HELPFULFACTS.NET

As a landlord who has acquired several new properties in the past several years, I have found nothing makes renters more nervous than a change in management. Fears of rent hikes, added fees and new rules are just some of the concerns tenants wonder about when there is a change in management.

If you are thinking of selling a rental property anytime soon, help ease your tenants’ transition by keeping them informed during the process and reassuring them of the new owner’s obligations.

First, tell them all rental agreements in place at the time of the sale are still legally valid until the end of each lease term. The new landlord cannot change the terms of any existing leases or move for an eviction without proper cause.

Second, rent cannot be increased in the middle of a lease just because the new owner wants to raise the rent. New owners must abide by the rental rate in the current lease.

Third, no changes can be made in lease provisions regarding policies concerning pets, number of occupants or anything else stipulated in the current agreement.

As the seller, once you have accepted an offer and have a deposit, you should begin sharing information on the property and tenants with the new owner. Let your tenants know you are selling the property as soon as you are confident the sale will go through. Keep tenants in the loop throughout the process by providing any important dates to them (inspections, closing, etc.).

Once the sale is final, send a farewell letter to each tenant introducing the new owner, providing the new landlord’s contact information and any other items needed for a smooth transition. Often times, the new owner will probably want to meet the tenants and inspect their units.

The final step is the closing, where you’ll turn over all keys, deposits and paperwork to the new owner. After this, you no longer own the building and can walk away knowing you have treated your tenants with respect and helped them to transition smoothly with their new landlord.

Your rental property sold and the closing went off without a hitch. Time to celebrate, right? Not just yet. Uncle Sam may be waiting for his share of the profits.

Capital gains taxes are a part of all real estate transactions realizing a gain (unless you are rolling the profits into another investment vehicle through a tax-deferred 1031 exchange). Property sales taxes are due at the time of sale. Of course, if the sale shows a loss, there is no tax liability.

Here is a closer look at the different tax scenarios of selling a rental property:

Capital Gains – After a building has been owned for more than 1 year, it is considered a long-term investment. Sellers pay capital gains on the amount of the selling price minus selling costs and adjusted basis in the property. The tax on this amount (the capital gain) is calculated at the capital gains rates, which is lower than the regular income tax rate.

Capital Loss – If you lose money on the sale, you may get a tax break in the form of a capital loss. Keep in mind a paper loss–a decrease in the property’s value below its purchase price–does not instantly qualify as a loss. The loss must be calculated on the sale or exchange of the property. You can then use this loss against capital gains or against regular income when paying your taxes, depending on tax rules.

Like-Kind Exchange – If you want to defer capital gains taxes, you can roll the profits on your sale into another investment property under a federal 1031 exchange, also known as a like-kind exchange.

Here is how it works: The proceeds from your first investment property are held by a third party until you purchase another investment property within a specific time frame. Specific rules must be followed such as type of property, value, etc. Assuming the transaction meets all IRS requirements, any capital gains are deferred until you sell the new property.

Importantly, you can continue to build equity by transacting one like-kind exchange after another. Many property investors use like-kind exchanges to build their rental property holdings.

LPA Quick Tips

* Automatic Agreement by No Response
Have you ever been frustrated because a tenant failed to return a signed copy of your notice of:
o LPA Lease Renewal
o LPA Rent Increase
o LPA Lease Update - Change of Terms or another notice you needed the tenant to agree to so that important changes affecting the tenancy can commence?

Here is the clause to insert into your LPA Notice of Rent Increase, Lease Update - Change of Terms Notice or Lease Renewal so that when you issue a notice, it will still be enforceable even if the tenants don’t return a signed copy to you. Just remember it is best to serve all official notices in person or by certified return receipt mail.
YOUR CONTINUED OCCUPANCY OF THE PREMISES AFTER ___________________, SHALL CONSTITUTE FULL AGREEMENT WITH ALL OF THE ABOVE IN ADDITION TO AND AS PART OF YOUR LEASE AGREEMENT. (PLEASE KEEP THIS NOTICE WITH YOUR LEASE DOCUMENT)

Just copy and paste the above to the bottom of your notice.
Disclaimer: State and local rental contract laws may vary, so The LPA recommends you consult a local attorney to make sure legal notice of this type is enforceable in your local court.

