an application for approval of proposed articles of incorporation with the commissioner, or upon filing an amendment to the articles of a proposed industrial loan company changing the name of an existing corporation, the incorporators shall file an application for a certificate of reservation of the name of the proposed company as set forth in the articles of incorporation with the Secretary of State pursuant to Section 201 of the Corporations Code. The application filed with the Secretary of State shall recite the fact of the pendency of the application and the Secretary of State shall issue a certificate of reservation upon such an application for a certificate and upon payment of any required fee. Notwithstanding the provisions of Section 201 of the Corporations Code, the name contained in the certificate of reservation shall be reserved to the applicant until the commissioner refuses to issue a certificate of approval or, if a certificate is issued, as long as a certificate continues in force or effect, or for a period of up to one year from the date when the application is filed in accordance with this article, pending the applicant’s fulfillment of any requirements precedent to opening for business. The Secretary of State may, upon the request of the applicant and the approval of the commissioner, extend the reservation of the name for an additional six months.

history: (History: Added by Stats. 1980, Ch. 428, Sec. 1.)

article: 1. General


text: Companies authorized to engage in the industrial loan business after the effective date of the act which added this section shall have the words “industrial loan company,” “investment and loan,” “thrift company,” “thrift and loan company,” or “bank” as part of the company name included in the articles of incorporation.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 586. Effective January 1, 1997. Operative July 1, 1997.)

article: 1. General


text: The articles of incorporation of an industrial loan company, in addition to the statement required by subdivision (b) of Section 202 of the Corporations Code, shall expressly state that its purpose is to engage in an industrial loan business pursuant to this division. The Secretary of State shall not file articles for the incorporation of an industrial loan company or an amendment to the articles of an existing corporation to engage in an industrial loan business unless there is filed with the Secretary of State a duplicate of the certificate issued by the commissioner pursuant to Section 18101.

history: (History: Amended by Stats. 1980, Ch. 478, Sec. 4.)

article: 1. General


text: An industrial loan company’s certificate to engage in the industrial loan business is not transferable or assignable.

article: 1. General


text:
Except as otherwise authorized under existing law, no person, unless lawfully authorized to do business in this state under the provisions of this division and who is actually engaged in carrying on an industrial loan business, shall:

(a) Do business under any name or title that contains the following terms:

(1) “Industrial Loan Company.”

(2) “Investment and Loan Company.”

(3) “Thrift Company.”

(4) “Thrift and Loan Company.”

(b) Use any name or sign, or circulate or use any letterhead, billhead, circular, or paper, whatever, or advertise or represent in any manner that indicates or reasonably implies that the business is the character or kind of business carried on or transacted by an industrial loan business or is likely to lead any person to believe that the business is that of an industrial loan company.

history: (History: Amended by Stats. 1992, Ch. 427, Sec. 35. Effective January 1, 1993.)

article: 1. General