New California Anti-Investor Laws

There are new laws being passed in many states including California, Minnesota, Texas, Georgia, and other states.

The laws are deadly serious. One investor was fined and sued for nearly $3,000,000 and despite spending over $400,000 on attorney's fees to defend himself, he lost everything he owned!! He lost his business, his own home, and was enjoined (forbidden) from ever speaking to homeowners in foreclosure!!

As an investor you have to keep up with this dangerous new trend. This commentary is about part of one of the new laws in California. California Civil Code section 1695.

The law deals with "Home Equity Purchasers" who are people that buy houses from homeowners in foreclosure (with some exceptions for people who buy thehouse as a place to live in, as a deed in lieu of foreclosure, or at atrustees foreclosure sale).

The law says that the purchase contract has to contain special language that is different from a regular agreement of sale including a provision allowing the homeowner five days to cancel the contract.

The law also says if the buyer says anything to the homeowner that is misleading or untrue the purchaser can be fined $25,000 and go to jail for a year!!

The law also says the buyer cannot take "unconsionable advantage" of the homeowner (See section 1695.13) . "Unconsionable advantage" is a very loose and uncertain term - as a lawyer I could not tell you if that means you make a 20%profit, a 10% profit or something less. It would probably come down to what judge you happen to get if you are hauled into court on one of these matters.

The law has plenty of other bad news for invetors. For example under section 1695.13 the homeowner may be able to rescind the transaction for two whole years!!

The purchaser is also liable for any representations made by his representative (ie door knockers).

You need to understand the Equity Purchaser law because an investor who violates it can do to jail for a year, be fined $25,000 AND he can be sued by the homeowner! I suggest you get a copy of the law and read it or come to one of my seminars to learn about the new law. Information on my seminars can be found at http://bobdiamond.com

Next time I will talk about another new California law that is intended to stop homeowners in foreclosure from being defrauded, deceived, harrassed, and dealt with unfairly by"foreclosure consultants."

Bob Diamond
http://bobdiamond.com