Article 3. Farm And Home Purchase of California Military And Veterans Code >> Division 4. >> Chapter 6. >> Article 3.

As used in this article:
  (a) "Farm" means a tract of land, which, in the opinion of the department, is capable of producing sufficiently to provide a living for the purchaser and the purchaser's dependents.
  (b) "Home" means any of the following:
  (1) A parcel of real estate upon which there is a dwelling house or other buildings that will, in the opinion of the department, suit the needs of the purchaser and the purchaser's dependents as a place of abode.
  (2) Condominium, as defined in subdivision (h).
  (3) Mobilehome, as defined in subdivision (k).
  (4) Cooperative housing, as defined in subdivision (m).
  (c) "Purchaser" means a veteran or any person who has entered into a contract of purchase of a farm or home from the department.
  (d) "Purchase price" means the price which the department pays for any farm or home.
  (e) "Selling price" means the price for which the department sells any farm or home.
  (f) "Initial payment" means the first payment to be made by a purchaser to the department for a farm or home.
  (g) "Progress payment plan" means payment by the department for improvements on real property in installments as work progresses.
  (h) "Condominium" means an estate in real property consisting of an undivided interest in common in a portion of a parcel of real property together with a separate interest in space in a residential building on the real property, such as an apartment, which, in the opinion of the department, suits the needs of the purchaser and the purchaser's dependents as a place of abode. A condominium may include, in addition, a separate interest in other portions of the real property.
  (i) "Effective rate of interest" means the average interest rate of the interest on the unpaid balance due on a participation contract to which the interest of the department is subject and the interest rate on the unpaid balance of the purchase price, as determined by the department.
  (j) "Participation contract" means an obligation secured by a deed of trust or mortgage, or other security interest established pursuant to regulations of the department.
  (k) "Mobilehome" means either a parcel of real estate, or an undivided interest in common in a portion of a parcel of real property, on which is situated a mobilehome that will, in the opinion of the department, suit the needs of the purchaser and the purchaser' s dependents as a place of abode and meets all requirements of local governmental jurisdictions.
  (l) "Immediate family" means the spouse of a purchaser, the natural or adopted dependent children of the purchaser, and the parents of the purchaser if they are dependent on the purchaser for 50 percent or more of their support.
  (m) "Cooperative housing corporation" means both of the following:
  (1) A real estate development in which membership in the corporation, by stock ownership, is coupled with the exclusive right to possess a portion of the real property.
  (2) A shared equity cooperative.
  (n) "Shared equity cooperative" means a housing cooperative that provides ongoing housing affordability and individual asset accumulation and is eligible for financing under regulations of the department.
  (o) "Shared equity cooperative housing loan" means a loan to a purchaser for the purchase of property in a shared equity cooperative.

This article may be cited as the Veterans' Farm and Home Purchase Act of 1943.

The object of this article is to provide veterans with the opportunity to acquire farms and homes.

The administration of the provisions of this article is vested in the Department of Veterans Affairs.

The department shall adopt rules and regulations in keeping with the purpose of this article to establish preferences in the granting of the benefits conferred by this article.

The department shall prescribe and determine the qualifications of all veterans. Any person deeming himself a veteran and desiring to benefit hereunder, shall submit to the department information, in such form as the department prescribes, which will enable the department to determine his eligibility and qualifications. The department may make further inquiries and investigations in order to determine such eligibility and qualifications. Veterans who are otherwise qualified and who were wounded or disabled as a result of their service shall be given first preference in the benefits conferred by this article. The department shall determine, in each case, whether or not the veteran was wounded or disabled as a result of service. The following group shall be given second preference in the benefits conferred by this article:
  (a) The unremarried spouse of individuals who were members of the armed forces on active military duty, entered active duty while in the State of California, lived in this state for six months immediately preceding his or her entry into active duty, and were killed in the line of duty while on active duty.
  (b) Members of the armed forces who entered active military duty while in the State of California, lived in this state for six months preceding his or her entry into active duty, and were held as prisoners of war.
  (c) The unremarried spouse of members of the armed forces who entered active military duty while in the State of California, lived in this state for six months preceding his or her entry into active duty, and have been designated by the armed forces as missing in action. Veterans discharged or released from active duty within 10 years of their application to the department shall be given third preference in the benefits conferred by this article. Nothing in this section regarding preferences shall affect any eligibility requirement for benefits conferred by this article.

