Q. What is the reason the Legislature passed the Buyer’s Choice Act?

A. The Legislative findings and declarations state that the recent troubled real estate market has resulted in a concentration of the majority of homes available for resale within the hand of foreclosing lenders and has dramatically changed the market dynamics affecting ordinary home buyers. The act declares that the potential for unfairness occasioned by the resale of large numbers of foreclosed home requires that protections against abused be made effective immediately.

Q. What is the Buyer’s Choice Act?

A. The Buyers’ Choice Act is a new law that prohibits a seller who acquired property as a foreclosure sale from requiring a buyer to purchase title and escrow services from a company chosen by the seller as a condition to receiving offers or selling the property. It was enacted by Assembly Bill 957 (Galgiani).

 Q. When does the Buyer’s Choice Act become law? 

A. Yes, provided that a written notice of the right to make an independent selection of those services is first given by the seller to the buyer.

A. The law covers title insurance and escrow services.

A. Yes. A seller who violates the new law is liable to the buyer for three times all charges made for the title insurance or escrow service. In addition, a seller who violates the law is also considered to have violated their licensing law.

A. No. A transaction cannot be invalidated solely because of the failure to comply with the law.

Q. Does the Act continue indefinitely? 

A. The Act is only effective until January 1, 2015 unless it is extended by the Legislature.

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The real estate market continues to evolve as we work through short sales and foreclosures in the Pleasanton market place as well as market places all over the country. One of the difficulties surrounding short sale transactions is the amount of time it typically takes for the lender to approve the short sale-a mandate in moving the transaction forward.

Lawmakers realize that improving turn around time on these kinds of transactions will only benefit the market place as a whole.

Here is the latest news for the Senate on short sale legislation:

Recently enacted Senate Bill 306 does not require lenders to review short sale requests from sellers and their agents within 21 days.  The new California law, which addresses certain escrow procedures, has been mischaracterized by some practitioners as landmark legislation calling for a 21-day turnaround for short sale approvals.

The new law inserts a short payoff amount request into the existing payoff demand law which generally requires a lender to respond to a request for a payoff demand statement within 21 days from when it is requested, typically by escrow.  The new law essentially requires, after a short sale has already been approved, for the lender to respond to a request for a short-pay demand statement within 21 days.  The lender’s response to escrow can be a short-pay demand statement or even, depending on the circumstances, a written statement electing not to proceed with the proposed transaction.

Another provision of SB 306 may also cause confusion.  In practice, a lender may approve a short sale subject to its review of a closing statement prepared by escrow, but the lender does not review that closing statement promptly.  Under the new law, if a lender fails to approve the closing statement within four days, the closing statement shall be deemed approved, but only if it is “not clearly contrary to the terms of the short-pay agreement or the short-pay demand statement provided to the escrowholder.”  The new law does not bind a lender to a short payoff amount in an offer that the lender has not approved.

Senate Bill 306 contains other technical changes in real estate related laws, such as, but not limited to, the following:

• Expanding the existing requirement for a lender to contact certain borrowers to explore options for avoiding foreclosure at least 30 days before filing a notice of default, to include not only owner-occupied residences, but also owner-occupied residential property with two-to-four dwelling units.
• Extending the existing requirement for a lender to record a notice of sale from 14 to 20 days before a trustee’s sale.  This provision does not change existing law requiring a lender to wait at least 20 days after mailing a notice of sale before conducting a trustee’s sale.

This new law comes into effect on January 1, 2010. 

Click here to read the text of Senate Bill 306.

 (Information provided by the California Association of Realtors.)

Click here to read about how short sales work.

Questions about short sales? Contact us. We are currently working with several clients who are selling their homes and are in a “short pay” sitaution. We can help you too!

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Open house on Sunday, 10/4, from 1-4pm.