I don't know the laws in other states, but here in California there are several regulations that come into play with pre-foreclosure and foreclosure properties that can significantly impact us. I suspect there are some regulations that exist in your state that dictate what you, as an agent, can and cannot do. And which might also protect consumers from being harmed by investors seeking to capitalize on their bad luck.

The Foreclosure Consultant Law protects sellers from jeopardizing their equity due to fear of foreclosure. If you, as agent, say you can help someone avoid foreclosure or hint that you can, or save their credit, this triggers this law, since you are, in effect, acting as a foreclosure consultant.

This could also result from an ad or solicitation that you submit. Damages that could imposed from a suit filed by a seller can be significant. A Notice of Default (NOD) does NOT have to be filed; a single late payment can trigger this law. And as always it is critical to NOT give legal or financial advice. It is prudent to recommend that potential clients seek out real estate legal advice.

Be careful what you say or imply when dealing with sellers who potentially are in financial trouble

The other law to know about is the Home Equity Sales Act, which is triggered when the NOD is filed. The issue here is about representation of an equity buyer (i.e., an investor, rather than a buyer who will live in the home) of a 1-4 unit residential property.

  • As a listing agent you cannot act as a dual agent
  • A buyer agent cannot represent someone who is purchasing such a property for investment purposes (or an investor "disguised" as a occupant buyer).

There are special forms to use, and legal advice is essential. Purchasers who engage in practices that are viewed as fraud or deceit in the case of an equity seller may find themselves fined or even in jail. And as the agent on either side you could find yourself in big trouble.

Some last words of advice - keep in mind in that if you violate the law, E and O insurance will not cover you as I understand. Not a good situation to be in.

 

 
Posted by Jeff Dowler ~ Carlsbad Real Estate on 12/06/2007 02:21 PM   Comments (14)   , ,  

14 Comments on Foreclosure Assistance for Agents in California

Very interesting.  The best part of the law is

"NOTICE REQUIRED BY CALIFORNIA LAW
_________________________________ or anyone working
(Name)
for him or her CANNOT:
(1) Take any money from you or ask you for money until
_________________________________________ has
(Name)
completely finished doing everything he or she said he or she would do; and

12/06/2007 02:31 PM by Lenn Harley, Homefinders.com, MD & VA Real Estate

WOW! I'm constantly amazed at all the laws and required disclosures in California.

12/06/2007 03:20 PM by Sharon Simms St Pete Florida CRS CIPS CLHMS (RE/MAX Metro)

Jeff, people in this business need to l stick to doing what they do best and do not act in a capacity that they are not qualified to act in or even give advice about.

12/06/2007 03:58 PM by George Souto (McCue Mortgage Co.)

Hi Jeff,

Good info.  I guess I give credit to those who delve into providing this service as I agree with George, it's better left to those who have some expertise in the area. 

 

12/06/2007 04:50 PM by Pascack Valley Real Estate>> Lisa and Robert Hammerstein (Coldwell Banker)

Jeff.

I never understood E and O insurance. I would still seek my own legal council...I have heard that it isn't that easy.

12/06/2007 06:10 PM by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)

Lenn - yep, it raises some interesting issues, doesn' it?

Jeff

12/06/2007 11:01 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Sharon -well, we have a reputation for being a litigious state. And each court case seems to result in a new law or disclosure.

Jeff

12/06/2007 11:02 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Jeff,

I know that california is the first state in foreclosures if I am still right, great blog, you are helping people out :)

Ray Saenz

 

12/06/2007 11:50 PM by Aurora Colorado Real Estate Ray Saenz, Colorado Realtor (United Property Brokers, INC)

Jeff- Nice post.. I was going to do one on the lae in CA. but you have done a great job... too many agents don't know that they can't represent an investor . Enforcement hasn't been toguh but am betting it will begin to be an issue..

12/08/2007 11:03 AM by Manhattan Beach CA/ e-PRO..... Kaye Thomas... (Real Estate West)

Thank you, Ray. There are lots of people out there who need assistance. We just have to be careful what assistance we provide.

Jeff

12/08/2007 01:22 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

George - you're right. The problem is that we can get in trouble even if we hint that we are in a position to help them avoid foreclosure, even if that is not what we intend. Someone could be well meanign but get themselves in trouble.

Jeff

12/08/2007 01:25 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Kaye - I suspect that may be true. And the penalties can be rather substantial. Too much risk involved, and not enough education about this, IMO.

Jeff

12/08/2007 01:26 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Kinda similar, but jeff can you help me with this:

http://activerain.com/blogsview/405702/Does-Anyone-Know-the

03/04/2008 07:15 PM by Jay RealtyStore.com ~ for Real Estate Pros (Realtystore)

Stopped by your post and added a link, Jay. Thanks

Jeff

03/04/2008 07:45 PM by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

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Real Estate Agent: Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)
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