This article shall be known, and may be cited, as the Buyer’s Choice Act.
Article 1.8Buyer’s Choice Act
Section § 1103.20
This law is officially named the Buyer’s Choice Act, which means it can be referred to by this name.
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Section § 1103.21
This California law addresses issues related to the sale of foreclosed homes. It recognizes that foreclosures now make up a large part of the housing market, and this concentration has changed how the market works, often affecting everyday homebuyers. To ensure fairness, the law aligns with federal rules by preventing sellers from requiring buyers to purchase title insurance or escrow services from specific companies when buying a foreclosed home. This protection aims to uphold transparency and fairness in real estate transactions, especially for foreclosed properties.
(a)CA Civil Law Code § 1103.21(a) The Legislature finds and declares:
(1)CA Civil Law Code § 1103.21(a)(1) Sales of foreclosed properties have become a dominant portion of homes on the resale real estate market.
(2)CA Civil Law Code § 1103.21(a)(2) The recent troubled real estate market has resulted in a concentration of the majority of homes available for resale
within the hands of foreclosing lenders and has dramatically changed the market dynamics affecting ordinary home buyers.
(3)CA Civil Law Code § 1103.21(a)(3) Preserving the fair negotiability of contract terms is an important policy goal to be preserved in real estate transactions.
(4)CA Civil Law Code § 1103.21(a)(4) The potential for unfairness occasioned by the resale of large numbers of foreclosed homes on the market requires that protections against abuses be made effective immediately.
(5)CA Civil Law Code § 1103.21(a)(5) The federal Real Estate Settlement Procedures Act (RESPA) creates general rules for fair negotiation of settlement services, prohibits kickbacks and specifically prohibits a seller in a federally related transaction from requiring a buyer to purchase title insurance from a particular insurer.
(6)CA Civil Law Code § 1103.21(a)(6) California law does not
specifically prohibit a seller from imposing, as a condition of sale of a foreclosed home, the purchase of title insurance or escrow services from a particular insurer or provider.
(7)CA Civil Law Code § 1103.21(a)(7) Therefore it is necessary to add this act to California law to provide to a home buyer protection that follows the RESPA model and applies to, and prevents, the conditioning of a sale of a foreclosed home on the buyer’s purchase of title insurance from a particular insurer or title company and/or the buyer’s purchase of escrow services from a particular provider.
(b)CA Civil Law Code § 1103.21(b) It is the intent of the Legislature that, for the purpose of this act, the sale of a residential real property is deemed to include the receipt of an offer to purchase that residential real property.
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Section § 1103.22
If you're selling a house with up to four units, you can't force the buyer to use a specific title insurance company or escrow service. However, if you recommend one, you must first let the buyer know they can choose their own. Sellers who break this rule have to pay the buyer three times what the title or escrow service cost, and they might face penalties from their professional licensing board. The sale won't be undone just because someone didn't follow this rule.
(a)CA Civil Law Code § 1103.22(a) A seller of residential real property improved by four or fewer dwelling units shall not require directly or indirectly, as a condition of selling the property, that title insurance covering the property or escrow service provided in connection with the sale of the property be purchased by the buyer from a particular title insurer or escrow agent. This section does not prohibit a buyer from
agreeing to accept the services of a title insurer or an escrow agent recommended by the seller if written notice of the right to make an independent selection of those services is first provided by the seller to the buyer.
(b)CA Civil Law Code § 1103.22(b) For purposes of this section:
(1)CA Civil Law Code § 1103.22(b)(1) Escrow service” means service provided by a person licensed pursuant to Division 6 (commencing with Section 17000) of the Financial Code, or exempt from licensing pursuant to Section 17006 of the Financial Code.
(2)CA Civil Law Code § 1103.22(b)(2) “Seller” means a mortgagee or beneficiary under a deed of trust who acquired title to residential real property improved by four or fewer dwelling units at a foreclosure sale, including a trustee, agent, officer, or other employee of any such mortgagee or beneficiary.
(3)CA Civil Law Code § 1103.22(b)(3) “Title
insurance” means insurance offered by an insurer admitted in this state to transact title insurance pursuant to Chapter 1 (commencing with Section 12340) of Part 6 of the Insurance Code.
(c)CA Civil Law Code § 1103.22(c) A seller who violates this section shall be liable to a buyer in an amount equal to three times all charges made for the title insurance or escrow service. In addition, any person who violates this section shall be deemed to have violated his or her license law and shall be subject to discipline by his or her licensing entity.
(d)CA Civil Law Code § 1103.22(d) A transaction subject to this section shall not be invalidated solely because of the failure of any person to comply with any provision of this act.
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