Foreclosure Sale In 5 Days
Help! A couple's house in L.A. is going to foreclosure auction next week Wednesday. It's worth $170K spruced up, owe $114K, $16K to bring loans current, $5K to walk ($135K total). Problem is the 5-day right of recission. If I get them to sign a purchase contract tomorrow and get the deed to take title "subject to," if I bring the loans current and spend $16K, should I be concerned about the 5-day right of recission which will end on the morning of the auction date? Is there a way to protect my $16K investment or would it be better to walk away from this one as there's not enough time left?
I'd be grateful for any help from you pros. 
There is enough time!
You're at 79% Loans to Value. Depending upon repairs and what you plan to do with the property, this may or may not be a good deal. I personally don't buy homes above 65% Loan to Value.
Have them sign the purchase contract. They have 5 days (or the morning of the sale) whichever comes first.
Get them to sign the deed at 8 AM the morning of the sale. Find a notary near their house and meet them there. Arrange everything with the Trustee, notary, owners, etc. beforehand and plan on paying the reinstatement amount the morning of the sale (or you can even do it AT the sale) AFTER they sign the deed. You don't care if it doesn't foreclose because you just recorded the deed in your name
That way, if they don't sign the deed after the recision period, you aren't out any money.
Hope This Helps,
Mrs. Meltzer
Quote:
On 2003-09-05 01:48, florence wrote:
Help! A couple's house in L.A. is going to foreclosure auction next week Wednesday. It's worth $170K spruced up, owe $114K, $16K to bring loans current, $5K to walk ($135K total). Problem is the 5-day right of recission. If I get them to sign a purchase contract tomorrow and get the deed to take title "subject to," if I bring the loans current and spend $16K, should I be concerned about the 5-day right of recission which will end on the morning of the auction date? Is there a way to protect my $16K investment or would it be better to walk away from this one as there's not enough time left?
I'd be grateful for any help from you pros. <IMG SRC="images/forum/smilies/icon_confused.gif">
Thanks Mrs Meltzler! 2nd question: Would it make sense to have the couple sign over the deed now (they're willing) but wait to record it on the morning of the sale and immediately afterwards make up the back payments to the trustee?
Re the 79% LTV, I realize it's skinny, but I would be taking this deal not to flip but to lease-option to a tenant buyer for 3 years (the rent would cover the PITI with about $150-200 cf).
Thanks again for help. I really appreciate it. -Flo
I always waited until the period was over before having them sign the Grant Deed because I always err on the side of caution.
When they sign the deed, it will have to be notorized. The notary will put a date on it. So logically it will have to be signed the morning of the sale. But the problem there is that they really CAN back out during the 5 days (it's happened to me before).
Other schools of thought say the property isn't transferred until the deed is recorded.
I don't reallly know the answer to this question. My suggestion is to contact an attorney and let me know what he/she says.
Oh, and if the attorney needs to "research" the question, go to another attorney. Some try to charge 10 hours of research to answer one silly question. I wouldn't pay for more than the minimum that they charge. This is an easily answered question.
Mrs. Meltzer
I'll call an attorney and let you know what he says. Sorry about misspelling your name, Mrs. Meltzer, on my last post. I'm very grateful for your help. Take care.
-Flo
Mrs. Meltzer: I spoke to a Pre-paid Legal attorney (don't have a real RE attorney yet) but he didn't even know about any 5-day right of recision pertaining to RE purchase contracts! I know there is one as it's in Civil Code Sec. 1695, but I think it may pertain only to "equity purchasers" buying properties in foreclosure when the seller occupies the property. He looked at all the clauses in the standard purchase agreement used by realtors in Calif. and said he didn't see anything regarding it. So much for that. Sorry I couldn't get a correct and reliable answer that could help us both. If I do later, I'll share it with you. Thanks once more for your previous help. Take care.
Flo
Hey Florence you better be very very careful what u are doing.
I just reviewed all the laws on this and also the cases in CA.
There is liablity up the YAZOOO and if u do not do it perfectly u are leaving yourself open BIG TIME.
I do shorts in other states NO CA for very very good reasons.
SKI
For my email go to my profile!!
SKI
Hi Ski. Thanks for the warning. You mentioned avoiding shorts in CA, but I don't think that would apply in this case, would it? Also, according to the attorney (albeit not top-notch RE atty), as long as the seller doesn't reside in the property, I wouldn't be considered an "equity purchaser" under CA Civil Code 1695. So if 1695 doesn't apply, what other legal issues that you are aware might? Can you direct me to the source of the information you looked up re CA laws governing these types of transactions?
Are you saying that a newbie should steer clear of "subject-to" deals or "short" deals in California, or both?
Thanks. -Flo