California Regulations
Comprehensive guide to seller financing laws, usury limits, and disclosure requirements in California.
Maximum Interest Rate
10%
Business exemptions may apply
Maximum Rate
10%
Penalty Type
Treble (3x) damages
Notes
Article XV of CA Constitution. Rate is 10% or 5% + Federal Reserve discount rate, whichever is greater. Severe penalties including treble damages.
Business Exemption
Loans arranged by licensed real estate brokers or DFPI-licensed lenders are exempt. Business purpose loans are also generally exempt.
Required Disclosures
- Transfer Disclosure Statement (TDS)
- Natural Hazard Disclosure (NHD)
- Lead-based paint disclosure (pre-1978)
- Seller Financing Addendum (CAR Form SFA)
- Megan's Law disclosure
Licensing Required
No license required for occasional seller financing of own property. Arranger of credit rules may apply if assisting others.
Balloon Payment Rules
Restricted for owner-occupied 1-4 unit residential properties under Civil Code 2957
Prepayment Penalty Rules
Restricted for owner-occupied residential loans
- California Civil Code Section 2956-2967 (seller financing disclosures)
- California Finance Lenders Law exemptions
- Rosenthal Fair Debt Collection Practices Act
- Deed of Trust state
- Non-judicial foreclosure (trustee sale) is common
- Anti-deficiency rules protect borrowers on purchase money loans
- 3-month minimum foreclosure timeline
Legal Disclaimer
This information about California regulations is provided for educational purposes only and does not constitute legal or tax advice. Laws change frequently and vary by county and municipality. Always verify current regulations with a licensed California attorney before entering into any seller financing arrangement.