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Probate Topics

A flaw, California real estate investors, is the signing of a purchase too early for us if necessary.

Some real estate investors try to buy real estate if the deceased left real estate to family members or friends who do not wish to loan the monthly payments. If the deceased had a confidence in the rule is not a problem: The current trustee has the right to sell the property.

It is different, but if the deceased was either the will or had neither a trust or a will. In this case, a probate unless there is an end is everything to a surviving spouse. (There is also an exception if the assets of the estate, without deducting any loans, fewer than 100,000 U.S. Dollar, but it is very unlikely, if Real Estate is involved.) By the will, everything to a surviving spouse, it is often possible, a "marriage petition in the court to complete title to the surviving spouse without having to go through an entire probate.

Otherwise, usually a probate, or it is not clear title to the property. Basically a probate is a process in which the court (if any) and a listing of the assets are in the Probate Court, a person representative (executor) shall be determined by the court, creditors and heirs have a chance to comment argued that one Representatives of the court often determines the value of the property, and ultimately the court a decision on how the money and property in the settlement will be distributed. The whole process can take eight months or so, even though the time depends on the complexity of the matter.

Real estate investors should understand that an executor has no authority to sign contracts for the sale of real estate up to this Executor is the Probate Court as a personal representative for the estate. Also, unless the petition for probate requests that the personal representatives are "full authority" (and the court granted IT), the sale of real estate from the estate must be specifically authorized by the court. If the Court had decided to close the sale, it may be sold for not less than 10% below the market value of the Court, the representatives of real estate values. Sometimes trying executors, which in our system without the help of a lawyer, few know to ask for "full authority" when the first work to be - and if it is not initially requested that the court often will be reluctant to him later. On the other hand, once a personal representative has been approved with "full authority", an agreement signed with the personal representative in relation to the acquisition of property should be binding.

Because for us is complex and non-lawyers who are trying, with ourselves often encounter problems when you deal with us with a situation such as a potential buyer, try to call the executor to an attorney who can with us. This means cost some money (even if the lawyer only at the end of us), but otherwise the property may be lost to foreclosure. This is especially true because, while many lenders, the foreclosure if they are evidence that a lawyer is handling the probate, often they will not stop if no lawyer is.

Preforeclosure sale requirements

Another mistake that real estate investors, is not in accordance with the requirements in the purchase of residential property in California, when a warning was signed by the lender.

California has a number of detailed statutes setting out requirements for contracts for residential preforeclosure sale. (Civil Code § § 1695-1695.17.) This statute applies to all residential properties from the one-to four-family residential units, of which the owner as his or her principal place of residence, and against which there is a prominent reminder. These statutes require, among other things, that the Treaty:

Spellchecking all conditions of the agreement (including, for example, repurchase rights).
Contain evidence that certain size requirements and boldface.
Let the seller to terminate, usually until midnight of the 5th Business day after the signing.
Be accompanied by a cancellation form in duplicate.

Also, until the notice period ends, the buyer may not:

If the seller is a deed or deeds of trust.
Any deed or deeds of trust in relation to the property.
Transfer an interest in the property to a third party.
Pay the seller the money or other consideration.

In addition, the purchaser can not untrue or misleading statements about the value of the residence in foreclosure, the amount of proceeds the seller will receive after a foreclosure sale, or any other untrue or misleading statement about the sale of the residence.

In addition, it is prohibited to the buyers of the "unconscionable advantage" of the seller. This is true if the seller is unable or does not understand the transaction (for example, if the seller is not sufficiently fluent in English), and can be used in other situations as well. If "unconscionable advantage", you can cancel the transaction at any time within two years from the date of recordation of the transfer of home ownership.

If any of these provisions, the seller may not only have the opportunity to rescind the contract, but also actual damages, attorney's fees and costs, and exemplary damages in an amount equal to the greater of three times actual damages or $ 2,500. Fraud or deceit may also be punished by a fine of $ 25,000, by imprisonment in the county jail or in state prison for not more than one year, or for any violation. Other remedies are applied, as well.

Any provision of the contract or, suggests that attempts to limit the liability of the purchaser is void and, at the option of the seller, the purchase contract void.

Moral of the story: If you are buying preforeclosure Real Estate, you should use an attorney review your forms.

Restrictions on Giving foreclosure counseling

California also has specific statutes regarding residential foreclosure consultants. (Civil Code § § 2945-2945.11.) Part of these statutes are directed at those who charge an owner for the support of the owner of the possession of money, which, after a foreclosure sale, even though the statute for more than just the. "" Exclusion consultants ":" Basically, is defined as any person who offers, for compensation or remuneration, for services to:

1. Stop or postpone the foreclosure sale.

2. Obtain all the patience of any lender.

3. Support of the owners to exercise a right of reinstatement.

4. Obtain an extension of time for the owner back his commitment.

5. Obtain any waiver of an acceleration clause.

6. Support of the owners, a loan or advance of funds.

7. Avoid or mitigate the impairment of the owner credit.

8. Save the owner of the residence from foreclosure.

9. Support of the owners in all the remaining proceeds from the foreclosure sale.

With the exception of the last item, there are exemptions for licensed real estate brokers and agents, accountants, licensed residential mortgage lenders and service providers, etc.

