California Takes Pains To Clarify Laws Governing Structured Settlement Sales

California Takes Pains To Clarify Laws Governing Structured Settlement Sales
By now most states have adopted legislation to protect the rights of state residents who are receiving structured settlement payments. Not surprisingly, the state of California, often recognized as a leader in regulatory control, has gone a step further in the articles of their structured settlement law to clearly define the terms that must be presented to potential sellers during the contracting and transfer and sale of California structured settlement payments.

For The People

The requirements and language of the law governing structured settlements in California is clearly geared towards making sure sellers are fully informed of their rights, as well as the terms of the sale. Not only has California written and enacted a comprehensive law, but they have included very specific requirements for full disclosure to sellers. In the disclosure structured settlement buyers are required to provide

The total amount of payments to be transferred (sold)
The amount of all expenses, fees, commissions, and costs that will be deducted from the sale purchase price, as/if applicable
The net amount of money that will be paid to the payee (seller)
The discounted present value of the payments being purchased
The federal rate used to arrive at a present value for the money
Figures and amounts expressed as percentages

These required disclosures are much the same as the regulations that have been adopted by other states, but California takes it a step further. They clearly define the language that must be used so that the information given is presented in as understandable a way as possible. For instance, where the law states that the buyer must provide "The discounted present value of all structured settlement payments to be transferred," it also states that the buyer must put that into understandable terms by using the direct statement "This is the value of your structured settlement in current dollars."

It takes similar steps to insure that the seller understands the rate that is used to discount the value to present day by requiring it to be expressed as a percentage rate, something the average consumer is much more familiar with. The law dictates that the rate be disclosed in this way: ""YOU WILL BE PAYING THE EQUIVALENT OF AN INTEREST RATE OF ___% PER YEAR."
Although these may seem insignificant sticking points initially, California settlement recipients should find comfort in the extra effort afforded by the CA structured settlement law [Cal Ins Code § 10134-10139.5 (CA A.B. 2162)]. By being clear about the language and information that must be disclosed to potential sellers of California structured settlements the state has gone a step further to protect the rights of its citizens by ensuring that confusing legal language does not result in sellers entering into agreements that are less than favorable to them, or that are not what they believed them to be.

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