The new Fair Appraisal Notice requirement applies to a refinancing of a 1st lien purchase-money loan secured by residential property containing one-to-four units. The notice must be delivered with or before the Loan Estimate, so it suggests that the notice only applies to consumer-purpose transactions.

Has anyone done any research or contacted the DFPI to determine if the notice applies to a commercial transaction?

There is nothing obvious that limits it to consumer transactions.

We have received a Purchase Contract (sale by owner of the property) that is missing the required Fair Appraisal Notice. Since the Notice is legally required for all Sale Contracts, does that void the contract? Can the Bank provide the Notice that we would typically give on a refinance and proceed with the loan?

Effective July 1, 2022, another new California law requires every contract for the sale of real property to contain a new notice (the “Fair Appraisal Notice”) stating that any appraisal of the property must be conducted in a fair and unbiased manner. Depository institutions must also provide the Fair Appraisal Notice prior to or along with Regulation Z’s Loan Estimate when refinancing a first-lien, purchase-money loan secured by residential real property containing one- to four-dwelling units.

This is a question for your counsel, but in my non-lawyer opinion, the purchase contract does not meet the requirements that took effect as of July 1, 2022.

It appears that the seller is in violation of the law. Why would you want to interject the bank into this situation? If you feel the sales contract is not compliant with the law, then tell the buyer they need to either try again or amend the contract after visiting with their own legal counsel or find another lender.