* Landlord Screening Tip:
When screening an applicant, ask for a copy of a picture ID or drivers license. Make sure the person in front of you is the same person on the application and credit report. - The LPA

* Have proof you have sent written notices.
I have on many occasions seen tenants deny they received written notices from the landlord. One of the best ways to prove a notice was sent by Certified Mail is to include the Certified Mail Article # on the document and also send a copy by regular mail, and also keep a copy for yourself. Having the article # on the document shows that the notice you sent was the same as the notice you say you sent.

Just pick up a pile of cerified mail postcards and receipt slips so you can prepare them before going to the post office. - The LPA

* Beware a Tenant’s Lease Agreement
Some tenants come with their own lease agreement already prepared for you - by their attorney in many cases. Watch out! First of all, I have never had good experiences with tenants who are experts on landlord tenant law. Secondly, it is only logical that the tenant’s lease will contain more tenant protection than it will have landlord protection. There is usually a good reason the tenant wants to use his own lease agreement. You can bet there are lots of innocent seeming little clauses in there that wouldn’t even raise an eyebrow, but can cost the landlord plenty. Just stick with a landlord lease. - John C., BVR Mgmt

* Giving proper legal notice to tenant:

(This applies to month to month tenancies or if your lease allows you to make unilateral changes to the tenancy as the LPA Lease does.)
* It is important to remember that proper notice must also be given by the tenant or the landlord for the Intention of Non - Renewal. Even though the lease has an expiration date, the landlord must still require a written notice to vacate from the tenant.

If it is a 30 or 60 day notice, be sure that the written notice is served before the beginning of the next rent period. That means if the rent is due and payable on the 1st of the month, have the notice served before that date. Serving a notice in the middle of a rent period will not change the fact that the 30 or 60 days notice period starts on the first day of the next rent period. An official dated notice should be delivered / “served” to the tenant,
o in person (preferable)
o sent by certified mail- return receipt requested
o regular first class mail combined with the above. We recommend getting a certificate of mailing receipt from the post office whenever you mail an official notice by 1st class (regular) mail.
John N., NY

* Finding a good Eviction Attorney
Since our Attorney Directory is not yet complete, this might help:
If you are searching for a good landlord attorney, first ask your family attorney (if you have one) for a referral. Then ask a local real estate rental office or property management company who they recommend.

If you are going to interview eviction attorneys, I suggest you ask a few key questions.
1. Are evictions your specialty?
2. How many do you usually do a month?
3. How long does the average eviction take from beginning to end?
4. How fast can we have these tenants in court?
An “on the ball” eviction attorney will have the answers to these questions on the spot. Pay attention to # 4- because that should be an easy one to answer if the attorney is familiar with the Landlord Tenant Court schedule.- John@theLPA.com

* Security does NOT = Rent
Let the tenants know at the lease signing that security may not be used as rent. Then ask for their word of honor- that they will not break the agreements in your lease. Point out that if the tenant stops paying rent- even if they are giving notice to vacate asking you to use the security deposit as the rent- that they will be breaking their word of honor sealed this day with their signatures. And if this happens, you (your manager or your lawyer can be the “bad guy”) have no choice but to use the security deposit for attorneys fees to swiftly evict them and destroy any good credit they may have because if their word and their signatures are NO GOOD, why should you believe that they’ll move out when they say they will? - John N., NY

* OPEN HOUSE saves time
When I’m showing a rental property, I like to arrange it to be a multiple showing, like an open house. I set aside an hour for a particular day like a Sunday between 1 and 2PM and try to send a dozen or so customers to see the property. I bring a pile of applications with me and am prepared to answer questions about the rental. The whole time I am scrutinizing the prospects.
There is such a feeling of competition between the prospective tenants, and makes any one of them feel lucky if they are chosen. Most of them are willing to submit their application, screening fee and deposit on the spot.
This has been a great timesaver for me, and makes getting them rented a little more fun. - John N., NY

