Legal Question in Real Estate Law in California

Re: Protect Foreclosure Purchase

There are two possible areas of concern, maybe three.

First, in certain foreclosures, the borrower has what is called a right of redemption or equity of redemption. Generally, such a right exists only in certain kinds of judicial (in court) foreclosure proceedings, and not in the more usual case where the foreclosure is by a trustee under the power of sale provision of a deed of trust. Since you are thinking of a pre-foreclosure purchase, this probably doesn't apply to your proposed deal.

Second, there is the so-called "home equity sale contract" discussed and regulated by sections 1695 - 1695.17 of the Civil Code. Since the provisions are too lengthy to cover in a LawGuru response, I suggest reading them or consulting a local real-estate lawyer for an explanation. The essence of the law is to protect homeowners who are threatened with foreclosure from unethical, even fraudulent, practices by bottom-fishers who take advantage of their weakened financial and mental state at such times.

An "equity purchaser" as defined in the law is someone who buys a residence in foreclosure unless he intends to use the home as his personal residence, buys at a foreclosure auction, is a relative, etc.

You would appear to meet the bona-fide intent to use as personal residence criterion and thus the provisions may not apply to you, but you should familiarize yourself with Civil Cide 1695 et seq. anyway.

Your use of the home as your personal residence after purchase must be bona fide, and not a sham. After 1/2 hour of on-line research, I did not come up with any authority for how long you have to live in the house to satisfy the requirement of purchase for use as a personal residence. I would guess that one year would make you a bona fide residential user, but I can't guarantee that.

The third concern is that any kind of fraud in procuring a deed is a ground for asking a court to declare the deed null and void.