California Buyers Receive New Rights When Purchasing Foreclosure Properties

Everyone who has written an offer on a foreclosure property knows that when the offer is accepted, it isn't accepted using the California Residential Purchase Agreement but is accepted using the bank's contract.  Why does that matter?  The bank's contract is written by the bank's attorneys for the bank's best interests.  Many rights afforded buyers on the California Residential Purchase Agreement are specifically excluded.

The new California law "Buyer's Choice Act", which went into effect on October 11, 2009, returns one right to buyers.  The Buyer's Choice Act prohibits foreclosure sellers from requiring, either directly or indirectly, that the buyer purchase title insurance or escrow services from a particular title insurer or escrow agent as a condition of selling the property.

The law does not stop a buyer from agreeing to accept a title insurer or escrow agent recommended by the seller -- if written notice of the buyer's right to make an independent selection is first provided by the seller to the buyer.

A "seller" subject to this law can be a financial institution or and individual lender who foreclosed and acquired title to residential 1 - 4 unit property at the foreclosure sale.  This law applies only to such sellers and their agents.

This law will remain in effect until January 1, 2015.