* EPA Toxic Mold Information

* Quickglance Tenant Chart
Have a chart or calendar to remind you when to send a renewal form to the tenants. Put it where you will see it and refer to it. I suggest making a spreadsheet of your tenants or the Quick Glance Tenant Chart from the Essential forms page. It’s so easy to miss those renewal dates.- John N., NY

* When screening an applicant, ask for a copy of a picture ID or drivers license. Make sure the person in front of you is the same person on the application and credit report. - John N., NY

* Make copies of rent checks
If your tenant pays buy check, make a copy of the check for your records. You may need this information for future collection efforts. In the event that a judgment is awarded in your favor, the bank account can be restrained and the money can be taken from the account. - Jan Conte-Dailey N.Y.,yourcollectionsolution.com

* Enforce Late Charges
With new tenants be ready to enforce late charges the first time your tenant pays late. If you set a precident of waiving your late charge, tenants will be offended when you want to enforce your policies in the future.- Jack K., NY

* RRR: Raise Rents Regularly
One of my biggest mistakes was not raising the rent on a yearly basis. I thought that as long as the rent was being paid, I didn’t want to rock the boat. I later realized that my properties were way under rented. I found that when I tried to increase rent, the tenants went crazy. They resented that I “all of a sudden” want to hit them with a rent increase. They felt that as “good tenants” I was punishing them for no reason.- Louis C., NY

* When executing a new lease, remember to staple an Intention to Vacate form on the back of the tenant’s lease. Reminding the tenant to give proper notice and proper move-out procedure can make your life a lot easier when it’s time to start looking for a new tenant.- Dan A., OH

* Try not to collect rent in person if you can help it. It is an opportunity for the tenant to complain or make demands. Although many landlords like to check on their property under the guise of “collecting rent”, the visit often backfires. In some cases, if the landlord fails to immediately make an issue over a lease violation he notices (such as an unauthorized pet), it can be considered as giving implied permission. So, if you collect in person, be ready to confront tenants with violations.

* Don’t flash your riches in your tenant’s face
Also, if you have a beautiful car that you are proud to be seen in- try not to rub it in the faces of your tenants. Tenants resent the a landlord who arrives in a new Mercedes to collect the hard earned rent that the tenants just scraped together. Do you think they’ll feel bad for you if they’re forced to pay late or if you are behind on your mortgage? - John N., N.Y.

* Get a signed Property Condition Report
We have found that our properties are better maintained by tenants who have signed a Condition Inspection Report at Move-In. I highly recommend it.- John N., N.Y.

* Don’t forget the Landlord Reference
Always, always verify the current and past landlord. Ask the “landlord” to just verify the address of the property the tenants are leaving from. You’d be suprised how many phoney reference “landlords” don’t even know their friend’s address or how long the tenancy was. (We now have a new Landlord Reference Qualifier coming in April 2001 to the Essential Forms list.) - John N., N.Y.

* Get tenants to show their true colors
Pay special attention to your potential tenant’s reaction when you question any red flags on his application. If you strike a nerve, they may reveal their true colors if you have a potential problem tenant on your hands. - John Como, N.Y.

* Prepare your tenant
To avoid an unprepared tenant at the lease signing, be sure to instruct him on what to bring with him beforehand. We like to always require the tenant to bring a copy of his driver’s license, social security card, and the balance due in certified funds, money order or cash. Also, if there are any other adjustments, we’ll advise them at that time. - Lou, BVR Management, Inc.

* I’ve been a landlord for over 25 years and always have had a good relationship with my tenants. Unfortunately, they become my friends soon after they become my tenants and I’ve always enjoyed their friendship. That can be very costly. How can you raise rent regularly on friends? How can you enforce your lease when they break it if you value the friendship? I’m behind in my payments because my “friend” can’t pay the rent! My advice is: try not to become close friends with tenants. - Joan M., Allentown, PA

* I have been able to eliminate a few disasters by making a reason to visit the rental applicant at their current home before signing a lease with them. I get the opportunity to view how they live. Sometimes they even invite me to stay for dinner. - J.N., Naples, FL

By: Grace Bloodwell

In real estate, a short sale is a sale that happens when the outstanding loan against a property is greater than the market value of the property itself. A short sale represents a solution for a homeowner who cannot pay his mortgage and wants to walk away from the property without blemishing his credit and financial profile through a foreclosure or bankruptcy declaration. Not all banks will consider the short sale, but many will. You will need a willing lender/bank and buyer to complete a short sale. Here is how you do it.

