Governor Arnold Schwarzenegger signed Senate Bill 306 (SB 306) into law on August 5, 2009.
SB 306 requires a beneficiary to prepare and deliver a response within 21 days of the receipt of a short-pay request. This requirement is conditioned on the existence of an existing contract to purchase the property, prepared in response to a request from an entitled person or authorized agent, setting forth an amount less than the outstanding debt, together with any terms and conditions, under which the beneficiary would execute and deliver a reconveyance of the deed of trust.
The bill provides that a short-pay agreement is made in writing, by which the beneficiary agrees to release its lien on a property in return for payment of an amount less than the secured obligation.
SB 306 permits a beneficiary to refuse to provide a short-pay demand statement, but does require that the beneficiary provide a written statement indicating that they have elected not to proceed.
SB 306 provides that if the terms and conditions of the agreement require approval by the beneficiary, approval or disapproval shall be provided not more than 4 days after receipt by the beneficiary of the closing statement, shall be deemed approved, except as specified.
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