Yes, unless buying at auction.

Posted by Keith(CA) on November 29, 2004 at 01:29:51:

In Reply to: Re: Auction Date Looming in Califronia- Advice Needed posted by Madelynn on November 28, 2004 at 12:42:12:

When purchasing from an owner in foreclosure (if you do not intend to occupy the property), then you may go as far as signing an equity purchase agreement (purchase contract) but may go no further. California Civil Code §1695 stipulates that a mandatory five(5) day right of rescission be extended by you to the owner in foreclosure. At any time during this "cooling off" period, the owner may cancel the equity purchase agreement for any cause and without recourse against him/her. The text of the Civil Code spells out exactly what wording MUST appear in your purchase agreement.

It is at the conclusion of the five(5) day period, or 8:00AM the morning of the sale, that you are able to take ownership by having the owner in foreclosure notarize a grant deed to you or your entity. At no time prior to the expiration of this "cooling off" period can you even request a deed.

Follow the link here to read the code.

Now, the owner in foreclosure can file an emergency petition for Chapter 13 at the bankruptcy court in order to temporarily stall a sale (last ditch option when no time is left). Also, keep in mind that there is a mandatory five(5) day right of reinstatement. This means that up to five(5) days prior to the scheduled auction, the foreclosing lender MUST allow payment of the default amount + fees/penalties and place the loan in good standing. Any closer than five(5) days to the auction and it is up to the lender's discretion how to handle it...they might still accept the reinstatement, or they are entitled to accelerate the loan and demand their full principal at once (in which case they most likely proceed with foreclosure). So, all around, it's best to time things so that your right-of-rescission period will end prior to the expiration of the right-of-reinstatement period. Sounds confusing, but it's really not when you put it on a timeline.

: Keith and/or all,

: If I am understanding this correctly the sale from the owner to me has to be completed in its entiriy including the deed signed to me by the auction date at 8AM to the very least. Am I correct?

: : Madelynn,

: : Adding to what Nick(Colorado) wrote...

: : To be a little more precise, it is five days or 8:00AM the morning of the auction (whichever comes first). This means that you and the owner(seller) may enter into an agreement for the sale of the property, but the owner(seller) must not sign and notarize a deed until five days have elapsed (longer if the waiting period ends on a Sunday or State/Federal holiday). However, if your agreement gets signed with less than five days before the auction, then the mandatory waiting period ends at 8:00AM the morning of the auction.

: : If this doesn't make sense to you or is confusing in any way, then you are not ready to buy a property in foreclosure. Continue to learn first in order to minimize your own risk or else your first deal could wind up being your last.

: : Cheers!
: : Keith

: : : This is my first time considering on buying a foreclosure and I am not sure that I can buy this property. Hence, I need a bit of advice. The auction date has been set for 12/07/04 and I do not know if it is too late for the owner to sell it to me. Why? because for what I have been reading this property might have gone beyond a pre-foreclosure point since the acution date has been set and the owner may not have the right to sell to me. However, I might be incorrect due to the fact that I do not much about the process yet. Could anyone clariy this for me? Can the owner still sell to me directly?

: : : Thanks! :)

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Comments:
: When purchasing from an owner in foreclosure (if you do not intend to occupy the property), then you may go as far as signing an equity purchase agreement (purchase contract) but may go no further.  California Civil Code §1695 stipulates that a mandatory five(5) day right of rescission be extended by you to the owner in foreclosure.  At any time during this "cooling off" period, the owner may cancel the equity purchase agreement for any cause and without recourse against him/her.  The text of the Civil Code spells out exactly what wording MUST appear in your purchase agreement.

: It is at the conclusion of the five(5) day period, or 8:00AM the morning of the sale, that you are able to take ownership by having the owner in foreclosure notarize a grant deed to you or your entity.  At no time prior to the expiration of this "cooling off" period can you even request a deed.

: Follow the link <a href="http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=71252620342+0+0+0&WAISaction=retrieve">here</a> to read the code.

: Now, the owner in foreclosure can file an emergency petition for Chapter 13 at the bankruptcy court in order to temporarily stall a sale (last ditch option when no time is left).  Also, keep in mind that there is a mandatory five(5) day right of reinstatement.  This means that up to five(5) days prior to the scheduled auction, the foreclosing lender MUST allow payment of the default amount + fees/penalties and place the loan in good standing.  Any closer than five(5) days to the auction and it is up to the lender's discretion how to handle it...they might still accept the reinstatement, or they are entitled to accelerate the loan and demand their full principal at once (in which case they most likely proceed with foreclosure).  So, all around, it's best to time things so that your right-of-rescission period will end prior to the expiration of the right-of-reinstatement period.  Sounds confusing, but it's really not when you put it on a timeline.

: 
: : Keith and/or all,

: : If I am understanding this correctly the sale from the owner to me has to be completed in its entiriy including the deed signed to me by the auction date at 8AM to the very least. Am I correct?

: : : Madelynn,

: : : Adding to what Nick(Colorado) wrote...

: : : To be a little more precise, it is five days or 8:00AM the morning of the auction (whichever comes first).  This means that you and the owner(seller) may enter into an agreement for the sale of the property, but the owner(seller) must not sign and notarize a deed until five days have elapsed (longer if the waiting period ends on a Sunday or State/Federal holiday).  However, if your agreement gets signed with less than five days before the auction, then the mandatory waiting period ends at 8:00AM the morning of the auction.

: : : If this doesn't make sense to you or is confusing in any way, then you are not ready to buy a property in foreclosure.  Continue to learn first in order to minimize your own risk or else your first deal could wind up being your last.

: : : Cheers!
: : : Keith

: : : : This is my first time considering on buying a foreclosure and I am not sure that I can buy this property. Hence, I need a bit of advice. The auction date has been set for 12/07/04 and I do not know if it is too late for the owner to sell it to me. Why? because for what I have been reading this property might have gone beyond a pre-foreclosure point since the acution date has been set and the owner may not have the right to sell to me. However, I might be incorrect due to the fact that I do not much about the process yet. Could anyone clariy this for me? Can the owner still sell to me directly?

: : : : Thanks! :)


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