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Avoiding non-notice problems...

Posted by Ward-CA- on September 04, 2003 at 6:31 AM

In Reply to: Requests For Notice posted by SeanW on September 03, 2003 at 7:11 PM

: Something to add to Ward's article a few months ago.

: I remember some time back, Ward said he trains people to verify that junior interest holders were notified before the sale.

: I was curious how exactly this would be done -- would the trustee provide proof, or would the potential investor need to contact all the juniors?

: Well, if I'm reading my statutes right, in North Carolina, there is "almost" no need for this. The junior creditors need to make the effort to file their Requests For Notice-- because only THEN would it become the trustee's responsibility to notify them, of a sale.

: As a practical matter, most non-institutional juniors don't file a RFN. (Heck, how many people know how to enforce a judgement, much less remember to file a RFN?)

: It sure sounds like cheap insurance... that they really *should* be doing. So no wonder juniors rarely bid at the auction!

-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

Sean,

As you're aware, CA is very consumer oriented. So, almost 20 years ago CA dropped the requirement that only those junior lienors who had the foresight to record a special request for notice were afforded a pre-sale copy of both the NOD (notice of default) and the NTS (notice of trustee's sale). Looks like NC has some catching up to do.

If the adversely affected junior lienors/interest holders don't receive the mandated copies of the NOD/NTS then their interests are NOT wiped off title by the subsequent foreclosure sale!!

Wow, that could mean that you, as the highest bidder at the trustee's sale, would be saddled with more liens remaining after the sale simply because the trustee didn't notify some junior lienholders that they were in harm's way!

The remedy to this potential problem is to double check what junior liens and interests show on the trustee's Trustee's Sale Guaranty (TSG) versus what our trainee has found by examining the title of the property at the County Recorder's records.

If there's a lack of notice according to the Code then it can be simply remedied by canceling the original trustee's sale based on mistake and returning the sale bid amount before its distribution and noticing everyone who's entitled to notice before the second go-around of the trustee's sale.


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