Q: I am a licensed Cal realtor not a broker .My client has a offer through me . me being a dual agent.The property is zoned
zoned commercial with a mixed use building consisting of a salon on ground level with a 1700 sf residence above .Owner is going to carry a 1st trust deed of 2,550,000 for 10 years at 5% intrest only monthly payments of $10,625.00.This will help her avoid capital gains tax for now .purchase price is 3,000,000 with 15 % down .
What is the maximum pre payment penalty allowed by law in California on this type mixed use zone commercial property ?
A:
In California, the law does not specify a fixed maximum prepayment penalty for commercial or mixed-use properties. However, lenders typically include a prepayment penalty clause in the loan agreement, which must comply with California law. These penalties are often negotiated between the lender and the borrower.
For mixed-use properties, it is common to see prepayment penalties structured as a percentage of the remaining loan balance or as a set fee. The specific terms, including the duration and amount of the penalty, should be clearly outlined in the trust deed or mortgage agreement.
It's important to review the loan documents carefully and possibly consult with a real estate attorney to ensure the prepayment penalty terms are fair and within legal limits. Always ensure your client's understanding and acceptance of these terms before proceeding.
A: Zoning follows the local rules, and it can vary from city to city. You need to consult with a real estate attorney to give you an estimate about the penalty and if there is any way to get the permit for these types of property use.
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