1. Value. Confirm the value of the property by having a real estate agent perform a Comparative Market Analysis (CMA).

2. Costs associated with sale of property. Figure out what you will spend on selling the property. Total up advertising costs, any broker fees/commissions you may incur, as well as the closing costs for the deal. Ask your mortgage broker about the fees associated with closing. Be sure to include any legal fees in your calculations.

3. Total loan value. Total up all loans against the property.

4. Do the math. Subtract the total amount of money owed against the property from the expected earnings of the sale. The number remaining represents the “short” of the short sale. The lender will factor this number into consideration when deciding whether or not a short sale is appropriate.

5. Legal assistance. You may want to consider hiring a lawyer or having a family friend who is in the legal profession assist you with the deal. This article can give you a general idea about the short sale, but cannot substitute for legal advice.

6. Accountant. It is a good idea to get an accountant’s input on the short sale before you proceed. There are tax implications in the short sale, just as in any real estate transaction. You need to know exactly what you will owe before getting into a short sale scenario.

7. Find a buyer. In order to do a short sale, you’ll need to come up with a buyer to pay off the amount of money your lender will accept. The new buyer will not assume your mortgage, rather, the sale of the property will result in you paying off the mortgage directly and the buyer having his own new mortgage on the property.

8. Contact lenders. It is now time to get a lender involved with the deal. Indicate to him that you are interested in a short sale, and share the information on your specific property with him. Depending on what percent of the estimated value you offer the bank, the lender may accept your deal or not. It can be difficult to find a lender with the authority to accept a discounted amount for the loan payoff, so do not think the first broker you call will jump on the case.

9. Proving insolvency. You must prove that you are incapable of paying off the entire mortgage and/or staying current with payments month to month. The lender will perform another mortgage application process to discover if you are, in fact, incapable of the financial responsibility you agreed to when you got the original mortgage. If the root of your financial woes occurred before you received your first mortgage, the lender may have a case against you for fraud—so beware. Also, know that lenders will almost never do short sales for properties with second mortgages since the lender in the second mortgage will not be happy about forfeiting his investment.

10. Sell the property. Once your lender has okayed the deal, and you have a buyer, you are free to sell the property. The lender will want to see a contract between the seller and the buyer indicating that the sales price is the exact amount of payment that the bank will be receiving from the seller. The bank wants to be sure that you (the seller) are not pocketing extra money off the deal.

11. Benefits for the lender. Lenders and banks routinely put properties into foreclosure in order to get their money back in a situation where the borrower defaults. A short sale may be an attractive alternative to the lender in some cases. In a short sale, the lender does not have to deal with some of the unpleasantries of a foreclosure, including the eviction process, attorney’s fees, costs associated with the resale of the property, damage to the property, and all the delays that are likely to occur in the process. Even though the bank is getting less money, they are getting it “now.”

12. Benefits for the buyer. The buyer gets a property at a discount.

13. Benefits for the seller. The benefit to the seller is that he walks away from the deal without having to declare bankruptcy or having to go into foreclosure. His credit report will be unaffected by this deal as well.

The short sale deal can be a creative way to save your credit and avoid declaring bankruptcy. Be sure you talk to a lawyer, a competent lender, as well as an accountant to verify the details of short selling with particular reference to your situation. Good luck.

Related Articles

* How To Sell Your Own Home
* How To Find a Real Estate Newsletter
* How To Successfully Sell Your Home in a Soft Housing Market

By: David M. Smith

While there are lots of buyers out there searching all over the country for deals on real estate, many are still coming up empty handed, and that can lead to a lot of frustration. However, if you just know where to look in the first place to find consistently low-priced homes, it becomes a lot easier. That is exactly the purpose of a foreclosures list. It gives you access to a huge directory of properties available all over the nation that are available at prices that are below the actual market value of the properties themselves.

