| |
The California Supreme court's recent denial of certiorari in Schweitzer v. Westminster Investments (2007) 157 Cal. App.4th 1195 does not have as dramatic and wide-sweeping an effect on the California Home Sales Contract Act (Cal Civil Code Section 1695 et seq.) as California REALTORS(R) might hope.
The California Home Equity Sales Contract Act was enacted to protect defaulting homeowners from being negotiated out of their homes by slick talking foreclosure consultants representing investors. The terms of the act required that in order to represent an investor in a foreclosure equity purchase of a 1-4 unit primary residence in default, you had to have a license and put up a bond twice the amount of the fair market value of the property.
The catch? No insurers in the state offered the required bond, effectively making it illegal for licensees to represent foreclosure investors.
In Schweitzer, a REALTOR(R) did just that, and was slapped with a seller lawsuit on the basis that he failed to post the bond. At the California Appellate court in the Fourth Appellate District, Division 1, the bond requirement was found to be unconstitutionally vague and the court found for the REALTOR(R).
On March 26, 2008, the California State Supreme Court denied review of the case - effectively telling the plaintiff to go away and leaving the ruling undisturbed.
What does it all mean? Can REALTORS(R) start taking on the lucrative business of representing foreclosure investors everywhere? Not so fast.
For one thing, the Court's denial of review is NOT the same as upholding the decision. In fact, all the ruling actually means is that in the Fourth Appellate District that lower courts will be prevented from following the legislation as drafted due to controlling precedent.
The Fourth Appellate court retains the power to go back on its own decision. Not to mention, in all five other jurisdictions in the state, the Home Equity Sales Contract Act is still controlling.
Likely the reason the Supreme Court did not hear the case is that currently, there are no conflicting appellate court decisions on the issue. Supreme Courts are in the business of resolving conflicts among departments on the lower level, rather than spending time on undisputed matters of first impression. In short, the fight is far from over.
However, if you are a REALTOR(R) who finds yourself in this position, you have now been given a great defense, with all of the arguments already written for you and an influential appellate decision to boot.
In the long run, if the Supreme Court does rule the law unconstitutional as drafted, the legislature will know the reason is that bond requirement is too vague. The legislature is perfectly capable of going back to the drawing board, making a clearer bond requirement, and passing it all over again.
Therefore, if I was a REALTOR(R) (which I am) and I wanted to stay as far as possible on this side of the law (which I do) I'd still steer clear of accepting this kind of representation (which I plan to) - at least until the bonds are offered by an insurance company in our state (which they're not).
About Michael Rooney Law Office: Michael Rooney Law Office is a San Francisco law firm specializing in litigation, real property, estates and trusts, and business consulting. Learn more at http://mikerooneylaw.com. Michael Rooney Law Office teaches the California DRE approved consumer protection class: "Foreclosure Fictions and Facts." For Moreinformation, contact: Michael Patrick Rooney http://mikerooneylaw.com
 EasyPublish™ this article - publishers click here
More articles by Michael Rooney
- Do You Have to Get Out of the Car if Stopped by the Police? Plus 4 Things the Prosecutor Must Prove (James Parrish)
This article is designed to educate the reader regarding the legalities of what a law enforcement officer may and may not do following a traffic stop. It also demonstrates 4 items, which the prosecutor must prove during trial in order to obtain a conviction for DWI/DUI in the Courts of Virginia. - Tying the Financial Knot. What to Know Before You Get Married. (Alexis Martin Neely)
Tying the knot? Well, you are tying the financial knot as well. Hear America's Personal Family Lawyer and leading Financial Expert speak on 5 hot topics couples should discuss before getting married: Debt, Combining finances, Community vs. Separate Property, Taxes and Estate planning.
|