WILLIAM DONALD SCHAEFER, Governor Ch. 404
12-1023.1.
(A) ANY STATEMENT OR CHARACTERIZATION THAT INDICATES THE
BORROWER INTENDS TO OBTAIN A LOAN SOLELY TO ACQUIRE AN INTEREST IN OR
TO CARRY ON A BUSINESS OR COMMERCIAL ENTERPRISE MAY BE RELIED UPON BY
A CREDIT GRANTOR IN MAKING THE LOAN, UNLESS THE CREDIT GRANTOR KNOWS
OR SHOULD KNOW THAT THE STATEMENT OR CHARACTERIZATION IS FALSE OR
MISLEADING.
(B) AS A CONDITION TO MAKING A LOAN. A CREDIT GRANTOR MAY NOT
REQUIRE A BORROWER TO MAKE ANY FALSE OR MISLEADING STATEMENT OR
CHARACTERIZATION THAT THE LOAN IS A COMMERCIAL LOAN OR FOR A
COMMERCIAL PURPOSE IF THE CREDIT GRANTOR KNOWS OR SHOULD KNOW IT IS
NOT A COMMERCIAL LOAN OR FOR A COMMERCIAL PURPOSE.
(C) THE BORROWER HAS THE BURDEN OF PROVING THAT A CREDIT
GRANTOR KNEW OR SHOULD HAVE KNOWN THAT A STATEMENT OR
CHARACTERIZATION DESCRIBED IN SUBSECTION (A) OR (B) OF THIS SECTION WAS
FALSE OR MISLEADING WHEN MADE AND THAT THE LOAN WAS NOT A COMMERCIAL
LOAN OR FOR A COMMERCIAL PURPOSE.
(D) UNLESS A CREDIT GRANTOR KNEW OR SHOULD HAVE KNOWN THAT A
STATEMENT OR CHARACTERIZATION DESCRIBED IN SUBSECTION (A) OR (B) OF THIS
SECTION WAS FALSE OR MISLEADING WHEN MADE, A CREDIT GRANTOR SHALL
HAVE NO LIABILITY UNDER THIS SUBTITLE IF A LOAN IS ACTUALLY USED BY THE
BORROWER OTHER THAN AS A COMMERCIAL LOAN OR FOR A COMMERCIAL
PURPOSE.
12-1024.
(A) THIS SECTION APPLIES ONLY TO A LOAN MADE BY A CREDIT GRANTOR
TO A CONSUMER BORROWER.
(B) WITHIN A REASONABLE TIME AFTER A LOAN TO A CONSUMER
BORROWER HAS BEEN REPAID IN FULL AND ALL OTHER OBLIGATIONS UNDER THE
AGREEMENT, NOTE, OR OTHER EVIDENCE OF THE LOAN HAVE BEEN FULFILLED, A
CREDIT GRANTOR SHALL:
(1) (I) INDELIBLY MARK WITH THE WORD "PAID" OR "CANCELED"
AND RETURN TO THE CONSUMER BORROWER EACH AGREEMENT, NOTE, OR OTHER
EVIDENCE OF THE LOAN; OR
(II) FURNISH THE CONSUMER BORROWER WITH A WRITTEN
STATEMENT THAT IDENTIFIES THE LOAN TRANSACTION AND STATES THAT THE
LOAN HAS BEEN PAID IN FULL; AND
(2) RELEASE ANY RECORDED MORTGAGE, DEED OF TRUST, SECURITY
AGREEMENT, OR OTHER LIEN SECURING THE LOAN.
(C) THE RELEASE SHALL BE:
(1) IN WRITING; AND
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