While researching a Nevada property I wanted to buy at auction, I found a discrepancy in the chain of title. As far as I can tell, the borrower only owned 50% of the property when he took out the loan. The Deed of Trust names the entire property as security. I didn’t bid and it went back to the bank. I’m wondering what happens now and what I would have owned if I had bid.
The chain of title looked like this:
– husband and wife owned property as community property
– wife died
– wife’s will directed her 50% into a Living Trust, her estate recorded deed to that effect
– husband wrote QCL deed to put his 50% into same Living Trust
– now the Living Trust owns 100%
Later it appears two subtrusts (A/B trust for Survivor Trust and Credit Trust) were created.
– Living Trust records QCL deed to put 50% into Survivor subtrust
– Living Trust records QCL deed to put 50% into Credit subtrust
– now each subtrust owns 50%
Then the husband wanted a cash-out loan. He recorded the following deeds:
– Survivor subtrust grants all its interest in property to husband (now he owns 50%)
– Living trust grants to husband all its interest in property (which is nothing I think) to husband (he still owns only 50%): probably this was an administrative error and the intent was to have the Credit subtrust grant its 50%
– it seems to me that Credit subtrust still owns its 50%
At this point there is a Deed of Trust recorded with the husband as borrower, and the entire property as security.
Recently the lender foreclosed and the property went to the beneficiary.
What is the bank’s situation?
What would have happened if a 3rd party bought the property at auction?