Myth: If does not matter what contract a buyer uses if a Notice of Default is filed on a property, and the buyer is an investor.
False: Before an investor starts writing a contract on a home about to avoid foreclosure, their agent needs to make sure they do not need the Notice of Default Purchase Contract. If all 4 items are met, then the agent needs to make sure they follow the Home Equity Sales Contracts Law:
(1) the property being sold is residential one-to-four units;
(2) the owner currently occupies the property;
(3) a Notice of Default (NOD) has been recorded against the property; and
(4) the buyer does not intend to occupy the property (i.e., buyer is an investor)
This must be done for the following reasons
- Provide homeowners with information necessary to make informed, intelligent sales decisions;
- Require written sales agreements;
- Safeguard the public against deceit and financial hardship;
- Insure fair dealing in the sale and purchase of homes in foreclosure;
- Prohibit misleading representations;
- Restrict unfair contractual terms;
- Provide homeowners reasonable opportunity to rescind sales to equity purchasers; and
- Protect homeowners’ equity.