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HomeFinancial CodeDiv. 1.1Ch. 10Art. 1§ 1321 Bank Property Sale Requirements

§ 1321 Bank Property Sale Requirements

Financial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 1321 Bank Property Sale Requirements

This law requires banks to sell any real estate they own that isn’t allowed under specific rules, using the sale money to pay back the loan losses, and they can only keep the property to finish selling it.

Key Takeaways

  • •The property must be sold if it isn’t used for a permitted purpose.
  • •The sale price must be enough to reimburse the bank for loan losses.
  • •The bank can only keep the property to complete the sale and cannot run other businesses there.

Example

A bank takes a house as security for a loan, but the house isn’t being used for a purpose the law allows. The bank must sell the house as soon as it can for enough money to cover the loan losses, and it can’t use the house for any other business except to finish that sale.

If the bank keeps the house after the loan is defaulted and tries to rent it out or run a store there, that would break the rule. The bank can only hold onto the house until it is sold to reimburse the loan.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 1321 Bank Property Sale Requirements

Any real property not held for any purpose permitted by subdivisions (a) and (e) of Section 1320 shall be sold whenever the same can be sold for an amount sufficient to reimburse the bank or trust company for all loss arising out of the loan for which such real property was security or arising out of the original investment. A bank or trust company shall not by the retention of any real property acquired pursuant to this section engage in any business not authorized by this division except to the extent necessary in the orderly liquidation of an indebtedness owing to the bank. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 11, 2026

Key Terms

real propertysubdivisions (a) and (e) of Section 1320orderly liquidationindebtedness

Related Statutes

  • § 1320 Bank Property Acquisition Rules
  • § 1322 Bank Real Estate Investments
  • § 1323 Bank Employee Bribery Prohibition
  • § 1324 Bank Fraud By Insiders
  • § 1325 Bank Officer False Reports

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Financial Code. Section 1321.
View Official Source