Posted by Lyal on September 23, 2005 at 07:52:12:
I’m not an attorney but I was there for Bruce Berger’s excellent “heads up” presentation.
It’s doubtful that the bill will pass in it’s present form but, now that this initiative has some momentum, some form of bill will be passed that will preclude or at least severely limit any kind of “creative” deal unless you OWN the property (meaning buy conventionally with cash or financing). Any lease / option, sub-to, Contract for Deed, Land Contract etc will have disclosure requirements that essentially say “I’m a crook and if you agree to this deal you’re going to get screwed big time 'cause I’m an investor / crook”.
Also, if I remember correctly from Bruce’s presentation, they’re also going to put in verbiage that will state that if you violate this law it will constitute a violation of a federal regulation and the penalties are pretty severe. If they hadn’t put that explicit verbiage in, it would have been a BIG stretch to say that if you crossed the line on the state statute that you’d violated the federal one.
Oddly enough (but not surprisingly) licensed realtors will be exempt.
All in all, an attempt by vote conscious legislators to “protect” sellers when all they need to do is enforce the regs already on the books. There will be a lot of desperate people with NO way out now as they won’t be able to sell or have debts wiped clean via bankruptcy and the banks will take their home, re-sell it and scrape any profits into their hopper.