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We’ve all heard the horror stories about a poor widow being unable to afford her mortgage, and the mortgage goes into foreclosure. Then, someone comes along promising to “save” her house by temporarily transferring the property to them, and allowing the widow to stay there while she gets back on her feet. Then the house would revert back to her. Of course, this never happens. What happens is the house gets sold again – the scammer makes a profit – and the widow loses her house. This is called a “buy-back”.

The New York State Legislature enacted the above law effective February 1, 2007. The Act requires that in a situation where an investor (not someone planning to live in the house after closing) purchases a home from someone whose mortgage is in foreclosure, or in default of payment for two months for a “buy-back” agreement, the purchaser will be given five business days after signing the contract to cancel the contract. This must be written into the contract. If the Act is not followed exactly, the seller will have up to six years to void the transfer.

This law is extremely complicated, and if you are a homeowner in default, or an invester, it would be imperative for you to consult an attorney as to your rights and responsibilities. As a homeowner, you should be aware of scams and your rights under this law. As an invester, you should be in compliance with the Act, especially since it provides for criminal sanctions, in addition to monetary sanctions.

For more information, see

Cynthia M. Burke,

Categories: Real Estate Law