How does a recorded " Lis Pendens " on a property impact the buyer in a Trustee Sale auction?


#1

Hi everyone, thanks for so much valuable info. A property is being auctioned (going to TS) in Ca. by the 1st TD, the owner has recorded a divorce Lis Pendens on the property ,does the date of this Lis Pendens recording matter? If I buy this property in auction, do the previous owners have control over my selling it? can they not remove the Lis Pendens? what would it take to have them remove it? what are things that they can legally do? If I get an attorney , can the attorney legally force them to remove it? what are the risks of buying this property? I am planning to sell this later and I want to make sure I can get title insurance on it. I really appreciate all the help I can get on this. Thanks again


#2

I think the first thing to do would be to go to the county recorders and get a copy of the lawsuit…this wil give you an idea of what is going on.


#3

Thanks for your help. What are some of the things that I should look for in the lawsuit? What things should concern me? what would make it just worthless and not to worry about? Thanks again


#4

The lawsuit papers are in the Courthouse - not recorder’s office.

For starters, you want to see if the suit has anything to do with the validity of the loan.


#5

Thanks Miket for your help. It is a Divorce Lis Pendens, could it still have anything to do with the loan? If the husband & wife have disagreement about the sale of the property and divorce settlements , would that still remain on the property after the TS?


#6

If both wife and husband signed on the loan, you should not have a problem. (Unless, of course, one party is claiming they never signed the loan docs.)


#7

One more point. Somewhere in the divorce papers, one or both parties will list (admit) to assets and liabilities incl. subject loan. Also, you might look to see if they, in the past, filed a Bk. where the property was listed along w. debts.


#8

Thanks. If they have filed for the BK, would it be recorded ? and the Recorder’s office would show it?


#9

If I was interested in a property that has a lis pendens filed by the Co-trustees of a Trust who have been in litigation against a Reverse Mortgage Company for 6+ years and the case is now on appeal, the Co-trustees have filed complaints with the CFPB and HUD, and there are at deeds of trust held by multiple entities including HUD, should I just walk away?


#10

I would guess you wouldn’t be able to get title ins. I assume the property is still occupied. If so, you would have a hell of a time getting possession.


#11

To evict the owner occupants (who are filing the case) you will need to do an Unlawful Detainer eviction. The owners will fight against the eviction and tie it up in the other case. Most judges will continue/postpone the eviction until the original Lis Pendens case against the mortgage company is closed.

If the original case has been closed, and the plaintiff (trustees) lost the case, I believe that the original Lis Pendens has to be removed. However, the trustees could file a new Lis Pendens associated with their appeal.


#12

Hi. I recorded a lis pendens on my house 2 days (sueing my previous lenders for numerous egregious errors in fatal violations of California Code of Civil Procedures, including dual tracking) before the trustee sale took place. The auction took place and I heard there were 9 bidders, and one of them won the bid, paying almost the full listed price.
This past Monday, a guy showed up at the door and said he is the new owner and has the title to my house. I asked whether he was aware of the lis pendens on the property and he said he did the search on the morning of the auction but nothing came up. So he had no idea but that he doesn’t care and is going ahead with the ‘flow’. When I told him I may have to include him as a defendant to my pending case, he simply said, if that’s what I gotta do, then to do so. He kept repeating that he’s just an innocent buyer and just claiming what’s rightfully his property cause he paid for it. The whole time he seemed nervous and he even told me he had never bought a foreclosed home with a suit pending before and that he’s a bit nervous. He also said he has 7 other properties but he needed to buy a house for his ‘soon to be ex wife’… guess he didn’t want to sell any of his current properties and thought it’d be easier and cheaper to buy a house that’s in foreclosure. Interesting guy.
Anyway, he handed me a 3 day notice to quit and told me to call if I had any questions. I just responded to his notice and mailed a copy certified to his address basically saying I’ll see him in court. I went to the county clerk office earlier and didn’t see any new recordings on my house.
To my knowledge under California Code of Civil Procedure Section 1161a(b), a three-day written notice to quit the property can’t be served until the title under the sale has been ‘duly perfected’, and that the Title is duly perfected only upon recording of the deed with the county recorder?s office, within 15 calendar days after the sale date. Is this correct?
But based on what I’m reading here and from a couple of other blogs, the purchaser can still go ahead with the eviction process and serve the UD on me. Am I understanding this correctly?
If so, my question is then, “Should I wait to be served by the purchaser to include him as defendant in the original summons or should I file the motion ASAP?”
Additionally, I would have to answer to the ‘complaint’ within 5 days from the time I’m served the UD, correct?
Thank you.


