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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] What's fair and equitable when dealing with a residential foreclosure owner. Posted by Ward-CA- on April 19, 2002 at 4:40 PM In Reply to: fair price vs unconscionable advantage posted by Greg (San Diego) on April 18, 2002 at 11:26 PM : Ward: : How worried about 1695 should I be? : Just how likely is it that a fomer owner comes back and sues an investor? : Recently I heard another expert say we can't pay less than 70% of FMV, and this basis doesn't even discount for repairs. : Do you follow any such rule to avoid violating 1695? : Greg =•=•=•=•=•=•=•=•=•=•= Greg, First off, just to clarify things, California Civil Code Section 1695, which governs buying from an owner-in-foreclosure, expressly forbids in Section 1695.13, the taking of unconscionable advantage of a residential foreclosure owner. So the issue of unconscionability applies when buying from the trustor/owner before the foreclosure auction, not when buying from the trustee at the trustee’s sale. I find it a little disingenuous for some people to exclaim that they don’t know what “taking unconscionable advantage of” really amounts to. My standard is simple and direct, “do unto others what you would have them do unto you”. Basically I split 50/50 the net equity figure at the bottom of my “Seller’s Net Worksheet” form with the defaulting home owner. By following that practice I’ve never had a lawsuit on the issue and I’ve never beat myself up for being too greedy, nor have I lost any sleep worrying that some foreclosure owner might come back and sue me. Net equity is the figure that results after subtracting from the fair market value of the property all debt of any kind, including penalties and interest and subtracting reasonable allowances for rehearing, repairs, sales costs, transactional expenses, and recurring monthly expenses up to the close of escrow upon our resale. Using a gross measure of 70% of FMV is too simplistic, too lopsided and not even mentioned in Section 1695. Hope this helps. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Ward: : : How worried about 1695 should I be? : : Just how likely is it that a fomer owner comes back and sues an investor? : : Recently I heard another expert say we can't pay less than 70% of FMV, and this basis doesn't even discount for repairs. : : Do you follow any such rule to avoid violating 1695? : : Greg : =•=•=•=•=•=•=•=•=•=•= : Greg, : First off, just to clarify things, California Civil Code Section 1695, which governs buying from an owner-in-foreclosure, expressly forbids in Section 1695.13, the taking of unconscionable advantage of a residential foreclosure owner. So the issue of unconscionability applies when buying from the trustor/owner before the foreclosure auction, not when buying from the trustee at the trustee’s sale. : I find it a little disingenuous for some people to exclaim that they don’t know what “taking unconscionable advantage of” really amounts to. My standard is simple and direct, “do unto others what you would have them do unto you”. : Basically I split 50/50 the net equity figure at the bottom of my “Seller’s Net Worksheet” form with the defaulting home owner. By following that practice I’ve never had a lawsuit on the issue and I’ve never beat myself up for being too greedy, nor have I lost any sleep worrying that some foreclosure owner might come back and sue me. : Net equity is the figure that results after subtracting from the fair market value of the property all debt of any kind, including penalties and interest and subtracting reasonable allowances for rehearing, repairs, sales costs, transactional expenses, and recurring monthly expenses up to the close of escrow upon our resale. : Using a gross measure of 70% of FMV is too simplistic, too lopsided and not even mentioned in Section 1695. : Hope this helps. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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