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AB-669 Real property: foreclosure.(1997-1998)



Current Version: 07/08/97 - Chaptered

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AB669:v95#DOCUMENT

Assembly Bill No. 669
CHAPTER 50

An act to amend Sections 1695.4, 1695.5, 1695.6, 2945.3, and 2945.6 of the Civil Code, relating to real property.

[ Filed with Secretary of State  July 08, 1997. Approved by Governor  July 08, 1997. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 669, Wright. Real property: foreclosure.
(1)  Existing law provides for the regulation of a contract between an equity purchaser, who is defined as a specified person who acquires title to a defined residence in foreclosure, and an equity seller, who is defined as the seller of a residence in foreclosure, that is incident to the sale of a residence in foreclosure. Existing law provides that the equity seller has, in addition to a right of rescission, the right to cancel any contract with an equity purchaser until midnight of the 5th business day following the day on which the equity seller signs any contract or until 8 a.m. on the day scheduled for the sale of the property pursuant to a deed of trust, whichever occurs first.
This bill would provide that the right to cancel extends until midnight of the 5th business day following the day on which the equity seller signs a contract subject to the above-described regulatory provisions or until 8 a.m. on the day scheduled for the sale of the property, as specified.
(2)  Existing law requires the equity purchaser to provide the equity seller with a copy of the contract and notice of cancellation specifying the date and time by which the equity seller may cancel the sale without any penalty or obligation.
This bill would allow the equity seller to cancel the contract until the equity purchaser has complied with this requirement.
(3)  Existing law states that when an equity purchaser purports to hold title as a result of an absolute conveyance by an equity seller who either reserved the right to repurchase, or was given the option of repurchasing the residence, the equity purchaser shall not cause any encumbrances to be placed on the property without the written consent of the equity seller.
This bill would provide that nothing in the above-described provision precludes the application of existing law prohibiting an equity purchaser from transferring or encumbering an interest in the residence in foreclosure to a 3rd party, as specified.
(4)  Existing law provides for the regulation of defined foreclosure consultants. Existing law requires a court to award exemplary damages of at least three times the compensation received by the foreclosure consultant for the violation of specified provisions.
This bill would revise this provision to also require an award of exemplary damages of 3 times the homeowner’s actual damages for any violation of other specified provisions.
(5)  Existing law requires a foreclosure consultant to provide the owner with a copy of the contract and attached notice of cancellation.
This bill would allow the owner to cancel the contract until the foreclosure consultant has complied with this requirement.
(6)  This bill also would add a provision regarding legislative intent, as specified.

The people of the State of California do enact as follows:


SECTION 1.

 Section 1695.4 of the Civil Code is amended to read:

1695.4.
 (a)  In addition to any other right of rescission, the equity seller has the right to cancel any contract with an equity purchaser until midnight of the fifth business day following the day on which the equity seller signs a contract that complies with this chapter or until 8 a.m. on the day scheduled for the sale of the property pursuant to a power of sale conferred in a deed of trust, whichever occurs first.
(b)  Cancellation occurs when the equity seller personally delivers written notice of cancellation to the address specified in the contract or sends a telegram indicating cancellation to that address.
(c)  A notice of cancellation given by the equity seller need not take the particular form as provided with the contract and, however expressed, is effective if it indicates the intention of the equity seller not to be bound by the contract.

SEC. 2.

 Section 1695.5 of the Civil Code is amended to read:

1695.5.
 (a)  The contract shall contain in immediate proximity to the space reserved for the equity seller’s signature a conspicuous statement in a size equal to at least 12-point bold type, if the contract is printed or in capital letters if the contract is typed, as follows:
“You may cancel this contract for the sale of your house with­out any penalty or obligation at any time before
.
(Date and time of day)
See the attached notice of cancellation form for an explanation of this right.”
The equity purchaser shall accurately enter the date and time of day on which the rescission right ends.
(b)  The contract shall be accompanied by a completed form in duplicate, captioned “notice of cancellation” in a size equal to 12-point bold type, if the contract is printed or in capital letters if the contract is typed, followed by a space in which the equity purchaser shall enter the date on which the equity seller executes any contract. This form shall be attached to the contract, shall be easily detachable, and shall contain in type of at least 10-point, if the contract is printed or in capital letters if the contract is typed, the following statement written in the same language as used in the contract:
“NOTICE OF CANCELLATION
(Enter date contract signed)
You may cancel this contract for the sale of your house, without any penalty or obligation, at any time before
.
(Enter date and time of day)
To cancel this transaction, personally deliver a signed and dated copy of this cancellation notice, or send a telegram
to   ,
(Name of purchaser)
at
(Street address of purchaser’s place of business)
NOT LATER THAN .
(Enter date and time of day)
I hereby cancel this transaction .
_____ (Date)
”
(Seller’s signature)
(c)  The equity purchaser shall provide the equity seller with a copy of the contract and the attached notice of cancellation.
(d)  Until the equity purchaser has complied with this section, the equity seller may cancel the contract.

SEC. 3.