Homes on a foreclosure list are special types of properties that have been repossessed by lenders and scheduled for public sale due to the mortgage default of other homeowners. The lenders seek to legally sell these properties as a means of collecting the debt remaining on the loan in question. This poses a very interesting opportunity for buyers however, that can often mean savings of anywhere from 10 to 50% off the market value of lots of apartments, condos, houses and commercial properties.

Often time, lenders will allow foreclosures for sale to go for only the amount remaining in debt on the loan, regardless of how much they would be worth on the open market. This is mostly to encourage quick purchase, as they only need to recover the loan to break even. Using a list of foreclosures, anyone can learn to find all sorts of these discount properties in areas around the country!

However, there are a lot of foreclosure listings out there these days, and it can sometimes be hard to tell the great deals from not so great deals. To be able to make the best investments possible, you have to know how to analyze the homes you find on foreclosure lists, so that you choose to pursue only the properties with the best potential for investment value and profits down the line. For starters, it’s very important to do research into any foreclosure listing that interests you. Find out everything you can, from the property’s sale history, it’s estimated market value, and statistics on the surrounding neighborhood and economy. All of these figures can help you determine not just how much the home is worth now, but whether or not its value is going to increase as time goes on.

Also, learn about the many different options for the kind of homes for sale list you want. There are all sorts of lists that specialize in many different kinds of properties. A bank foreclosure list can help you find great homes available for cheap prices from banks, and the process of buying them can be very accustomed to a beginner in this practice. Conversely, buying Fannie Mae foreclosures can often be a much more involved process that may require more experience.

But no matter what type of distressed properties you end up pursing, be sure you find a reliable foreclosure listing service to help you get your hands on the properties you want. Ideally, you want to find a company that can provide not only a great volume of properties in a foreclosures list, but also up-to-date information and accurate statistics. Look for the companies who update their databases daily, and who have a lot of experience in the business.

All in all, buying homes through a foreclosures list can reap you lots of profits and savings. Just be sure to carefully weigh your options and move ahead on purchases confidently, yet cautiously, and you will be in great shape.

If I told you there was a market much larger than the New York Stock Exchange, where you have the potential to double your money in hours — with limited risk — you’d probably think I was trying to sell you something. “If it sounds too good to be true….it probably is” kinda thing. But if you are a trader, you must at least in- vestigate the Forex markets.

What is the Forex?

Forex is an acronym for “foreign exchange,” and involves trading pairs of currencies, i.e., buying one currency and selling the other in a single transaction. For example, USD/JPY is buy US dollar/sell Japanese yen. In this case, you expect the dollar to appreciate versus the yen, the yen to depreciate against the dollar, or both.
The foreign exchange market is gigantic: over $1.5 trillion in daily Forex trades, with national banks such as the Bank of Japan, money center banks such as Citicorp and large pension plans and hedge funds being the major players. It’s mainly the larger currencies that are involved, together with the US dollar. While there are several currency pairs that offer good opportunities, these four are the most widely traded: Euro/US dollar (EUR/USD), US dollar/Swiss franc (USD/CHF), US Dollar/Japanese yen (USD/JPY), British pound/US dollar (GBP/USD)?

Why Trade Forex?

There are plenty of good reasons to trade Forex, and if you have experience trading stocks or futures, you have a definite edge over the crowd. Let’s take a look at why you should consider this market:
Huge Leverage
Incredibly, you get can 200:1 leverage on Forex pairs. In a mini account, $50 controls a $10,000 position! $500 controls a $100,000 position. This obviously means potentially huge profits. But what about the risk?

Limited Risk

With Forex, your stops are always honored, even on gaps. If you have a position on into the weekend and it gaps against you Sunday night, you will be filled at your stop price — provided you have a stop in place. Plus, if your account should go to 0.00, your broker will automatically close out trading, so you can’t possibly lose more than your margin deposit. If you’ve ever had a maintenance call from a broker, you’ll appreciate this.

