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Failure to notify a junior lienor is rare...In Reply to: Re: Post-sale consequence of missed notification to a lien of record... posted by bob on October 15, 2003 at 11:10 PM
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- Bob, Yes, a winning foreclosure bidder has recourse against a trustee who failed to notify a junior lienor whose lien is against the title of the foreclosed property. That's because failure to notice the junior lienor of the impending foreclosure results in the junior remaining intact and against the title of the foreclosed property after the sale. So you might find you now own a property with a lien against it that would have been wiped off if the trustee had sent the lienor the required notice. Lack of notification doesn't happen too often. It is usually discovered by the title company that is issuing a title policy to a third party buying the property about 6 months later. If the problem is discovered soon after the trustee's sale then it can be corrected by having the trustee cancel the sale, based on mistake, and return the bidder his funds. Then the trustee would re-record a new Notice of Trustee's Sale and make sure this time around that everyone is noticed. If the problem isn't discovered until months later then it's a different story since it wouldn't be possible to just cancel the sale and get the dispersed funds back from the distributees. In that case the bidder would have to sue the trustee, which would kick in the contract of indemnification between the trustee and the title company that issued the faulty TSG (Trustee's Sale Guaranty). The bidder would ultimately get the overlooked lien removed from the title of the property he bought, but not before spending a fair amount of legal fees he wouldn't be able to recoup. Hope this helps.
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