Facts About California's Trustee's Sales
All Cash Required
In some other states junior lienors are allowed to "credit bid" their unpaid balances at the foreclosure sale of a senior lien, but that is NOT the case in California.
No Property Inspection or Title Report
Since trustees make no title reports available to bidders on upcoming foreclosures it is a case of "buyer beware". Bidders are well advised to do a thorough title search at the county recorder's office, or purchase the equivalent, before they bid on any foreclosure. Forming assumptions or guessing about lien priorities will result in heavy losses from time to time.
Finality of Sale/Sale Effect/Trustee's Deed
The effect of a trustee's sale is the absolute extinguishment of the foreclosing lien and any and all junior (later recorded or non-recorded) liens and title interests pertaining to the specific property. A junior lien may continue to exist (especially an involuntary lien) after the trustee's sale-but not against the foreclosed property. Since real property taxes are always the most senior claim against the title to any property they are not wiped out by any foreclosure. But don't confuse property taxes with income taxes. State and federal income tax liens in junior priority are cleared off the title to property by a foreclosing senior lien. This issue is sometimes confusing because the Feds have a "redemption right" for a limited time (120 days) that allows them to buy out the new foreclosure owners for the price they paid for a property and take title to the property for the purpose of selling it themselves for even more money (in order to collect something towards the foreclosed owners' delinquent federal income taxes).
A trustee's deed is the equivalent of a quitclaim deed and as such only purports to transfer whatever title interest the trustee might have had-if any. In addition, successful bidders do not automatically acquire any possessory right to foreclosed property via a trustee's sale. Possession is perfected afterward, usually via a voluntary abandonment or surrender of the premises by the occupants. An eviction lawsuit can be resorted to if they prove to be intransigent and that will usually take about 30 days or so.
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