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Article of the Month for July 2006 Printer friendly version

Post-Sale Trustee Issues

by Ward Hanigan

Record Your Trustee's Deed Immediately
It's becoming increasingly important that you insist on personally recording your Trustee's Deed as quickly as possible after the trustee's sale. Since most trustees seem oblivious to the need for speed in recording your deed, you should be prepared to explain to them that:

  1. Senior lienors often require documentary proof that you are the new owner of record before they'll allow you to reinstate their delinquent senior loans.
  2. Being the owner of record is a prerequisite before you can legally serve a 3-Day or 30-Day Notice To Quit on any holdover owner or tenant who is continuing to occupy the premises after the trustee's sale [California Civil Procedure 1161a(b)(3)].
  3. You must be the owner of record within 15 days following the foreclosure sale date in order to claim that you have a perfected right to the property that is superior to the previous homeowners' rights-just in case they file a bankruptcy petition in the interlude after the trustee's sale took place, but before you record your Trustee's Deed.
You should also be aware that a trustee can now unilaterally reverse their sale to you, even after you've recorded your trustee's deed. All they have to do is record their "Rescission of Trustee's Deed"!

Compare Your Title Search Record Against The Trustee's T.S.G. Report
The Trustee is required to notify all junior lienors of the impending foreclosure of a senior lien by mailing them, via registered or certified mail, copies of the NOD and Notice of Trustee's Sale (California Civil Code 2924b). The lack of timely, proper notice to a junior lienor before the trustee's sale will create a situation where the junior lien will remain on title and not be expunged by the foreclosure of the senior lien. So it's not enough that you be thoroughly informed as to the condition of title before the sale-the trustee's file must also be as equally accurate.

Therefore, it's very important that you and/or the trustee compare your title research results with the trustee's title report (Trustee's Sale Guaranty). Generally, it's not possible to do such a comparison before the sale. So, once you're the winning bidder, contact the trustee and do the comparison, before the trustee irrevocably disperses the trustee sale funds.

If it's discovered that they made a mistake and didn't notify all entitled lienors, they can use their authority to cancel the sale, return your winning bid amount to you, and re-set the trustee's sale again (by recording a new Notice of Trustee's Sale that is mailed out to all junior lienors).

Information provided by this website is for informational purposes only and is not a substitute for professional advice. Please consult your investment advisor and/or attorney before entering into any transaction. Read our privacy policy.

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