The owner has the right to make such a contract until midnight of the third "Business Day" after the date on which the owner of the contract.

The contract must be in writing and must include:

Fully disclose the exact nature of the foreclosure consultant services.
Fully disclose the total amount and the conditions for compensation.
With a specific reference to a minimum size and boldface.
Do you have a cancellation form in duplicate.

Only after the 65-day period after a foreclosure sale, the foreclosure consultant in a contract to assist the owners in the design of the release of funds remaining after the foreclosure sale. This agreement must include a specific ad in a print size not less than bold.

Among other things, it is a violation of the foreclosure consultant:

1. Compensation after the exclusion of consultants has been fully implemented.

2. Receiving a fee or other compensation arrangements, more than 10 percent per year the amount of the loan, the foreclosure consultant may be sent to the owner.

3. Take any wage assignment, the lien of any type on real or personal property, or other security for the payment of compensation.

4. If you receive any examination by any third party in connection with services to an owner unless that consideration in full to the owner.

5. Acquisition of interest in a residence in foreclosure from an owner with whom the foreclosure consultant.

6. Take a power of attorney from a manufacturer for a particular purpose.

7. Induce or attempt to each owner, a contract to which the foreclosure consultant Statutes.

8. Enter into an agreement to assist the owners in the design of the release of surplus funds prior to 65 days after the trustee sale takes place.

Note that (e) means that someone can not be paid as a foreclosure consultant and also wholly or partly owned.

A foreclosure consultant is also liable for the actions of any representative that he / she uses.

Any waiver by an owner of the statute is void, and any attempt by a foreclosure consultant to an owner to waive his / her rights is a violation of the Statute.

If a foreclosure consultant to one of the laws, the owner may take a decision for actual damages, reasonable attorneys' fees and costs, fair and appropriate assistance. The court also may, in its discretion, award exemplary damages and shall award exemplary damages in the amount of at least three times the compensation that the Adviser in the foreclosure against certain regulations, and three times the owner of the actual damage to the violation of other provisions, in addition to any other award of actual or exemplary damages. The owner can measure up to four years after the date of the alleged violation. Moreover, it can also lead to criminal penalties of not more than ten thousand dollars ($ 10,000) and / or imprisonment in jail for not more than one year, or in the state prison.

If you are on a kind of compensation for work as consultants foreclosure, you should have a lawyer review the arrangements in advance with you.

Predatory lending law

California's predatory lending law (Financial Code Sections 4970-4979.6) applies to certain loans secured by a lien on a residence permit.

Basically, the predatory lending law, if a "consumer loan" (as defined below) in which the principal balance of the loan does not exceed two hundred fifty thousand U.S. dollars ($ 250.000), revised upwards every five years after 2001 in accordance with the California Consumer Price Index, in the case of a mortgage or a deed of trust, and if one of the following conditions are met:

1. For a mortgage or a deed of trust, the annual percentage rate for completion of the transaction is for more than eight percentage points above the Treasury yield securities with comparable periods of maturity, OR

2. The points and fees payable by the consumer at or before closing for a mortgage or a deed of trust for more than 6 percent of the total loan amount.

"Consumer loan" is defined in terms of a loan that is secured by real estate with headquarters in California, which is used or intended to be used or occupied, as the principal dwelling of the consumer, by a one-to-four residential -- unit. "" Consumer "loans" is not a reverse mortgage, an open line of credit or a loan, through the rental property or second homes. "Consumer loan" not a bridge loan, which is defined as any temporary loans with a maturity of one year or less, for the purposes of the "acquisition or construction of a dwelling, the main consumers of flat.

This means that if the loan of an amount exceeding $ 250,000 (and is secured by a mortgage or a deed of trust) or the duration of the loan is one year or less and is required for the acquisition or construction, then the predatory lending law does not apply.

If the law is a set of complex requirements come into play. Among other things, there can be no prepayment penalty for the first 36 months, more advance determination must meet specific requirements, which can not increase interest rates on default, the originator must reasonably believe that the borrower's position to the planned payments, can accelerate not on the basis of the lender in its sole discretion, there are restrictions on the payment of home improvement and there must be an identifiable benefit to the borrower. Moreover, a person who made a covered loan can not be one, the loans, finance and fees of more than one thousand dollars ($ 1,000) or 6 percent of the original principal balance, without any points and fees, whichever amount is higher. Because of the complexity of the statutes, if you are on the loans, which by the law, you should seek a lawyer's services.

