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Interesting Anti-Investor Legislation being passed

By Donna Oehler

Real Estate Agent with Realty Executives Platinum

October 17, 2007 05:37 PM

A friend of mine sent me an e-mail today with a few examples of recently passed legislation from other states that has been passed. I thought that California was one of the toughest states for investors - but here are a few examples of anti investor legislation which has recently been passed.

These are just a few example as to why it is important that you need an experienced agent if you are doing real estate investing. You must be careful and know the laws in your state or you could unknowingly break laws and get in hot water!

MARYLAND

Pre-Foreclosures

* Restricts fees and services investors can offer homeowners.
* Seller gets 10-day right to cancel contract.
*** Investor must reimburse 82% of proceeds to seller if reselling the home for profit.

Landlording

* All rental property must be inspected for lead paint each vacancy (6 month backlog waiting on inspectors, and CANNOT EVICT until inspection completed).

NORTH CAROLINA

Subject-To
* Buying subject-to can only be done with lender approval - making it effectively impossible.

Owner Financing
* Only brokers can give advice on loans, and recommending a broker is illegal (so, technically, 'owner financing' and 'wraps' may be against the law).

COLORADO Pre-Forecloures
* Similar restrictions to Maryland (at left).

ILLINOIS

Pre-Foreclosures
* Expands Maryland law to include any distressed homeowner who is 90-days behind (and investor can violate this without knowing - because there is no public record).
"Mortgage Rescue"
* Banned (can't charge fees, etc.)

HAWAII

Anti-Flipping
* New "conveyance" tax - collected once on buy, then twice more on re-sale (means 6 times for a double- close on a wholesale flip).

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Patricia Beck

RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO

Colorado Springs Realty

Donna, I cant believe this kind of legislation that is passing! Especially the one about reimbursing the seller 82% of the proceeds if you are re-selling the home for a profit!! when you say, the laws are similar in Colorado to those of Maryland, how similar??

Oct 17, 2007 05:55 PM

Donna Oehler

Realty Executives Platinum - Palmdale, CA

A.V. Foreclosure Specialist

to be honest - I am not familiar with Colorado or Maryland laws but I believe they have similar laws about reimbursing the seller if you re-sell for profit. My question is how long do you have to wait to sell for profit - 1 year - 10 years?? These would be things that you would need to know if you plan on investing in these states.

Maybe an a/r member from those areas could elaborate a bit more - but if these changes are being made in these states - how soon before the other states follow?

Oct 17, 2007 06:20 PM

Sarah Nopp

South Sound, WA

You should take a look at my post about similar legislation in Washington, about SHB 1843. Now, if you want to flip a property, you have to get your General Contractor's license. There are some people who are upset about it.

Oct 17, 2007 06:32 PM

Here is the link to Sarah's post Flip a House = Pay a Fine, aka SHB 1843 it is interesting.

I can understand that it is not good to take advantage of owners in distress ... but I am not sure why there are so many anti investor laws. If it were not for investors - where would all the renters live???

Oct 17, 2007 06:49 PM

David Dee

RMX REALTY - Alhambra, CA

Real Estate - San Gabriel Valley (L.A.) & N. Orang

Donna,

These are some crazy laws that passed. Making it tough for investors is not going to help the market. These laws are too restrictive and would deter investors from investing in these states. Thanks for the update on these new laws! BTW, thanks for commenting on my post!

Dave

Oct 17, 2007 07:28 PM

David Petrovich

S.P.O.C.H. a 501c3 Charitable NP - Oakhurst, NJ

Equity Protection. The 82% floor is predicated on FMV at the time of the sale from the distressed homeowner to the realty speculator. By assuring the seller receives 82% of the FMV, it places the burden on the speculator to "work for its profit" by creating value (repairs, etc.) rather than gain simply by the exploitation of an uninformed &/or emotionally distressed seller.

The law seems to set 18% as a reasonable profit for snatching a home. If the speculator wants to earn more, he'll have to work for it, or wait for the market to improve.

My $.02

Oct 18, 2007 12:08 AM

Mike Norvell Sr

Morris Williams Realty - Leesburg, FL

Norvell Consulting Group

I am in Fla,and we have a number of old rules that are changing as well. Basically, most of them go away if you do basic repairs, ie carpet & paint, and hold for ayear and a day. I am going for my brokers in a few weeks, I am sure the new laws will be gone over in detail. PS We do earn our money

Mike Norvell Sr ...Mikenorvell.com

Oct 18, 2007 01:07 PM

Jeffrey Dolfinger

24/7 Realty Inc. - Poughkeepsie, NY

NRBA Member

New York has a law that passed last year that requires investors to register with the state and has all sorts of disclosures etc if your buying at a short sale, preforeclosure and do it more than 1x in 12 months. I thinks its ggod because it protects those less educated from those who have no morals. Serious buyers will purchase at the foreclosure auctions or buy the paper.

Oct 22, 2007 01:10 PM

Mark Hicken

Advantage Home Solutions LLC - Long Beach, CA

I had heard about Maryland which is very tough. Honestly, California isn't that bad as long as you follow the rules which are clearly stated in the law.

Jan 05, 2008 05:44 PM

Interesting Anti-Investor Legislation being passed

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Donna Oehler

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