Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
Calling all CA legal eagles. Is anyone aware of equity skimming laws in California separate from CCP 890-894? That Civil Code deals specifically with rent skimming. I'm also familiar with Civil Code 1695 that deals with equity purchases and working with sellers in foreclosure.
Neither of these laws restrict the re-sale or profit of the buyer. Is anyone aware of any law CA law that relates to equity purchases such as when buying property subject to existing debt?
It was mentioned in another thread that WA and OR have such restrictions.
You probably already know this @Account Closed , but CA CC 1695 restricts profit in a sense. If you purchase from a seller in foreclosure leaving them in the property with a lease and an option to repurchase, the purchase by law becomes a loan, buyer becomes the lender, seller becomes borrower, and depending on the difference between your purchase price and the option repurchase price the loan is probably usurious. That could in a sense be considered a limit on profit.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
Originally posted by @Account Closed:
You probably already know this @Account Closed , but CA CC 1695 restricts profit in a sense. If you purchase from a seller in foreclosure leaving them in the property with a lease and an option to repurchase, the purchase by law becomes a loan, buyer becomes the lender, seller becomes borrower, and depending on the difference between your purchase price and the option repurchase price the loan is probably usurious. That could in a sense be considered a limit on profit.
I'm curious about this too!
Hi David. I see how CC 1695 could restrict usurious lending as it applies to sellers in foreclosure and keeping them the property. But buying sub2 and lease/optioning back to the seller is SO not my thing.
It was mentioned in another thread that WA and OR have such laws. I quickly looked at WA's equity skimming law and indeed it looked more restrictive than CAs.
Buying from sellers sub2 has always seemed straightforward to me. Even the CC 1695 requirements make sense and seem reasonable to me. I just want to make sure I'm not missing something.
I'm not aware of any. Could you be a little more specific as to the facts and circumstances and your biggest concern(s)?
If you'll do that, I'll put a couple calls in to friends and attorneys (although they usually call me).
Besides my Bottomfeeder buddies, you might put a call into Ward.
Hi there. No special circumstances. I'm just wanting to make sure I'm not missing anything. I feel like I understand the rent skimming law and the requirements of CC 1695. But wondering if there are laws that specifically protect seller/borrower equity in CA. Thanks!