On and after January 1, 1974, all applications for the benefits contained in this article shall be filed with the department within 25 years from the date of the applicant's discharge from the service, except applications filed by either:
  (a) Veterans who were wounded or are disabled as a result of wartime service; or
  (b) Veterans who were previously declared prisoners of war.

(a) If a veteran dies after filing an application for a farm or a home, and the application setting forth the veteran's eligibility and qualifications is subsequently approved, his or her surviving spouse may, in the discretion of the department, succeed to the veteran's rights under the application, and may be entitled to the rights, privileges, and benefits under this article that would have been the veteran's, but for his or her death. The contract of purchase that the department otherwise would have made with the veteran may be made with his or her surviving spouse.
  (b) If a person was a member of the armed forces on active military duty, entered active duty while in the State of California and lived in this state for six months immediately preceding entry into active duty and was killed in the line of duty while on active duty, he or she shall be considered to be a "veteran" for the purposes of this article, and his or her unremarried surviving spouse may file an application, may be entitled to the same rights, privileges, and benefits, and may contract with the department as provided in the case of a surviving spouse under subdivision (a).
  (c) If a member of the armed forces entered active military duty while in the State of California, and lived in this state for six months immediately preceding entry into active duty, and is being held as a prisoner of war or has been designated by the armed forces as missing in action, he or she shall be considered to be a "veteran" for the purposes of this article, and his or her surviving spouse may file an application, may be entitled to the same rights, privileges, and benefits, and may contract with the department as provided in the case of a surviving spouse under subdivision (a).

When a veteran has been authorized by the department to select a farm or home, he shall submit his selection in such form as the department prescribes.

The department may acquire a farm or home from the owner thereof or may contract with a veteran for the construction of a dwelling house and other improvements for a farm or home, upon the terms agreed if:
  (a) The department is satisfied of the desirability of the property submitted.
  (b) The veteran has agreed with the department that the veteran or members of his or her immediate family will actually reside on the property within 60 days from the day of purchase by the department, or if the residence on the property is not complete on the date of purchase, within 60 days after the residence is completed.
  (c) The sum to be expended by the department pursuant to a contract for the construction of a dwelling house and other improvements does not exceed twenty-five thousand dollars ($25,000).
  (d) Where the department is to contract with a veteran for the construction of a dwelling house and other buildings, or for the purchase of a mobilehome:
  (1) The veteran is the owner in fee of the real property on which the dwelling house and other buildings are to be constructed, or is the owner in fee of the real property or the owner of an undivided interest in common in a portion of a parcel of real property on which a mobilehome is to be situated, and agrees to convey that property to the department without cost.
  (2) The veteran has paid a reasonable fee set by the department to cover the cost of any preliminary service of the department as may be necessary to process the application.
  (3) The veteran has filed with the department adequate plans and specifications for the improvements to be constructed upon the real property, together with a contract, executed by a contractor licensed by the State of California for the construction of the improvements in accordance with the plans and specifications within eight months after the acquisition of the real property by the department, and a bond executed by the contractor providing for compliance with the terms of the contract and for the payment of persons furnishing material or labor on the job, executed by a surety company, authorized to do business in the State of California.
  (4) The plans, specifications, contract and bond are approved by the department.
  (5) The veteran has placed in escrow, all sums of money to be advanced by him or her where the cost is in excess of the maximum that may be expended by the department. As used in this section "immediate family" includes only the following: Spouse, children, either natural or adoptive; and the parents if they are dependent upon the veteran for 50 percent or more of their support.

