Please read! CALL TO ACTION
Last year, our N.C. Coalition worked very hard with all real estate industry stakeholders to reach a compromise on a bill introduced to regulate foreclosure rescue purchases, lease/options, and contracts for deed. We negotiated in good faith, and a compromise bill was agreed upon, recommended by a committee with blessing from all stakeholders, and passed in the N.C. Senate. This year, a new “proposed committee substitute” version of that bill, Senate Bill 1015 regulating lease/option, contract for deed and foreclosure rescue, is being introduced in the North Carolina House. This new version is COMPLETELY different and absolutely goes against everything negotiated last year. Here are just a few highlights:
- You cannot purchase a pre-foreclosure property for less than 82% of value and allow the seller to lease back, buy back, retain an option or in any way retain an interest.
- You cannot sell a residential property or land to be used for a residential property using a lease/option or contract for deed UNLESS you are the only mortgage holder yourself (no 3rd party sales), and the property you are conveying is the only property on the mortgage. Therefore, you cannot purchase a house with 1 acre, divide off a half acre parcel and sell that parcel using a lease/option or contract for deed. Or, you cannot purchase 30 acres with a mortgage, create a subdivision, and sell off any parcels unless you pay off the mortgage.
- If you sign a lease/option contract, the buyer has 3 days to back out of the contract and receive return of all monies paid.
- If you sign a lease/option contract or contract for deed, you must record the contract and it must contain certain required elements including detailed information on title and any existing mortgages.
- If you enter a contract for deed, any downpayment must be escrowed for the life of the contract until the deed is conveyed.
WE NEED YOUR HELP TO FIGHT THIS! CREIA has led North Carolina in past efforts when members were called to action. Please do your usual awesome job and get the word out to our representatives now! We do not have any local representatives on either committee hearing this bill, but our representatives will have to vote on this bill if it passes through committee onto the House floor. AND, many of our representatives can influence their fellow chamber members who ARE on these committees. So, please jump on this NOW!
Please write your North Carolina representatives in the HOUSE and transmit your letter via email, fax or both as soon as possible. US Mail will take too long to arrive. Email addresses can be found by looking for your representative on www.ncleg.net. If you plan to fax, call the listed number for your representative’s office and ask the staff for the appropriate fax number for their office.
THANK YOU ALL IN ADVANCE!!
If you need help with what to write, please comment here or email and I will get a suggestion letter to you.
Wow Karen. That eliminates investor financing for you. Let me ask, “Does the recently passed federal law supercede the NC statute? Or do both have to be enforced? And lastly, why are the state and federal levels so insistent on eliminating investors in the marketplace? Are we the ones being blamed for the real estate fiasco, and they are looking for another scapegoat?
BTW, what a great blog!! Kudos to you.
Blake Mtousek
May 25th, 2010 / 8:23 am
Blake:
Financing a home you are selling is being outlawed nationwide. That is what we went to DC to fight. When we pointed out the broad-sweeping effect of the legislation as proposed, the Representatives agreed that it was over regulation and an “unintended consequence” of the bill. No one, not even your parents, will be able to sell their property with owner finance unless they own it free and clear and can then sell only 1 property that way, as I understand it.
Legislators are intent on regulating Mortgage Fraud at every level. Most of this new legislation is aimed at lending institutions. The little guy just gets umbrella-ed in unless we could have gotten a “carve out” for our industry, as did Habitat for Humanity, allowing us to be exempted from the bill. We were not in time to get that and were told we would now need to introduce new legislation exempting our industry.
Another issue is that ours is an unregulated industry and we have been noticed due to all the mortgage issues of late. Government is now determined to regulate us as we have not established any self-regulating measures. The bills will be harsh and will continue to come at us fast as, to date, political regulation against investors has gone unchallenged. We are not an organized group and can be easily regulated out of business..
Which trumps, state or Federal law? As a general rule, Federal law trumps state law. However, if state law is more strict, state trumps. ie. HUD outlawed owner financing nationally as of July 31, 2010. NC made a ruling allowing NC residents to do 5 owner finance deals per year. HUD reviewed NC’s exemption request and came back at the beginning of this year disallowing the NC ruling – only one will be allowed every 36 months, as per the HUD ruling.
May 25th, 2010 / 9:21 am
what’s the latest with this legislation?
Jul 9th, 2010 / 11:01 pm
Passed.
In a nutshell.. as of October 1, 2010, we can no longer do Agreement for Deeds on 3rd party transactions (subject-to’s). Also, all Lease Option agreements must be recorded and, to break the lease requires a judges approval unless the tenant agrees.
Great question for a follow-up blog post. Thank you, Joe.
Jul 11th, 2010 / 2:07 pm