24-Hour Trading

If you just can’t get enough trading out of your system during regular NYSE trading hours, you’ll love the fact the Forex trades 24 hours a day, from the beginning of the Japanese session Sunday evening about 8 PM EST to the end of the US session on Friday at 4:00 or 5:00 PM EST. European bourses open at 3:00 AM EST, and the US session opens at 9:30 AM EST. The slowest periods are between 4:00 PM EST and 8:00 PM EST, between the end of the US session and the beginning of the Asian markets.

No Commissions/Low transaction costs
There’s no question but that stock commissions have come down a lot, but with Forex, there is no commission — your fee is the dealer spread. The spreads are small, usually about 4-5 PIPs. On a mini account, that’s $4-$5.

Tremendous Upside Potential — And Fast
Because of the incredibly high leverage, you have the potential to double your investment quite rapidly — in hours even. I’ll show you a trade shortly to make this point.

Low Capital Requirements
many brokers will let you open an account with $2000, and you can even open a mini Forex account for a few hundred dollars. This obviously is substantially less than the $25,000 requirement for day traders. Mini Forex trades can be put on for as little as $50.

No Bull or Bear Markets
With stocks, 70% of the move is due to the market, so if the market isn’t moving, it’s harder to find good stocks to trade. Not so with Forex, as the many combinations available mean there is always some currency pair moving.
No Restrictions on Selling Short
Shorting stocks has always been a little tricky, with the up tick rule and now that bullets are gone, life just got tougher. In the Forex market, there are no restrictions on selling short.
Low Correlation with Equities

As with most commodities, currencies have a very low correlation with equities and fits in nicely with the concept of portfolio risk reduction.

In conclusion, there is no doubt that Forex trading should be considered for the above reasons. However, one must consider that most country governments take an active interest in manipulating their currencies and using technical analysis might be less reliable due to the large part that domestic and international politics play in price movements. Oh well, nothing is perfect-particularly in the world of finance and investing.

California is known as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan. The document that secures the title is usually called a deed of trust but may also be referred to as a mortgage. California has a complicated set of rules concerning foreclosures and alternate rules for foreclosures; it is generally a consumer friendly state.

How are California mortgages foreclosed?

The primary method of foreclosure in California involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action. When the deed of trust is initially signed, it will usually contain a provision called a power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the underlying defaulted loan. The trustee acts as a representative of the lender to effectuate the sale, which typically occurs in the form of an auction. Unlike many states where trustees are appointed by lenders, title companies primarily serve as trustees managing foreclosure sales in California. California has a requirement known as the one-action rule. If a foreclosure is completed by non-judicial means, a second action to recover a deficiency judgment is not permitted. Using a judicial foreclosure, a lender may recover a deficiency judgment in certain circumstances. But since this process takes longer than non-judicial foreclosure, it is rarely used. California non-judicial remedies have stringent notice requirements and the mortgage documents are required to contain thepower of sale language in order to use this type of foreclosure method.Judicial foreclosure are permitted in California and these usually occur when no power of sale language is included in the loan documents.

Power of Sale Notice Requirements:

1. A notice of default is recorded after a default occurs in the county in which the property is located. This does not necessarily occur after one or more payments are not met but for logistical reasons may occur after a loan is in substantial default — sometimes six months or more past due. This is known as the redemption period. The foreclosure process does not move forward for a minimum of 60 days. A notice of sale containing the name and address of trustee, certain disclosures (including that the property is about to be lost to foreclosure sale), the name of the beneficiary, and other information must be recorded in the county in which the property is located at least 14 days before any foreclosure sale after that time period. This is known as the publication period.
2. The borrower must receive a twenty (20) day notice before any foreclosure sale, further notice of the foreclosure must: (a) mailed to the defaulting borrower (and other creditors whose liens affect the property) and; (b) be posted at the property being foreclosed upon and in a public place in the county where any sale would occur. The defaulting borrower may prevent the foreclosure sale by paying all arrearages up to five (5) days before the sale. The trustees’ foreclosure sale then occurs at the earliest twenty one (21) days after the first publication.
3. Foreclosure sales must take place on any business day between the hours of 9AM and 5PM and must occur at the location referenced on thenotice of sale. The trustee will auction the property to the highest bidder, including the lender. The borrower is permitted to postpone the sale for one (1) day.