The department may purchase property, subject to a participation contract providing for a loan term of not less than 23 years. In no event shall the purchase price plus the participation contract exceed twenty-five thousand dollars ($25,000) or equal more than 90 percent of the market value of the property as determined by department appraisal, whichever is the lower amount.

The department, after consummating a purchase under the provisions of this article and the veteran having occupied the property as required by Section 986.3 of this code, may waive the occupancy requirement for a period not to exceed four years on a showing of good cause. The department shall establish standards for the occupancy waiver and shall make those standards known. The department shall waive the occupancy requirement in any case where the State Department of Health determines that health hazards on adjacent property render the farm or home unsuitable for occupancy, and such waiver shall be effective as long as such conditions exist.

Notwithstanding other provisions of this article relating to the occupancy, leasing, letting, or subletting of a farm or home acquired pursuant to this article, the department, with respect to any veteran who after consummating a purchase of a farm or home under this article and occupying such farm or home reenters the active military, naval, or air service of the United States, may waive the occupancy requirement for the period of such active service and for a reasonable period subsequent to the termination of such active service and consent to the leasing, letting, or subletting of the farm or home during such period or periods.

The department shall not acquire a home under the provisions of this article where the market value of the improvements exceeds the sum of forty-five thousand dollars ($45,000), to be determined by an appraiser or an authorized representative of the department.

The purchase price of a home to the department shall not exceed the sum of twenty-five thousand dollars ($25,000), except that the purchase price of a mobilehome to the department shall not exceed twelve thousand five hundred dollars ($12,500), and a veteran purchasing the home may advance, subject to the provisions of Section 986.4, the difference between the total price or cost of the home and the sum of the purchase price of the home to the department and any amount the department is required under Section 986.9 of this code to add to the purchase price of the home in fixing the selling price thereof to the veteran. The purchase price of a farm to the department shall not exceed eighty thousand dollars ($80,000), and a veteran purchasing the farm may advance the difference between the total price of the farm or cost of the dwelling and improvements to be constructed on a farm under a contract and the sum of such purchase price to the department or contract price to the department and any amount which the department is required under Section 986.9 of this code to add to such purchase or contract price to the department in fixing the selling price of the farm to the veteran.

The department may acquire a farm in which the veteran to whom such farm is to be sold has theretofore acquired an interest.

Before the purchase of any property by the department there shall be filed with the department (1) an appraisement of the market value of the property by an employee or an authorized agent of the department or (2) in lieu of the appraisal by the department, the department may accept an appraisement of the market value of the property by either the Federal Housing Administration or the Veteran' s Administration, and in addition there may be filed with the department an appraisement of the market value of the property by an authorized appraiser of a banking corporation formed under the laws of this state or of a national banking association having a place of business in this state. Each appraisement shall be certified by the maker thereof. The certification shall state that it is made in good faith, and that the valuation is honestly determined and represents the bona fide opinion of the maker.

The department, before consummating a purchase under the provisions of this article, shall cause the title of the property sought to be purchased to be examined and may require for that purpose an abstract, an unlimited certificate of title, or a policy of title insurance, and may refer the same to the Attorney General for his opinion.

The department shall then enter into a contract with the veteran for the sale of the property to the veteran. The department shall fix the selling price of the property by adding to the purchase price thereof, to the total cost of improvements constructed, or to the value of such property as determined by the department when such property is acquired by the department in a manner other than by purchase, all expenses incurred and estimated to be incurred by the department in relation thereto, inclusive of interest, administration, appraisals, examination of title, incidental expenses, and the sum deemed necessary to meet unforeseen contingencies. In the case of real property acquired from a veteran for the purpose of constructing improvements thereon, the department shall forthwith after acquiring said real property enter into the contract with the veteran authorized by this section at a selling price determined by the amount of the contract price for the improvements and any of the other additions herein authorized. After the execution of said contract between the veteran and the department and the making of the initial payment thereon the department shall be authorized to pay the cost of the improvements contracted to be constructed on said real property, making progress payments thereon in such amounts and at such times as the department approves. The department shall upon written request of the veteran and his contractor have authority to approve additions to or deletions from the improvements contracted to be constructed and any savings affected or added cost incurred shall be deducted from or added to the amount due the department by the veteran under the terms of his contract.

