Chapter 17 - § 17.8 • EQUITY PURCHASE CONTRACTS

• Jurisdiction: Colorado

§ 17.8 • EQUITY PURCHASE CONTRACTS

§ 17.8.1—Contracts Between a Home Owner and an Equity Purchaser

A contract between a home owner³⁵⁸ and an equity purchaser³⁵⁹ whereby the equity purchaser will acquire title to a residence in foreclosure³⁶⁰ must be written in at least nine-point, legible type and fully completed, signed, and dated by the home owner and the equity purchaser prior to the execution of any instrument quit-claiming, assigning, transferring, conveying, or encumbering an interest in the residence in foreclosure.³⁶¹ The contract must contain the entire agreement of the parties, and must include the following terms:³⁶²

• The name, business address, and telephone number of the equity purchaser;
• The street address and full description of the residence in foreclosure;
• Clear and conspicuous disclosure of any financial or legal obligations of the home owner that will be assumed by the equity purchaser;³⁶³
• The total consideration to be paid by the equity purchaser in connection with or incident to the acquisition by the equity purchaser of the residence in foreclosure;
• The terms of payment or other consideration, including, but not limited to, any services of any nature that the equity purchaser represents will be performed for the home owner before or after the sale;
• The date and time when possession of the residence in foreclosure is to be transferred to the equity purchaser;
• The terms of any rental agreement or lease;
• The specifications of any option or right to repurchase the residence in foreclosure, including the specific amounts of any escrow deposit, down payment, purchase price, closing costs, commissions, or other fees or costs;
• A notice of cancellation; and
• The following notice, in at least nine-point bold-faced type, and completed with the name of the equity purchaser, immediately above the statement required by C.R.S. § 6-1-1114:
NOTICE REQUIRED BY COLORADO LAW

Until your right to cancel this contract has ended, __________ (Name) or anyone working for __________ (Name) CANNOT ask you to sign or have you sign any deed or any other document.

The contract survives delivery of any instrument of conveyance of the residence in foreclosure, but does not have any effect on persons other than the parties to the contract or affect title to the residence in foreclosure.³⁶⁴

In addition to any right of rescission available under state or federal law, the home owner has the right to cancel a contract with an equity purchaser until 12 midnight of the third business day following the day on which the home owner signs a contract that complies with the Colorado foreclosure Protection Act, or until 12 noon on the day before the foreclosure sale of the residence in foreclosure, whichever first occurs.³⁶⁵ Cancellation occurs when the home owner personally delivers written notice of cancellation to the address specified in the contract or upon deposit of such notice in the United States mail, properly addressed, with postage prepaid.³⁶⁶ A notice of cancellation by the home owner need not take the particular form as provided with the contract and, however expressed, is effective if it indicates the home owner's intention not to be bound by the contract.³⁶⁷ In the absence of any written notice of cancellation from the home owner, the execution by the home owner of a deed or other instrument of conveyance of an interest in the residence in foreclosure to the equity purchaser after the expiration of the rescission period creates a rebuttable presumption that the home owner did not cancel the contract with the equity purchaser.³⁶⁸

The contract must contain, as the last provision before the space reserved for the home owner's signature, a conspicuous statement in at least 12-point³⁶⁹ bold-faced type, as follows:

You may cancel this contract for the sale of your house without any penalty or obligation at any time before __________ (Date and time of day). See the attached notice of cancellation form for an explanation of this right.³⁷⁰

The equity purchaser must accurately specify the date and time of day on which the cancellation right ends.³⁷¹

The contract must be accompanied by duplicate completed forms, captioned "notice of cancellation" in at least nine-point bold-faced type if the contract is printed or in capital letters if the contract is typed, followed by a space in which the equity purchaser shall enter the date on which the home owner executed the contract. The form must:

• Be attached to the contract;³⁷²
• Be easily detachable;³⁷³ and
• Contain the following statement, in at least nine-point type if the contract is printed or in capital letters if the contract is typed:³⁷⁴

NOTICE OF CANCELLATION
__________ (Enter date contract signed). You may cancel this contract for the sale of your house, without any penalty or obligation, at any time before __________ (Enter date and time of day). To cancel this transaction, personally deliver a signed and dated copy of this Notice of Cancellation in the United States mail, postage prepaid, to __________, (name of Purchaser) at __________ (Street address of purchaser's place of business) NOT LATER THAN __________ (Enter date and time of day). I hereby cancel this transaction __________ (Enter Date) __________ (Seller's signature).

The equity purchaser must provide the home owner with a copy of the contract and the attached notice of cancellation.³⁷⁵

Until the equity purchaser has complied with the provisions of C.R.S. § 6-1-1114, the home owner may cancel the contract.³⁷⁶

Within ten days following receipt of a notice of cancellation, the equity purchaser must return without condition the original contract and any other documents signed by the home owner.³⁷⁷

A transaction in which a home owner purports to grant a residence in foreclosure to an equity purchaser by an instrument that appears to be an absolute conveyance and reserves to the home owner, or is given by the equity purchaser, an option to repurchase is permitted only where all of the following conditions have been met:³⁷⁸

• The reconveyance contract complies in all respects with C.R.S. § 6-1-1112;
• The reconveyance contract provides the home owner with a nonwaivable 30-day right to cure any default of the reconveyance contract and specifies that the home owner may exercise the right to cure on at least three separate occasions during the reconveyance contract;
• The equity purchaser fully assumes or discharges the lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure, which assumption or discharge must be

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