In California, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain the power of sale language, the lender may seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in county court along with what is known alis pendens. Alis pendens is a recorded document that provides public notice that the property is being foreclosed upon.
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What are the legal instruments that establish a California mortgage?

The documents are known as the deed of trust,note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in California?

Depending on the timing of the various required notices, it usually takes a minimum of 120 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy.

Is there a right of redemption in California?

California has a complicated statutory right of redemption after the foreclosure sale has occurred, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs one (1) year after foreclosure sale unless the original lender made a full price bid then that period is shortened to three (3) months. A borrower does have ninety (90) days after the recordation of a notice of default to cure any default and this is commonly referenced as the redemption period although it is not a true statutory redemption. Junior lien holders cannot redeem. There is no statutory right of redemption if a deficiency judgment is waived or prohibited at the time of which effectively negates any possibility of a redemption occurring in the scenario noted above.

Are deficiency judgments permitted in California?

Only in certain circumstances. A deficiency judgment may not be obtained when a property in foreclosure is sold through a non-judicial public sale or if the foreclosure relates to a purchase money mortgage. Different rules apply to guarantors of such loans.

What statutes govern California foreclosures?

The laws that govern California foreclosures are found in California Civil Code, Section 2924. To view these statutes on the Web, you can visit:

http://www.leginfo.ca.gov

There are two primary points to consider. The first is that all of the debt that encumbers the preforeclosure property remains against the property until it is sold at the foreclosure auction. This means that any “junior” or subordinate debt stays in place, including trusts, second and perhaps even third mortgages, tax liens, assessments, and judgments. Any of these debts incurred by the owner and secured by the real estate, which may exist against the property, must be paid off. Most of the time, there is only one trust deed or mortgage on a property; however, it is of vital importance that you find out about any other possible indebtedness before you spend too much time and money pursuing a purchase of the property.

The second issue is that only the individuals who are named on the title can sell the property. This seems obvious, but it can go overlooked and valuable time can be wasted. All of the owners of the property must agree to sell it to you before a legal sales transaction can be completed. Make sure that you know who ALL the owners are and that they are all interested in selling before you start negotiating a deal. Most homes are owned by individuals or couples, so finding them and negotiating with them should be straightforward. Owners who have co-signors or non-resident partners, and owners who have abandoned the property and may have moved out of the area will obviously take additional time and effort to locate, negotiate with, and get documents signed. Just remember that even one deal that nets you thousands of dollars will make your time well spent.

You must submit a written contract directly to the owners in order to buy a preforeclosure, since the property still belongs to them during this stage. You can initiate contact with the owners by mail, by phone, or by visiting them, depending on your personal preference. When you make contact, find out all you can about the physical and financial details of the property in addition to the information you have from our database. For example, find out the condition of the property and its major systems (e.g., roof, plumbing, heating/air conditioning, appliances, and foundation). You are there as a problem-solver, and you MUST learn the full extent of the problems. Also find out the number of liens, type of liens, loan balances, and total amount of arrears. Ask to see any correspondence from the lender(s) that will fill in the details the owners may not be fully aware of or may not full understand. The sooner you can establish yourself as a true professional who needs the complete and honest cooperation of the owners, the sooner you can make a reasonable offer that will help them, and enable you to achieve a profit.

You will need all this physical and financial information to do your research and to determine whether the property represents a good deal, given what you (and your partners, if any) want to do with it. Once you have made the determination, you can then prepare a written contract and submit it to the owners. When you have successfully negotiated the purchase, you must then inform the foreclosure attorney to stop the foreclosure process during the time necessary to proceed to closing and settlement of the purchase transaction.

Absolutely! Most of the great family fortunes in our country have been created through real estate ownership and investments in real properties. People just like you are attracted to the opportunities presented by dealing with foreclosures because frequently they can buy the properties at prices substantially below market value. Buying properties at discount prices is the surest and quickest way to make money in real estate. Individuals who are looking for a home can get a significant amount of equity up front with foreclosures. Of course, there are no guarantees with any investment, but all across the country, people earn almost immediate income by “flipping” foreclosure properties for big profits. And many landlords are able to buy and rent foreclosures, producing positive cash flow and long term wealth accumulation.