Code Section Group

Financial Code - FIN

DIVISION 1.1. BANKING [1000 - 1910]

  ( Division 1.1 added by Stats. 2011, Ch. 243, Sec. 3. )

CHAPTER 12. Deposits [1400 - 1440]

  ( Chapter 12 added by Stats. 2011, Ch. 243, Sec. 3. )

ARTICLE 1. Depositors [1400 - 1411]
  ( Article 1 added by Stats. 2011, Ch. 243, Sec. 3. )

1400.
  

A bank account by or in the name of a minor shall be held for the exclusive right and benefit of such minor and shall be paid to such minor or to his order and payment so made is a valid release and discharge to the bank for such deposit or any part thereof.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1401.
  

A bank account by or in the name of a married person shall be held for the exclusive right and benefit of the person, shall be free from the control or lien of any other person except a creditor, and shall be paid to the person or to the order of the person, and payment so made is a valid and sufficient release and discharge to the bank for the deposit or any part thereof.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1402.
  

A bank account that is a multiple-party account as defined in Section 5132 of the Probate Code is governed by Part 2 (commencing with Section 5100) of Division 5 of the Probate Code.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1403.
  

No bank, directly or indirectly, by any device whatever, shall pay any interest on any demand deposit except to the extent that the payment of interest on demand deposits is permitted to member banks of the Federal Reserve System or to banks whose deposits are insured by the Federal Deposit Insurance Corporation or any successor federal agency insuring bank deposits. This section shall not apply to any deposit which is payable only at an office of the bank located outside of the states of the United States and the District of Columbia.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1404.
  

Notwithstanding Section 10145 of the Business and Professions Code or any other provision of law, but subject to the limitations of Section 854, benefits accruing from the placement in a noninterest bearing account of a financial institution of funds received by a real estate broker who collects payments or provides services in connection with a loan secured by a lien on real property under subdivision (d) of Section 10131 or Section 10131.1 of the Business and Professions Code shall inure to the broker, unless otherwise agreed in writing by the broker and the lender or note owner on the loan. A borrower shall receive at least 2 percent simple interest per annum on impound account payments covered by Section 2954.8 of the Civil Code. For purposes of this section “financial institution” means any institution the business of which is engaging in financial activities as described in Section 1843(k) of Title 12 of the United States Code.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1405.
  

(a) Notwithstanding Section 10145 of the Business and Professions Code or any other provision of law, benefits accruing from the placement in an interest bearing account of a financial institution of funds received by a real estate broker, as defined in Section 10131 of the Business and Professions Code, who collects payments or provides services for an institutional investor in connection with a loan secured by commercial real property may inure to the real estate broker, if agreed to in writing by the real estate broker and that institutional investor as to that loan.

(b) For purposes of this section, the following definitions shall apply:

(1) “Commercial real property” means real estate improved with other than a one-to-four family residence.

(2) “Financial institution” means any institution the business of which is engaging in financial activities as described in Section 1843(k) of Title 12 of the United States Code.

(3) “Institutional investor” has the meaning set forth in subdivision (i) of Section 50003.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1406.
  

(a) In this section:

(1) “Creditor” includes, but is not limited to, a depositor.

(2) “Insolvency,” when used with respect to a bank, means that the bank is unable to pay its debts as they come due.

(b) This section does not apply to any of the following:

(1) Any transaction authorized under Section 1463 or 1465.

(2) Any transaction made by a bank in the ordinary course of its business.

(c) No bank may pay or secure a creditor if the bank does so (1) after committing an act of insolvency or in contemplation of insolvency and (2) with a view to preventing the application of its assets in the manner prescribed in Chapter 7 (commencing with Section 600) of Division 1 or with a view to the preference of one creditor to another.

(d) Any transaction made by a bank in violation of this section is void.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1407.
  

An overdraft of more than 90 days standing shall not be allowed as an asset of any bank.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1408.
  

A bank may act as a depositary, paying agent, trustee, or fiscal agent for the holding or handling of public funds or securities notwithstanding the fact that a member of the legislative body or an officer or employee of the depositor is an officer, employee, or stockholder of such bank, or of a holding company that owns any of the stock of such bank. Such member of a legislative body, or such officer or employee thereof, shall not be deemed “interested in any contract” as that phrase is used in Section 1090 of the Government Code, if his sole interest is the fact that he is an officer, employee, or stockholder of the bank selected to act as such depositary, paying agent or fiscal agent.

An officer or employee of a local public agency shall be deemed to have only a “remote interest” in a contract, as that phrase is used in Section 1091 of the Government Code, where such contract is entered into without competitive bidding under a procedure established by law, if his sole interest is that of an officer, director, or employee, of a bank, bank holding company, or savings and loan association with which a party to the contract has the relationship of borrower or depositor, debtor or creditor, and if the conditions of subdivision (a) of Section 1091 of the Government Code are met.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1409.
  

When a statement of account has been rendered by a bank to a depositor accompanied by vouchers, if any, which are the basis for debit entries in such account, such account shall, after the period of four years from the date of its rendition, in the event no objection thereto has been theretofore made by the depositor, be deemed finally adjusted and settled and its correctness conclusively presumed and such depositor shall thereafter be barred from questioning the correctness of such account for any cause.

A statement of account within the meaning of this section shall be deemed to have been rendered on a savings or time account when the bank, by making a notation in the depositor’s bank book or in some other manner reasonably calculated to give notice thereof to the depositor indicates that a certain sum is the correct balance of the account.