 Section 1695.6 of the Civil Code is amended to read:

1695.6.
 (a)  The contract as required by Sections 1695.2, 1695.3, and 1695.5, shall be provided and completed in conformity with those sections by the equity purchaser.
(b)  Until the time within which the equity seller may cancel the transaction has fully elapsed, the equity purchaser shall not do any of the following:
(1)  Accept from any equity seller an execution of, or induce any equity seller to execute, any instrument of conveyance of any interest in the residence in foreclosure.
(2)  Record with the county recorder any document, including, but not limited to, any instrument of conveyance, signed by the equity seller.
(3)  Transfer or encumber or purport to transfer or encumber any interest in the residence in foreclosure to any third party, provided no grant of any interest or encumbrance shall be defeated or affected as against a bona fide purchaser or encumbrancer for value and without notice of a violation of this chapter, and knowledge on the part of any such person or entity that the property was “residential real property in foreclosure” shall not constitute notice of a violation of this chapter. This section shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure.
(4)  Pay the equity seller any consideration.
(c)  Within 10 days following receipt of a notice of cancellation given in accordance with Sections 1695.4 and 1695.5, the equity purchaser shall return without condition any original contract and any other documents signed by the equity seller.
(d)  An equity purchaser shall make no untrue or misleading statements regarding the value of the residence in foreclosure, the amount of proceeds the equity seller will receive after a foreclosure sale, any contract term, the equity seller’s rights or obligations incident to or arising out of the sale transaction, the nature of any document which the equity purchaser induces the equity seller to sign, or any other untrue or misleading statement concerning the sale of the residence in foreclosure to the equity purchaser.
(e)  Whenever any equity purchaser purports to hold title as a result of any transaction in which the equity seller grants the residence in foreclosure by any instrument which purports to be an absolute conveyance and reserves or is given by the equity purchaser an option to repurchase such residence, the equity purchaser shall not cause any encumbrance or encumbrances to be placed on such property or grant any interest in such property to any other person without the written consent of the equity seller. Nothing in this subdivision shall preclude the application of paragraph (3) of subdivision (b).

SEC. 4.

 Section 2945.3 of the Civil Code is amended to read:

2945.3.
 (a)  Every contract shall be in writing and shall fully disclose the exact nature of the foreclosure consultant’s services and the total amount and terms of compensation.
(b)  The following notice, printed in at least 14-point boldface type and completed with the name of the foreclosure consultant, shall be printed immediately above the statement required by subdivision (c):
“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
(2)  Ask you to sign or have you sign any lien, deed of trust, or deed.”
(c)  The contract shall be written in the same language as principally used by the foreclosure consultant to describe his services or to negotiate the contract; shall be dated and signed by the owner; and shall contain in immediate proximity to the space reserved for the owner’s signature a conspicuous statement in a size equal to at least 10-point bold type, as follows: “You, the owner, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.”
(d)  The contract shall contain on the first page, in a type size no smaller than that generally used in the body of the document, each of the following:
(1)  The name and address of the foreclosure consultant to which the notice or cancellation is to be mailed.
(2)  The date the owner signed the contract.
(e)  The contract shall be accompanied by a completed form in duplicate, captioned “notice of cancellation”, which shall be attached to the contract, shall be easily detachable, and shall contain in type of at least 10-point the following statement written in the same language as used in the contract:
“NOTICE OF CANCELLATION

(Enter date of transaction) (Date)
You may cancel this transaction, without any penalty or obligation, within three business days from the above date.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to
(Name of foreclosure consultant)
at
(Address of foreclosure consultant’s place of business)
NOT LATER THAN MIDNIGHT OF . (Date)
I hereby cancel this transaction .
_____ (Date)
”
(Owner’s signature)
(f)  The foreclosure consultant shall provide the owner with a copy of the contract and the attached notice of cancellation.
(g)  Until the foreclosure consultant has complied with this section, the owner may cancel the contract.

SEC. 5.

 Section 2945.6 of the Civil Code is amended to read:

2945.6.
 (a)  An owner may bring an action against a foreclosure consultant for any violation of this chapter. Judgment shall be entered for actual damages, reasonable attorneys’ fees and costs, and appropriate equitable relief. The court also may, in its discretion, award exemplary damages and shall award exemplary damages equivalent to at least three times the compensation received by the foreclosure consultant in violation of subdivision (a), (b), or (d) of Section 2945.4, and three times the owner’s actual damages for any violation of subdivision (c), (e), or (g) of Section 2945.4, in addition to any other award of actual or exemplary damages.
(b)  The rights and remedies provided in subdivision (a) are cumulative to, and not a limitation of, any other rights and remedies provided by law. Any action brought pursuant to this section shall be commenced within four years from the date of the alleged violation.

SEC. 6.

 It is the intent of the Legislature in enacting this bill to abrogate the holding in Boquilon v. Beckwith (1996) 49 Cal. App. 4th 1697, 1713-1716, as it related to the relationship between paragraph (3) of subdivision (b) of Section 1695.6 of the Civil Code and subdivision (e) of that section.