Equity purchaser
An equity purchaser is someone who acquires a home in foreclosure through a property reconveyance: typically taking title from the owner and offering a lease with an option to buy the house back.
Minnesota regulates the role closely, under Minn. Stat. 325N.10 to 325N.18.
The transaction the statute is aimed at#
A homeowner facing a sheriff's sale is approached. They deed the house to the purchaser, who redeems or pays off the loan. The homeowner stays on as a tenant, with an option to repurchase later.
Sometimes that works. Frequently it did not, and the outcome was that the homeowner lost both the house and their equity while believing they had been rescued.
The five-day cancellation right#
The central protection, under Minn. Stat. 325N.13.
A foreclosed homeowner may cancel any contract with a foreclosure purchaser until the earlier of:
midnight of the fifth business day after signing a contract that complies with the statute, or
the end of the redemption period.
Three details make it strong.
The five days do not begin to run until all parties have executed the contract and the equity purchaser has complied with the section's requirements. A non-compliant contract never starts the clock.
Cancellation is effective on mailing or transmission, by any means, in writing. Email counts. The homeowner does not need it to arrive.
And a timely cancellation renders any deed executed before it void.
The contract requirements#
The contract must be accompanied by a completed notice of cancellation in duplicate, captioned in 12-point boldface if printed or capitals if typed, with a space for the date the owner executed the contract.
The equity purchaser must accurately enter the date and time at which the cancellation right ends.
What an equity purchaser may not do#
Under Minn. Stat. 325N.17, until the cancellation period has fully elapsed, an equity purchaser must not accept a conveyance from the owner or induce one, record any document signed by the owner, or transfer or encumber any interest in the residence.
The statute also imposes an ability-to-pay standard on repurchase terms and requires a minimum consideration to the homeowner where a reconveyance fails — provisions aimed squarely at transactions structured so that the homeowner could never succeed.
Waiver#
Void, with one narrow exception.
A homeowner may waive the five-day right only where the property is subject to a foreclosure sale within those five business days, and only by a handwritten statement signed by all parties holding title.
Anything else purporting to waive chapter 325N is unenforceable.
For a homeowner#
If you have signed something and are within five business days, you can probably still get out. Write, send it any way you can, keep proof, and call a lawyer or a HUD-approved counsellor immediately.