For the purposes of this article any veteran who is under the age of 21 shall be deemed to be of the age of majority and to be an adult person for the purpose of entering into any contract for the purchase of a farm or home from the department or any other contract with respect to such property.

The purchaser shall make an initial payment of at least 10 percent of the selling price of the property, in case of a farm, and 5 percent in the case of a home. The department may waive the initial payment in any case where the value of the property as determined by the department appraisal shall equal the amount to be paid by the department plus at least 10 percent in the case of a farm, and 5 percent in the case of a home. The balance of the purchase price may be amortized over a period fixed by the department, not exceeding 40 years for farms or homes, but not exceeding 15 years for mobilehomes, together with interest thereon at the rate as determined by the department pursuant to Section 987.17 for such amortization purposes. The purchaser on any installment date may pay any or all installments still remaining unpaid. In any individual case the department may for good cause postpone from time to time, upon terms as the department deems proper, the payment of the whole or any part of any installment of the purchase price or interest thereon. Each installment shall include an amount sufficient to pay the principal and interest on the participation contract to which the interest of the department is subject.

The provisions of Section 987, relative to the rate of interest to be charged to veteran purchasers do not apply to assignees of such purchasers who are not veterans, but as to such assignees the rate of interest shall be as fixed by the department, compounded at periods fixed by the department. The action of the department in refusing to permit any assignments except as provided in this section is hereby ratified and confirmed, it having at all times been the intent of the Legislature that Section 987 apply to veteran purchasers only.

(a) Notwithstanding Section 987.01, upon the dissolution of marriage or legal separation of a veteran contract purchaser and the veteran's spouse, an assignment may be made in favor of the nonveteran former spouse at the same rate of interest and upon the same terms and conditions as are provided to veteran purchasers, provided the veteran's entire beneficial interest is transferred to the spouse and provided there are dependent children of the veteran occupying the property and the spouse agrees to: (1) actually reside in the home and (2) continue to make the payments in the same amount required by the purchase contract. For the purposes of this subdivision, any child of the veteran who is legally adopted or who acquires a separate domicile or marries shall not be considered a dependent child.
  (b) Should the veteran retain entire beneficial interest in the property after dissolution or legal separation, the veteran may continue as purchaser provided either the veteran or the former spouse continues to occupy the property.

(a) Except as provided in subdivision (b), the department in each individual case may specify the terms of the contract entered into with the purchaser, but no property sold under the provisions of this article shall, voluntarily or involuntarily, by operation of law or otherwise, be transferred, assigned, encumbered, leased, let or sublet, in whole or in part, nor shall any mobilehome be removed from its original site, except in case of emergency where temporary removal is necessary to avoid potential damage, without the written consent of the department, until the purchaser has paid therefor in full and has complied with all the terms and conditions of this contract of purchase. The department may give its written consent to such transfers, assignments, encumbrances, leasings, lettings or sublettings, or removals, for good cause shown, subject to the interest of the department and consistent with the purposes of this article.
  (b) The consent of the department shall not be required where a veteran, alone or jointly with his spouse, transfers his interest in property which is the subject of a loan agreement with the department into a revocable trust established for the benefit of the veteran or of the veteran and his spouse.

The contract made between the department and the purchaser shall provide that the purchaser maintain the farm or home as the purchaser's place of residence and keep in good order and repair all buildings, fences, and other permanent improvements situated thereon, and that the purchaser, if required, insure and keep insured against fire or other hazards, all buildings, fences, other permanent improvements, or crops on the property, the loss, if any, under the insurance policies to be made payable to the department as its interest appears. Insurance shall be in the amount, with the insurance companies, and under the conditions specified by the department. The department shall make an annual report on or before September 1st of each year to the Legislature regarding any insurance coverage implemented or required by it. The report shall include, but not be limited to, the type of insurance coverage, its cost, the reason for requiring that coverage, loss-ratio information, and any changes in existing insurance coverage and the reason for those changes.

