BILL NUMBER: AB 669 CHAPTERED
BILL TEXT
CHAPTER 50
FILED WITH SECRETARY OF STATE JULY 8, 1997
APPROVED BY GOVERNOR JULY 8, 1997
PASSED THE ASSEMBLY JUNE 26, 1997
PASSED THE SENATE JUNE 23, 1997
AMENDED IN SENATE JUNE 12, 1997
AMENDED IN SENATE JUNE 9, 1997
INTRODUCED BY Assembly Member Wright
FEBRUARY 26, 1997
An act to amend Sections 1695.4, 1695.5, 1695.6, 2945.3, and
2945.6 of the Civil Code, relating to real property.
LEGISLATIVE COUNSEL'S DIGEST
AB 669, R. 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.