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On May 28th Floridas Governor Crist signed into law Statute 501.1377 Foreclosure Rescue Transactions. This is the long awaited and so called Anti-investor legislation that has been in the works for almost two years. The presumed intent of the legislation is to safeguard homeowners in foreclosure against what the Statute calls either an Equity Purchaser or a Foreclosure-rescue Consultant.In the exact text of the Statute - An Equity Purchaser or Foreclosure-rescue Consultant is anyone interacting with homeowners in, or contemplating foreclosure, by offering to buy their foreclosure property, offering to postpone or stop Foreclosure, anyone who charges an up-front fee for any related service to foreclosure or short sale, and anyone offering a lease option to a homeowner in foreclosure.This Stature replaces a 2007 Statute that was hastily written with the homeowner in foreclosure in mind that had the buyer of the property disclose certain material facts to the seller. This law is still in effect until October 1, 2008 when the new Statute 501.1377 repeals it. The old Statute 501.2078 is somewhat vague about what victimizing the homeowner really means but many cases have been prosecuted using this Statute. The simple solution for the old or new Statutes is to comply with their requirements.Under 501.1377 there are strict disclosure requirements and even stricter time requirements. For example, there is a one day look see period, a three day right-of-rescission, a ten day return of funds provision, and a three hour period in which to provide the homeowners with copies of any documents they signed. Even the font size and capitalization of text is strictly regulated.The fine is $15,000 per occurrence and from the amount of compliance needed for each disclosure, there could easily be 2 to 4 violations per deal. Some investors will be discouraged by the potential for fines and possible jail time, while others, have been viewing this legislation as a saving grace for our industry. Whatever your feeling, if you intend to become or remain in the real estate arena, you must quickly comply with the current and future regulations for Florida.There is yet more pending legislation that is currently being drafted for Floridas November Legislative Session, which is specifically focused on short sales, and undoubtedly, there will be more state legislation coming. There is even Federal legislation (S. 2888) pending called the Foreclosure Fraud Act of 2008 that defines A Foreclosure Consultant as Anyone who delays or helps a homeowner avoid foreclosure, whether the Consultant charges a fee or not. Despite the onerous implications of these laws, an investor can easily protect himself from frivolous litigation by having the perspective seller sign applicable disclosures and abide by the Statutes other requirements.
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