Legal Question in Real Estate Law in California

Re: Exceptions to the 3 day cooling off period in foreclosure contract when sel

First, it is not entirely clear what type of deed transaction you mean. There are two possibilities.

One is the deed in lieu of foreclosure. This is where you deed your property to the foreclosing lender to stop the foreclosure by just giving the lender the collateral. The loan is in effect paid off and you are entitled to cancellation of the note and a deed of reconveyance. Of course, you also lose ownership of the property, but often you can get the right to stay in the premises for a few months. In checking several references, I find no mention of a right of rescission in a deed in lieu of foreclosure, and therefore no notice is required or possible.

In addition, there is the equity purchase contract, which is probably your situation. An equity purchaser is someone who is neither your lender nor someone who is going to keep the home and live in it; it is simply someone who buys the equity (if any) in houses and income properties on which a notice of default has been recorded, and who intends to resell (or rent) the property for profit.

Civil Code sections 1695.1 - 1695.17 govern home equity sales contracts. The sections are too lengthy to describe fully here, and I recommend you read them in full at a library or on line.

In brief, there is a five-day (not three day) cancellation period. The contract must contain at least two notices of your rights in large print and must include a detachable form for you to use to carry out the cancellation.

Section 1695.6(a) places the responsibility for providing and completing the contract in conformity with the law upon the equity purchaser.