Posted by David on July 31, 2003 at 17:20:34:
To suggest that anything below FMV is unconscionalbe is missing the point. It’s not because it was below FMV, it’s because it was waaaaay below FMV, in the opinion of the Senator that introduced the bill.
Buy Foreclosure and Go To Jail??? - Posted by JSune
Posted by JSune on July 31, 2003 at 07:05:34:
Source: mortgagegrapevine.com–Ask The Experts–Legal Corner*
Anybody else has heard about this??
AMENDED LEGISLATION -BUY A HOUSE IN FORECLOSURE AND GO TO JAIL?
Existing law provides for the regulation of a contract incident to the sale of a residence in foreclosure, where the contract is between an equity purchaser, a specified person who acquires title to a residence in foreclosure, and an equity seller, the seller of a residence in foreclosure. Existing law provides that the equity seller has, in addition to a right of rescission, the right to cancel any contract with an equity purchaser until midnight of the fifth business day following the day on which the equity seller signs the contract or until 8 a.m. on the day scheduled for the sale of the property. These provisions include notice obligations and other requirements on equity purchasers, most of which are enforceable in a civil action. Existing law also provides that, a prevailing equity seller shall recover actual damages, plus reasonable attorneys fees and costs, and may be awarded exemplary damages or equitable relief. Certain violations require the court to award three times actual damages as exemplary damages. Effective January 1, 2004 a court, in every one of these civil suits in which an equity seller prevails, to award a civil penalty of not more than $2,500, if it does not award exemplary damages.
Existing law provides that any equity purchaser who violates certain of these provisions or who engages in any practice that would operate as a fraud or deceit upon an equity seller, is punishable for each violation by a fine of not more than $10,000, by imprisonment in a county jail for not more than one year, or in the state prison, or by both that fine and imprisonment. Effective January 1, 2004 the maximum fine is $25,000. (SB455, 7/21/03,Amends CC Sections 1695.7, 1695.8)
MORAL
Buy the house before the NOD is recorded. That is the definition of “in foreclosure.”
Buy all the preforeclosures in CA you want to… - Posted by Paul
Posted by Paul on July 31, 2003 at 15:24:34:
simply follow the context of the law to a “T”.
Give the seller their 5 day rescision period, don’t do anything unethical and don’t worry about going to Court.
Paul
What am I missing? - Posted by Dave
Posted by Dave on July 31, 2003 at 15:16:22:
I read the amendment and it looks like all they did was increase the penalties for someone that is convicted of fraud in this area. I don’t see how that translates into not being able to buy houses that are in foreclosure.
Re: I knew it - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on July 31, 2003 at 13:37:10:
was California.
This wording would be considered rather foolish in the United States, but is just liberal enough for California.
Re: Buy Foreclosure and Go To Jail??? - Posted by David
Posted by David on July 31, 2003 at 09:40:28:
It?s interesting that they didn’t fix the bonding problem. The way the law is currently written, a representative of the equity purchaser (agent) must be bonded, but the bond is impossible to get, leaving no legal means to buy a house through an agent.
Seems our socialist CA legislature was only interested in getting more money to support their spending addiction?no interest in making laws that even have a chance of working, the morons.
Calif - Prior Trustee Sale… - Posted by JT-IN
Posted by JT-IN on July 31, 2003 at 07:48:31:
“Amends CC Sections 1695.7, 1695.8”
CC stands for California Code…
There are stringent requirements when dealing with owners of properties who are in foreclosure, and purchasing their property prior to a Trustee Sale. Before one enters into this deep water, it would be prudent to understand the perameters of which you should proceed.
I’m not aware of any statutes that extend beyond CA, but it is probably a matter of time until there is some new federal police force which arrests all those who attempt to stop foreclosures, nationwide… (sarcasm)
Bottom line, know you states laws pertaining to your business.
Re: Buy Foreclosure and Go To Jail??? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 31, 2003 at 10:54:17:
David--------
I agree with some of what you say. I don’t think that the legislators are motivated by profit here. They are simply voting on many different bills which they do not have time to understand in great depth.
The original law on equity purchasing was apparently written by a junior staff member who had recently graduated from college and did not know much about real estate law and practice.
The law makers want to protect us from the predators. They do what they can to do so. However, it is not easy. The laws all have to be written so they are constitutional, don’t conflict with other state statutes, make sense, apply in all situations, etc. Hard to do well. And thus often not done well.
