Home Equity Sales Contract Act
Home Equity Purchasers
- A home equity sale is one that involves the purchase of any property in foreclosure, but for purposes of the HESCA law, a home equity purchaser is someone who buys the property and does not intend to live in it, is not related to the owner, is not being given the property voluntarily, or the property is being conveyed under the terms of a trust, by law, or by court order.
- The HESCA law is limited to dwellings that are for one to four families, have an owner occupying at least one of the units, and are currently in foreclosure.
- The HESCA law provides a detailed description of how a contract for an equity sale meeting the definition of the law must be drawn up, including terms for consideration, payment and a right of cancellation.
Right of Cancellation
- The HESCA law allows the seller a five-business days "cooling off" period, during which time he may cancel the contract without any penalty or further obligation. The equity purchaser is prohibited from taking any actions during that period.
- The HESCA law provides for criminal penalties for equity purchasers who violate the law, with a fine of up to $25,000 and one year in prison for each count.