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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Texas trustee's notice obligation to junior lienors... Posted by Daniel Stephens on February 20, 2004 at 6:31 AM In Reply to: Texas trustee's notice obligation to junior lienors... posted by Ward-CA- on February 19, 2004 at 3:19 PM : : Here's a good one for you Ward! BTW, you are great and you look JUST like my own foreclosure mentor here. I've got to send you a picture. : : Anyway, I purchased a home at a Texas Trustee's Sale a few months ago. The Trustee that conducted the sale missed a valid federal judgment that behaves just like an IRS tax lien, and therefore didn't notify the US Attorney's Office to trigger the redemption period(as they would the IRS). There were no excess proceeds. Later, I ended up having to pay an additional $26K to the government to clear the title and prevent the US Atty from foreclosing (executing) on me! : : Is there any recourse against the bank, trustee's firm, or title company that they subcontracted to do the faulty search? : : Any advice is greatly appreciated. : ================== : Daniel, : You may or may not have an action against the Trustee. It depends on whether or not a foreclosing trustee is obligated by Texas law to notify, besides IRS, all recorded junior lienors and interest holders of their impending foreclosure sale. : Here in CA the foreclosing trustee is obligated by law to give notice of the impending trustee's sale to all recorded junior lienors and interest holders. If they fail to do so, and as a consequence the overlooked lien remains on title after the foreclosure sale, then the trustee will have to do whatever it takes to remove that impediment or face a lawsuit over the issue. : In this instance you've cleared up the title to the tune of $26K. Your recourse is simple if a Texas trustee has the legal obligation to notice junior lienors of their foreclosure auction. If so, and the oversight was the fault of the publisher of the trustee's sale guaranty or abstractor's certificate, then there might be a contract of indemnification that exists between the trustee and the publisher. You'd find out once you formally filed suit and sued the trustee. : So, spend the time to research the obligation of a Texas trustee as far as notifying junior lienors of their impending foreclosure auction is concerned. : Hope this helps. Thanks, Ward. I think I've got a case even though Texas law does not require notification to junior lienors. This is because the notice of lien regarding this (new type of) federal judgment specifically states that the lien behaves identically to an IRS tax lien and must be handled according to those statutes. Therefore, they must notify regardless of state law, IMO. Also, after being informed by me that this judgment was out there, they sent me my overage check with a cover letter stipulating that my cashing of that check would release them and their client "from any liability associated with this transaction." This makes me think they do have some sort of liability. Just in case, I haven't cashed the check! Thanks for the help! Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : : Here's a good one for you Ward! BTW, you are great and you look JUST like my own foreclosure mentor here. I've got to send you a picture. : : : Anyway, I purchased a home at a Texas Trustee's Sale a few months ago. The Trustee that conducted the sale missed a valid federal judgment that behaves just like an IRS tax lien, and therefore didn't notify the US Attorney's Office to trigger the redemption period(as they would the IRS). There were no excess proceeds. Later, I ended up having to pay an additional $26K to the government to clear the title and prevent the US Atty from foreclosing (executing) on me! : : : Is there any recourse against the bank, trustee's firm, or title company that they subcontracted to do the faulty search? : : : Any advice is greatly appreciated. : : ================== : : Daniel, : : You may or may not have an action against the Trustee. It depends on whether or not a foreclosing trustee is obligated by Texas law to notify, besides IRS, all recorded junior lienors and interest holders of their impending foreclosure sale. : : Here in CA the foreclosing trustee is obligated by law to give notice of the impending trustee's sale to all recorded junior lienors and interest holders. If they fail to do so, and as a consequence the overlooked lien remains on title after the foreclosure sale, then the trustee will have to do whatever it takes to remove that impediment or face a lawsuit over the issue. : : In this instance you've cleared up the title to the tune of $26K. Your recourse is simple if a Texas trustee has the legal obligation to notice junior lienors of their foreclosure auction. If so, and the oversight was the fault of the publisher of the trustee's sale guaranty or abstractor's certificate, then there might be a contract of indemnification that exists between the trustee and the publisher. You'd find out once you formally filed suit and sued the trustee. : : So, spend the time to research the obligation of a Texas trustee as far as notifying junior lienors of their impending foreclosure auction is concerned. : : Hope this helps. : Thanks, Ward. : I think I've got a case even though Texas law does not require notification to junior lienors. This is because the notice of lien regarding this (new type of) federal judgment specifically states that the lien behaves identically to an IRS tax lien and must be handled according to those statutes. Therefore, they must notify regardless of state law, IMO. : Also, after being informed by me that this judgment was out there, they sent me my overage check with a cover letter stipulating that my cashing of that check would release them and their client "from any liability associated with this transaction." This makes me think they do have some sort of liability. Just in case, I haven't cashed the check! : Thanks for the help! 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