If the person violating this section is licensed, the Licensing Agency may be subject to disciplinary action, including suspension or revocation of the license. In addition, any person who willfully and knowingly violates this law shall be liable for a civil penalty of not more than twenty-five thousand U.S. dollars ($ 25.000) in an action brought by the Licensing Agency.

Regardless of whether or not authorized, a person who is not in conformity with the law is civil liability for the borrower in an amount equal to any actual damages suffered, plus attorney's fees and costs. For a willful and knowing the offender is liable to the borrower in the amount of fifteen thousand U.S. dollars ($ 15,000) or actual damages, whichever amount is higher, as well as attorneys' fees and costs.

A court may, in addition to any other remedy, award punitive damages to the borrower on the finding that these damages are warranted.

While the city of Oakland had an even tougher predatory lending law, the California Supreme Court as preempted by state law in the American Financial Services Assn. v. City of Oakland (2005) 34 Cal.4th 1239th

Usury law

Usury is under Art. 15, § 1 of the California Constitution, although there are some exceptions on the statute of California.

Subsection (1) regulates the credit primarily for personal, family or household, but subsection (2) applies to all other loans. The latter for the higher limit of 10% or 5% plus the applicable Federal Reserve rate.

A lender may be a borrower and an additional amount for additional costs associated with the negotiation, mediation, production and securing the transaction without these charges are considered interest. To determine this, you probably look at the points commercial lenders are charging for this loan size (at the same rate and same length of loans) at the time the loan was. To the extent that are in excess of that amount, the items are among the usury limit.

There are a number of exceptions. The primary goal is for loans made or by a person licensed as a real estate agent by the State of California and is situated wholly or partly secured by liens on real estate, assuming that the broker is compensated (however little) to do.

There is another exception for "industrial loan companies," the license from California, and an exception for the financing of licensed lenders.

In addition, there is an exception for shared-appreciation loans.

If there is an injury, and the interest has not been paid, the interest is void and the lender again only the most important, even if the borrower could seek punitive damages as well. If the interest has been paid, then an open law allows treble damages.

f you have to pay a licensed real estate broker for the loan, it is strongly recommended that a brief written agreement that the mediator as evidence.

The licensing for residential mortgages

You can not in the business of residential mortgage loans in California without a license in any way. (See, eg, the California Residential Mortgage Lending Act, California Financial Code Section 50000 et seq.) This means that either you need a license or a licensed real estate broker or other authorized person according to such loans. For more information, see the California Department of Real Estate on the side http://www.dre.ca.gov/faqs_mlb.htm ( "Frequently Asked Questions: Mortgage Loan Brokering in California").

Other limitations of the real property loans

The California "" real property loans "statute sets restrictions on late charges and prepayment penalties. (California Business & Professions Code § 10240 et seq.)

Any late charge for late payment of an installment due on a loan secured by a lien on real estate can not exceed an amount equal to 10 percent of the installment due, except that a minimum of five U.S. Dollar ($ 5) may be imposed. No costs can be imposed more than once for the same end of an installment payment, and no end of the fee may be charged on all rate, which is paid or tendered in full within 10 days after its scheduled maturity.

Also, only an advance payment within seven years from the date of the mortgage or deed of trust can lead to a pre-calculated. An amount of not more than 20 percent of the unpaid balance may be in advance in any 12-month period. A prepayment costs can be imposed on any amount prepaid in any 12-month period of more than 20 percent of the unpaid balance, the cost may be an amount equal to the payment of six months' advance interest on the amount in advance in excess of 20 percent of the unpaid balance.

There are other requirements that apply when the loan is a first trust deed with a principal amount of less than thirty thousand U.S. dollars ($ 30,000) or a junior lien with a principal amount of less than one thousand dollars ($ 20,000). These small loans seems unlikely.

Trusts to avoid taxes and Due-on-Sale Clauses

A land trust (at least in California) is only a confidence that a piece of real estate, such as the trust asset. (Some countries have specific land-trust laws, California, but is not the case.)

Almost all the deadlines rate loans, by a resident "Through on-sale" clause that allows the lender to the loan if the property is sold, transferred, etc. Some buyers have the property in a trust so that the lender does not discover that a transfer of ownership has been taken by the would-on-sale clause. More precisely, what they do is have the original owner, a trust and in their property through a deed. Second, if the sale is concluded, the beneficiaries and trustees in trust to the new owner, no certificate to the new owner is. Some take you step further and, if they sell them back to the beneficiaries and the trustee on the latest new owners.

Lenders, however, have a variety of ways by which they learn that a transfer has taken place (for example, the signature of the trustee to the changing controls). As a practical matter, one or two years by the lender, but almost always seems to find out eventually. Some lenders are governed by regulations, which allow them to exercise the basic on-sale clause, if they discover that a transfer was.

The well would be a lender, the loan does not complain and call all of them, but this approach seems to turn against the original owner for the sale of the loan agreement and may even be fraud. There are also Prop. 13 questions in California in the rule that a transfer of property (with the exception of some family members) triggers a reassessment of the propert