If the purchaser fails or neglects to pay, satisfy, and discharge at maturity all taxes and assessments, and all other charges and encumbrances which are a lien upon the property being purchased from the department, or any part thereof, and also all taxes and assessments levied or assessed upon the interest created by the contract of purchase of such property; or to keep the buildings, fences, other permanent improvements upon such property insured and in good order and repair, or to keep the crops upon such property insured; or to keep in good order and repair all buildings, fences, and other permanent improvements situated upon such property; then, in such event, the department may pay, satisfy, discharge, settle, or compromise the taxes, assessments, charges, or encumbrances, or insure the buildings, fences, permanent improvements, or crops, or do the work and supply the materials necessary to keep the buildings, fences, and other improvements in good order and repair. All moneys so expended by the department shall be added to the selling price of the property and bear interest at the rate of interest designated in Section 987 from the date of expending the same, and shall be repaid by the purchaser to the department on demand. The department may amortize the repayment of such expenditures or permit repayment in installments upon the terms and conditions which it deems proper.

The department shall be the sole judge of:
  (a) The legality or validity of taxes, assessments, charges, or encumbrances, and the amount necessary to be paid in satisfaction or discharge thereof.
  (b) The amount of insurance to be placed upon the buildings, fences, other permanent improvements, and crops and the amount necessary to be paid for the premiums for such insurance.
  (c) The necessity and nature of the work necessary to keep the buildings, fences, and other improvements in good order and repair, and the amount necessary to be paid therefor.

In the event of a failure of a purchaser to comply with any of the terms of his contract of purchase, the department may cancel such contract, and thereupon be released from all obligations, at law or in equity, to convey the property, and the purchaser shall forfeit all right thereto. All payments theretofore made shall be deemed to be rental paid for occupancy. Upon such forfeiture, the department shall take possession of the property covered by such contract, and shall remove all persons and personal property therefrom without any liability whatsoever on the part of the department or of any official or employee thereof for any damage or injury caused by or incident to the entry or removal. The failure of the department to exercise any option to cancel or to exercise any other privilege under such contract for any default shall not constitute a waiver of the right to exercise such option or privilege for any other default on the part of the purchaser.

In the event of a forfeiture of a contract of purchase under the provisions of this article, the department may sell or otherwise dispose of the property covered by the forfeited contract to such person and upon such terms and conditions as it deems proper. In the event such property is subject to a participation contract, the department may, at its option, pay the balance due upon such participation contract, including accrued interest without penalty.

The department may, in the contract of purchase with a veteran, provide that, in the event of default by the veteran and forfeiture of his or her rights under the contract and subsequent sale of the property by the department, it may pay to the veteran any net gain realized by the department upon the sale. The department is the sole judge of the net gain.

The department may insure and keep insured against fire or other hazards all buildings, fences, other permanent improvements, or crops situated upon any property which has reverted to and is under the control of the department, or may do the work and supply the materials necessary to keep the buildings, fences, and other improvements situated upon the property in good order and repair. The department may lease or let the property, in whole or in part, upon such terms as it deems proper. In the case of a farm, the department may cultivate the farm or harvest the crop.

If illness or accident prevents a purchaser of a farm from cultivating his farm or harvesting any crop, the department may enter and cultivate the farm or harvest the crop. In such event the department has a first lien upon the crop for all moneys expended and may sell the harvested crop. Out of the proceeds of the sale the department may reimburse itself for any expense which it has incurred in the cultivation of the farm, the harvesting of crops and the sale thereof, and retain any moneys due to the department from the purchaser. Any balance shall be paid by the department to the purchaser.

