§ 6-1-1115 — Options through reconveyances

(1) 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 shall be
permitted only where all of the following conditions have been met:

(a) The reconveyance contract complies in all respects with section 6-1-1112;

(b) The reconveyance contract provides the home owner with a nonwaivable
thirty-day right to cure any default of said reconveyance contract and specifies that
the home owner may exercise this right to cure on at least three separate occasions
during such reconveyance contract;

(c) The equity purchaser fully assumes or discharges the lien in foreclosure
as well as any prior liens that will not be extinguished by such foreclosure, which
assumption or discharge shall be accomplished without violation of the terms and
conditions of the liens being assumed or discharged;

(d) The equity purchaser verifies and can demonstrate that the home owner
has or will have a reasonable ability to make the lease payments and to repurchase
the residence in foreclosure within the term of the option to repurchase under the
reconveyance contract. For purposes of this section, there is a rebuttable
presumption that the home owner has a reasonable ability to make lease payments
and to repurchase the residence in foreclosure if the home owner's payments for
primary housing expenses and regular principal and interest payments on other
personal debt do not exceed sixty percent of the home owner's monthly gross
income; and

(e) The price the home owner must pay to exercise the option to repurchase
the residence in foreclosure is not unconscionable. Without limitation on available
claims under section 6-1-1119, a repurchase price exceeding twenty-five percent of
the price at which the equity purchaser acquired the residence in foreclosure
creates a rebuttable presumption that the reconveyance contract is
unconscionable. The acquisition price paid by the equity purchaser may include any
actual costs incurred by the equity purchaser in acquiring the residence in
foreclosure.

Legislative History

Source: L. 2006: Entire part added, p. 1341, � 1, effective May 30.