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.