When a purchaser dies, indebted to the department under contract of purchase, his rights acquired under this article and such contract shall devolve upon his heirs, devisees, or personal representatives, but subject to all rights, claims, and charges of the department. Default on the part of an heir, devisee, or personal representative, with respect to any right, claim, or charge of the department shall have the same effect as would default on the part of the purchaser but for his death.

For the purposes of carrying out the Veterans' Farm and Home Purchase Act of 1943 the Director of Finance may by executive order authorize the withdrawal from the General Fund of an amount or amounts not to exceed the amount of the unsold bonds which have been authorized to be sold for the purpose of carrying out this article, and the amount necessary to carry out this section is hereby appropriated without regard to fiscal years. Any amounts withdrawn shall be deposited in the Veterans' Farm and Home Building Fund of 1943. Any moneys made available under this section to the department shall be returned to the General Fund in such amounts as may be received by the department from the sale of bonds sold for the purpose of carrying out this article, together with interest at the rate of interest fixed in the bonds so sold.

The right to declare a forfeiture for breach of a condition contained in any deed to real property may not be enforced as against the interest of the deparement in said real property or any portion thereof.

The department shall not acquire a home in which the veteran has an interest of record except in the following instances:
  (a) Where the application is for aid for the construction of a home upon unimproved real property owned by the applicant.
  (b) Where the veteran had no interest of record in the property at the time of filing his or her application and thereafter secured interim financing pending the processing and approval of his or her application by the department.
  (c) Where the application is to pay the balance due on an existing loan not insured or guaranteed by the federal government, and which bears an interest rate of more than 5 3/4 percent.
  (d) Where the application is for purchase of a mobilehome to be situated upon real property, or an undivided interest therein, owned by the applicant.
  (e) Where the veteran had a prior interest of record in the property as a result of property left in trust at the time of filing his or her application. The loan may only be used to pay the amount of any existing encumbrance.

(a) Any veteran for whom a farm or home is purchased under this article may be granted a subsequent opportunity to purchase another farm or home when the farm or home purchased under this article is sold because of any of the following:
  (1) Condemnation proceedings instituted by a public agency.
  (2) A change in the veteran's employment which compels a change in residence location.
  (3) The health of a veteran or of a member of his immediate family compels a change in residence location.
  (4) Any increase or decrease in the veteran's obligation to provide housing for dependents has resulted in the livable area of the house being inadequate or excessive for the veteran's current housing needs.
  (5) Increased real property taxes beyond the veteran's ability to pay.
  (b) The provisions of subdivision (a) shall apply only if the veteran pays his purchase contract in full, applies for a subsequent loan within six months from date of sale and pays toward the purchase of the new farm or home the net equity received from sale of the former property.
  (c) Only one farm or home purchased under this article shall be owned by a veteran or a veteran and the veteran's spouse at any one time under the provisions of this article.
  (d) Any veteran for whom a farm or home is purchased under this article may be granted a subsequent opportunity to purchase another farm or home if he has paid his purchase contract in full, and qualifies as a veteran as described in Section 980, under another separate period of service, or the veteran and the veteran's spouse each qualify as a veteran as described in Section 980.
  (e) A member of the armed forces, eligible for military retirement who meets the residence requirements of Section 980, or a veteran as described in Section 980 who is receiving military retirement pay, for whom a farm or home was purchased under this article while in active military service, may be granted a subsequent opportunity to purchase another farm or home provided he has paid his purchase contract in full and has served during more than one period for which eligibility is granted.

