Articles of Interest
October 16, 2007
California Foreclosure Sales Highly Regulated
The California legislature stepped in a few years ago to crack down on fraud and created a whole new set of laws dealing with the sale of property in foreclosure.
Homeowner's facing foreclosure and buyers wanting a deal would seem a perfect match. But these matches face obstacles that both buyers and sellers may not fully understand, according to the California Land Title Association.
This is because the California legislature stepped in a few years ago to crack down on fraud and created a whole new set of laws dealing with the sale of property in foreclosure.
The law provides far-reaching protection to homeowners facing foreclosure. Once a notice of default is filed the law applies and sellers have specific legal protections, including the right to cancel a contract to sell up to five business days after signing a contract to sell the property. Not only can a seller cancel the contract before the sale but under certain circumstances the owner may rescind the sale within two years if a court finds the sale unconscionable. In addition, a court may award the seller damages and the purchaser could be criminally prosecuted.
A representative of the seller is also treated harshly if they do not comply with the law. These representatives must have a valid real estate sales license and a bond. Both the purchaser and seller must be given a statement by the representative that they have the license and
bond. Failure to comply means the seller may choose to treat the sales contract as void and can seek damages. There is some relief from all of these pitfalls. If a purchaser is going to use the property as their personal residence or the purchaser is the spouse or blood relative of the homeowner then the law does not apply.
The bottom line in all of this, the CLTA says, is that both buyers and sellers and their agents should be aware of the law. With all of the attention devoted to subprime mortgages and foreclosures it is likely that the failure to strictly comply with the law will lead to serious title problems.
