Sale While in Foreclosure Rescinded 18 months After Contract and 14 months After Close of Escrow

In this case, In re Lloyd, — B.R. —-, 2007 WL 1346553 (Bkrtcy.N.D.Cal.,2007), out of the Northern District of California, the Court held that a rescission of a home purchase contract was valid 18 months after the contract was signed and 14 months after close of escrow. The reason is that under the Home Equity Sales Contracts Act (HESCA), if a sale of a home in foreclosure is going to be completed, the seller needs to be given notice (next to his signature) stating that he has a 5-day right to rescind (cancel) the contract. That was not done in this case and the court found that the seller/debtor could rescind the contract and get his house back, even though the rescission was done over a year after close of escrow on the property.