It’s all over the news: foreclosures are on a rise throughout the state. A foreclosure is started with a lender records a Notice of Default, or NOD, against a property. Agents and brokers beware–if a NOD has been recorded against the property you must adhere to the Home Equity Sales Act.
In order for HESA to apply, there are four conditions that need to be met:
1. Residential property (1-4 units)
2. Owner occupies one unit
3. Notice of default recorded
4. Buyer does not intend to occupy
Items to note:
1. The seller must be given notice that he/she has a statutory five day right to cancel the purchase agreement.
2. No agent can represent a buyer in such a sale without securing a bond – which is not currently available.
What to do:
1. Ask that the title company provide a Property Profile and have them include any recorded NOD’s.
2. Highlight any recorded NOD’s on the Preliminary Title Report
3. On a regular basis, check for newly recorded NOD’s
With foreclosures on the rise, I think it is important that all consumers, not just agents and brokers, know about this. Buyers and Sellers alike need to understand that if all four of the above conditions have been met, an agent cannot represent you in this sale.