Nothing herein shall be construed to relieve the depositor from the duty now imposed by law of exercising due diligence in the examination of such account and vouchers, if any, when rendered by the bank and of immediate notification to the bank upon discovery of any error therein, nor from the legal consequences of neglect of such duty; nor to prevent the application of subsection (3) of Section 340 of the Code of Civil Procedure to cases governed thereby.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1410.
  

(a) No bank shall impose any charge on a savings account or on a depositor for the failure of a depositor to deposit, or for the late deposit of, any agreed periodic installment deposit into that account. A bank shall pay interest on savings accounts as to which a depositor has agreed to make periodic installment deposits at a rate of interest per annum that is not less than the lowest rate paid on other types of savings deposits.

(b) As used in this section “savings account” means a Christmas club account, a vacation club account, or other similar periodic installment deposit account maintained by a natural person, irrespective of its classification as a savings deposit or time deposit open account for purposes of state or federal law or regulations.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

1411.
  

(a) For the purposes of this section:

(1) “Customer” means one or more natural persons.

(2) “Debt” means an interest-bearing obligation or an obligation which by its terms is payable in installments, which has not been reduced to judgment, arising from an extension of credit to a natural person primarily for personal, family, or household purposes, and does not mean a charge for bank services or a debit for uncollected funds or for an overdraft of an account imposed by a bank on a deposit account.

(b) A bank is limited in exercising any setoff for a debt claimed to be owed to the bank by a customer in that a setoff shall not result in an aggregate balance of less than one thousand dollars ($1,000) as shown on the records of the bank for all demand deposit accounts maintained by a customer with the bank or any branch thereof.

(c) Not later than the day following the exercise of any setoff with respect to a deposit account for any debt claimed to be owed to the bank by a customer, the bank shall deliver to each customer personally or send by first-class mail postage prepaid to the address of each customer as shown on the records of the bank a written notice in at least 10-point type containing the following:

(1) A statement that the bank has set off a debt or a portion thereof against the customer’s deposit account, identifying the account, and giving the respective balances before and after the setoff.

(2) A statement identifying the debt set off against the account and giving the respective balances due before and after the setoff.

(3) A statement that if the customer claims that the debt has been paid or is not now owing, or that the funds in the deposit account consist of moneys expressly exempt pursuant to Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure, and listed in the notice, the customer may execute and return the notice to the bank by mail at the address shown or personally to the bank branch where the customer’s account is maintained not later than 20 days after the date of mailing or personal delivery.

(4) A statement that if the notice is executed and returned, the bank may file an action in court to collect the debt; that if a lawsuit is filed, the customer will be notified and have an opportunity to appear and defend; and that if the bank is successful, the customer will be liable for court costs, and attorney’s fees, if the debt so provides.

(5) A response form in at least 10-point type containing substantially the following:

“The debt described in the Notice of Setoff received from the
bank is ____ is not ____ my debt or the debt of another
person in whose name the account is maintained.

 “I claim that the debt:

has been paid.

is not now owing.

is not subject to setoff because the money in the account is:

 

Paid earnings (CCP 704.070)

 

Proceeds from execution sale of or insurance for loss
of a motor vehicle (CCP 704.010)

 

Proceeds from execution sale of household furnishings
or other personal effects (CCP 704.020)

 

Relocation benefits (CCP 704.180)

 

Life insurance proceeds (CCP 704.100)

 

Disability and health insurance benefits (CCP
704.130)

 

Workers’ compensation benefits (CCP 704.160)

 

Unemployment or strike benefits (CCP 704.120)

 

Retirement benefits including, but not limited to,
social security benefits (CCP 704.080, 704.110,
704.115)

 

Public assistance benefits including welfare payments
and supplemental security income (SSI) or charitable
aid (CCP 704.170)

 

Proceeds from sale of or insurance for damage or
destruction of a dwelling (CCP 704.720, CCP 704.960)

 

Proceeds from execution sale of or insurance for loss
of tools of a trade (CCP 704.060)

 

Award of damages for personal injury (CCP 704.140)
or wrongful death (CCP 704.150)

 

Financial aid paid by an institution of higher
education to a student for expenses while attending
school (CCP 704.190)


“I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct.

Date:

Signed: ”

 

(Customer)

(d) If the response form described in subdivision (c) executed by the customer is received by the bank not later than 20 days after the date of mailing or personal delivery of the written notice, the amount of the setoff for any debt claimed to be owed to the bank by a customer, and any bank service charges resulting from the setoff, shall be reversed and such amount shall be credited to the deposit account not later than the end of the business day following receipt of such executed response form.

(e) The limitations provided in this section do not apply to a deposit account, other than a demand deposit account, in which the bank has a security interest expressed by a written contract as collateral for the debt owing to the bank by the customer.

(f) The limitations provided in this section do not apply when a customer previously has authorized a bank in writing to periodically debit a deposit account as the agreed method of payment of the debt.

(g) The limitations provided in this section shall apply only to the exercise by a bank a setoff with respect to debts claimed to be owing to it by customers on or after July 1, 1976.

(h) Nothing in this section shall prejudice a person’s right to assert exemptions under Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure, or to assert a claim or defense as to the validity of the debt, in a judicial proceeding.

(Added by Stats. 2011, Ch. 243, Sec. 3. Effective January 1, 2012.)

FINFinancial Code - FIN1.