There is an increasing number of people interested in buying foreclosure property. The laws that govern this can heavily favor the homeowner and presents great risk for investors if the transaction is not constructed properly.
Unfortunately, there is always someone ready to exploit a consumer’s weakness. Foreclosure is a very draining emotional experience and can leave people vulnerable to making hasty decisions. As a result, many states have imposed laws to protect homeowners who are in foreclosure from losing their home to anyone who takes advantage of them. It can be a wide open hole of liability for investors in some states.
For example, in California this is covered under civil code 1695. There is very specific forms with exact verbage… even down to the font size, time periods for cancellation not present during a standard purchase, etc.
I am not familiar with the laws state – state but have come across others that have similar restrictions. It can cause your seller to come back after the sale and claim that he sold under duress and that you took advantage of his position with your low offer. A court can go either way on this and it can get costly to defend.
Your comments and questions are welcome.
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