Once a contract is determined to be covered by the Act, there are some strict contractual requirements that must be met: The contract must contain the entire agreement between the parties and must meet the following format requirements: Contract must be fully completed (i.e., no blank spaces); Font size equal to at least 12-point bold type; In English or in both English or Spanish if Spanish is the primary language of the equity seller; Name, address and phone number of the buyer; Address of the subject property; Consideration to be paid; List of all services that buyer has promised; Terms for payment of the consideration; Time at which possession of the property must be surrendered; Terms of any rental or lease agreement; Terms of any reconveyance agreement; Notice of right to cancellation in the immediate proximity of signature line and font in at least 14-point bold type (form in HEPTA); and Notice of cancellation form to be attached to the contract (form in HEPTA) Any provision which purports to limit the liability of the equity purchaser shall be null and void.
2-Year Right of Rescission - Generally, a violation of the contractual requirements or any of the prohibited acts in Subdivision 7 makes the conveyance voidable and may be rescinded within 2 years of the date the deed was recorded.
HEPTA does not affect the rights of a bona-fide purchaser or encumbrancer for value if their conveyance occurred before the recording of the notice of rescission.
These criminal penalties are in addition to the risk that the equity seller will rescind and thereby jeopardize the encumbrancer's interest in the property.
Those who acquire title as follows are excluded from HETPA: (i) To use, and then actually uses, the property as his/her primary residence; (ii) By a deed from a referee in a foreclosure sale; (iii) At any sale of property authorized by statute; (iv) By order or judgment of any court; (v) From a spouse, or from a parent, grandparent, child, grandchild or sibling of such person or such person's spouse; (vi) As a not-for-profit housing organization or as a public housing agency; or (vii) As a bona fide purchaser or encumbrancer for value (e.g. a lienholder) What is a Bona Fide Purchaser?
An equity purchaser has a defense to a violation of Subdivision 7 if he/she (i) acted in good faith; (ii) proves that the violation was not intentional (iii) proves that the violation resulted from a bona fide error despite procedures adapted to avoid such errors; (iv) notifies the equity seller within ninety days of the contract date of the compliance failure; Makes appropriate restitution within ninety days of the contract date.