Good InvestingRon Starr*
Here’s what happened… - Posted by David
Posted by David on July 31, 2003 at 10:05:09:
Looking at the assembly bill on the state website it says:
COMMENTS : This bill is intended to strengthen protections
against fraud under the Act for homeowners facing foreclosure of
their homes. The author states:
An incident in Senator Torlakson’s district spurred introduction of this bill. A sick elderly woman was pressured into selling her home for an amount well below market value. The case highlights the potential for fraudulent transactions to take place by equity purchasers hoping to capitalize on homeowners in the process of foreclosure. This bill increases the disincentive for equity purchasers to engage in fraudulent transactions by imposing a civil penalty of up to $2500 and raising the existing fine amount.
Re: Buy Foreclosure and Go To Jail??? - Posted by GL - ON
Posted by GL - ON on July 31, 2003 at 11:11:34:
Ron it appears to me that the result of all this will be to scare the Heck out of anyone who wants to buy a pre foreclosure in California. This will thin out the ranks of those bidding.
It will leave the field open to those who know the law and follow it exactly. Among other things, I wouldn’t give a seller a dime until the time period for welshing on the deal was over. And if the time was too short I wouldn’t bother at all.
So, those buyers who are left will be forced to make offers less advantageous to the sellers, and the sellers will be forced to take them because there are no other bidders.
What do you think?
Does this mean… - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on July 31, 2003 at 15:59:33:
that CA law considers any sale of a home to be fraudulent if the selling amount is below FMV? And if this is the case, does this mean that creative RE is illegal because it depends on a motivated seller selling below FMV?
Re: Buy Foreclosure and Go To Jail??? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 31, 2003 at 21:40:09:
GL–(ON)----------------
Well, your intelligence and strong grasp on reality is showing. I think you are right in all you say. I think that the equity sales statute does discourage a lot of beginners from starting out. Many people do get the law–its not very long–and study it and abide by it.
I suspect you are right about fewer potential buyers meaning lower prices for the defaulting property owners. I think there may be more cases where nobody even makes an offer and the owner loses the property at the auction–which is not always the best outcome for them.
There are some little details such as, at 8 am of the day of the scheduled trustee’s auction, one can give money to the owner and get a deed, even though one has not had a signed contract for 5 days. So, if one can move fast, one can make a last-minute deal and be within the law.
The law is not onerous, in my view. But it is very picky, even specifying the minimun typeface points for the heading of a document. I’m not much inclined toward preforeclosure buying anyway, but if I were, I’d still do it, just making sure to follow the letter and the spirit of the law.
Good InvestingRon Starr***
Re: Buy Foreclosure and Go To Jail??? - Posted by David
Posted by David on July 31, 2003 at 11:54:13:
You say ?It will leave the field open to those who know the law and follow it exactly.? I wish it could be followed exactly, that would make things easy. Unfortunately, there?s a clause in the statute that basically says that if you do anything ?unconscionable? they can throw the book at you. What?s ?unconscionable? and what?s not isn?t defined, it?s left to the discretion of the judge. So the outcome is dependent on the judge you happen to get and the mood he is in.
Do you really think… - Posted by ken in sc
Posted by ken in sc on July 31, 2003 at 11:53:42:
it will scare preforeclosure investors? Just asking. My take would be that most will not even know about it until it bites them in the butt. Those that do know will either not worry about it thinking the risk is small or do like you, become well versed in the law and run their business accordingly. If I had to bet the farm, I would bet that most will not run there business accordingly. This is just based on observations of investors in my area and people in general.
Ken
Re: Does this mean… - Posted by David
Posted by David on July 31, 2003 at 17:15:08:
People sell below FMV everyday, for a variety of reasons. In my opinion, it’s not at all unreasonable for a seller in default to accept lower than FMV for a quick, as-is, and trouble-free sale. That?s good business for both seller and buyer. The question is more about how far below FMV can you go without shocking the conscience of the court, that can only truly be answered by some kind of a formula from the court or in the statute, which hasn?t happened.
Re: Buy Foreclosure and Go To Jail??? - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on July 31, 2003 at 16:04:34:
It seems that the “unconscionable” act that resulted in this law was somebody buying a house from a person in foreclosure for an amount below FMV. If that is considered law, then there is no way around it and all creative RE investors in CA might as well go get a job because their profession is illegal.