The department shall establish the actual interest rate to be paid. To this end the department, by a two-thirds vote of California Veterans Board members and with the approval of the Veterans' Finance Committee of 1943, is empowered to establish a uniform rate of interest payable upon the amount remaining unpaid under any veteran's purchase contract executed prior to the effective date of the amendments to this section enacted at the 1972 Regular Session of the Legislature. The California Veterans Board and the Veterans' Finance Committee shall periodically, at least once each year, make a finding as to the rate of interest to be charged, not to exceed 5 percent per annum on contracts for the purchase of farms or homes, and not to exceed 8 percent per annum on contracts for the purchase of mobilehomes, taking into consideration the current value of money, bond market conditions, and the solvency of the Veterans' Farm and Home Building Fund of 1943. The California Veterans Board may raise or lower the rate of interest payable under such contracts for any given period as many times and as frequently as it deems to be for the best interests of the department, as well as the contract holders, if in so doing its action is made applicable alike to any and all contract holders and 90 days' advance notice be given of the time when the new rate of interest is to become effective. Any change in the interest rate shall not affect the total amount of any installment payment, but the difference shall be credited to interest or principal and accelerate or prolong the period of payment.

987.17a. (a) The department shall establish the actual interest rate to be paid. To this end the department, by a two-thirds vote of California Veterans Board members and with the approval of the Veterans' Finance Committee of 1943, is empowered to establish a uniform effective rate of interest. The California Veterans Board and the Veterans' Finance Committee shall periodically, at least once each year, make a finding as to the effective rate of interest to be charged, not to exceed 5 percent per annum, taking into consideration the current value of money and the solvency of the Veterans' Farm and Home Building Fund of 1943 and the interest paid on participation contracts to which the interest of the department is subject. The California Veterans Board may raise or lower the effective rate of interest payable under those contracts for any given period as many times and as frequently as it deems to be for the best interests of the department, as well as the contractholders, if in so doing its action is made applicable alike to any and all contracts executed after the effective date of this section, and 90 days' advance notice be given of the time when the new rate of interest is to become effective.
  (b) The total amount of any installment payment shall be raised or lowered to reflect a change in the effective rate of interest. The department shall, upon request of the purchaser, instead increase or decrease the period fixed by the department for amortization of the purchase price without changing the amount of the installment payment. The department shall provide the purchaser with full information as to the repayment options available to him or her under this subdivision and, upon request of the purchaser, the financial consequences of each option. The actual interest rate to be paid on the amount remaining unpaid under any veteran's purchase contract shall be a rate of interest that, when combined with the interest paid on the unpaid balance of a participation contract to which the department's interest is subject, equals the effective rate of interest.

(a) In the event the department enters into a master agreement with one or more insurance companies to provide life insurance coverage for the purchasers of farms and homes from the department, the master agreement shall provide that the life insurance coverage offered under the master agreement will be offered by the insurance company or companies to disabled and nondisabled veterans on an equal basis and that no veteran shall be denied coverage because that veteran is disabled at the time of application.
  (b) Any proposal to enter into, revise, amend, renew, extend, or cancel, any agreement described in this section shall be a policy change subject to subdivisions (b), (c), and (d) of Section 84.

The action of a veteran purchaser for damages against any third party does not affect his right of action for all damages against any party other than the department. If the department indemnifies, or becomes obligated to indemnify, the veteran purchaser, it may likewise bring an action against any such third party responsible for damage to the contract property. In the latter event, the department may recover in the same suit all payments made on behalf of the veteran purchaser. If either the veteran purchaser or the department brings an action against such third party, the veteran purchaser or the department, as the case may be, shall forthwith give to the other written notice of the action and of the name of the court in which the action is brought, by personal service or registered mail. Proof of such service shall be filed in such action. If the action is brought by either the veteran purchaser or the department, the other may, at any time before trial on the facts, join as party plaintiff, or shall consolidate the action if brought independently. The court shall first apply, out of the entire amount of any judgment for any damage recovered by the veteran purchaser, a sufficient amount to reimburse the department for the amount of its expenditures for indemnification. If the department has not joined in the action or has not brought action, or if the action has not been consolidated, the court, on the department's application, shall allow as a first lien against the entire amount of any judgment for any damages recovered by the veteran purchaser, the amount of the department's expenditures for indemnification.

This article shall be applicable to all farm and home purchase loans made or entered into prior to the effective date of the legislation adding this section during the 1974 legislative session and thereafter Article 3.1 (commencing with Section 987.50) of this chapter shall apply.