#13

Since your end objective is to get as much “free rent” as possible, you probably won’t get much “free” advice here. It is a given you can stall the inevitable for some amount of time. Question - how can you live with the uncertainty as to when the end of the line will come? You admitted the buyer paid close to retail (the asking price). Most Courts will not let you live indefinitely for free while you flail away with your case.
I will answer one question: Some Courts will insist that the Trustee’s Deed record before the 3-day is served. Not all. Virtuallyall Courts will want it recorded before the UD is filed. You would be ahead of the game by getting some “Kash for Keys” + 30 days to vacate. That’s what you would have recvd. if your sale closed.
Question - How long have you gone without making payments to anyone? Since this is a site where your identity is anonymous, you have nothing to lose by giving that info. It isn’t often we hear from the “other side”. I’m sure there are others here that would like to pick your brain. In exchange, you mite get some useful advice.


#14

Thank for your feedback. Actually, I’m not trying to get ‘free rent’. It’s actually ‘mortgage’. My husband and I bought this house 5 and half years ago. It all started when we tried to get a loan mod from my previous lender due to reduction in our incomes. And basically my previous lender lied to us and had no intention of helping us from the start. I didn’t pay my mortgage since January through May, and actually I was advised not to pay until the modification is complete. I was told by the representative who was assigned to my case that the underwriter was going to approve my loan mod on May 10 and on May 12, I received a notice from the lender saying the loan was transferred to another company. And that I should keep working with them to get my loan modified. So I contacted the new company on May 14 and within 5 minutes, I was told that I don’t qualify because I was more than 5 months delinquent. I also found out the same day that a notice of default was recorded on May 14. And that unless I pay the arrears, they will continue with the foreclosure on my house. I did some research and found out that the two companies have a history of ‘dual tracking’ homeowners and now I know that most likely my original loan was securitized. I’m actually in the process of getting an Asset Compliance Audit done on my property and will have the report next week. My husband and I are definitely not going to accept ‘cash for keys’ because this is Our Home and we won’t give it up without a fight. Especially against those that are conducting illegal practice and hurting a lot of innocent homeowners for their own benefit.


#15

RevaC,
I would agree with Miketh’s points above and add that the investor who bought your property will most likely be able to “prefect the sale” as the date of the auction (day of trustee sale), as long as he is able to record the Trustee’s Deed Upon Sale within 15 calendar days of the auction.

A few other points, while the practice of “dual tracking” has negative connotations and garnered much publicity/media attention, it will only become a prohibited practice once the new legislation (CA Homeowner’s Bill of Rights) goes into effect - 1/1/13.

One point you made that continues to make me utter (under my breath) “WTF were they thinking!?” Sadly, you were not alone in receiving the bassackwards advice to “stop paying your mortgage” in order to be considered (taken seriously) for a loan modification. Some claim to have received that advice directly from their lenders, but more often than not, this “stop payments” strategy was advised by so called “loan modification experts” who set up shop to take advantage of distressed homeowners. Now there’s the group of carpet-baggers who need to get sued! Tens of thousands have lost their home to foreclosure by following that strategy … far more than got truly beneficial loan mods.

I hope you will reconsider adding the investor to your lawsuit. My opinion in this matter is quite biased, as I have been there and done that so to speak… More specifically, been added to a soon to be “ex”-homeowner’s suit versus the lender. Like your investor, I was a bona fide purchaser for value at a trustee sale and given extra protections (insulations) from liability in litigation. Without going into details, I won in court and fairly quickly got possession of the property. Sadly, the real winner on the ex-homwowner’s side of the table was his lawyer. It cost him much more to add me to his case … Particularly since I defended with full vigor (counter actions, full discovery, etc.) and good legal council. I believe the ex-homeowner would have been in a much better financial position to accept my cash for keys offer versus expenditure on litigation.

Everyone’s circumstances are different and I’m sure you will weigh matters carefully as you proceed. Hope it works out for both you and the investor.


#16

Reva -
I hope you have been setting aside the “rent” (payments) you haven’t had to make for several months.
A couple of guesses:

  1. You are under water (owe much more than the home is worth. If that’s the case why not walk across the street and buy a similar home for half the price - or rent it for a fraction of what your present payments are.
  2. You paid nothing or almost nothing down when you bought the home. If so, you have no financial loss. Since you will have lived for free for a year by Dec., figure out how many thousands that is worth.
    Big businesses close up losing stores, factories etc. - sometimes thru a bankruptcy - rather than feeding a losing operation, More individuals should do the same. Even professional investors, here, will tell you they have walked from deals they bought at the peak when you did.

#17

Thanks for your response. I agree that there are a lot of homeowners out there that are trying to stay in their homes for as long as they can for free. For me, it’s a different story. At this point, it’s not up to me to make the decision on the ‘investor’. Fortunately, my legal counsel is actually a distant relative of mine and he’s volunteered to represent my case pro bono because of what the lenders did to us. He’s really good and is especially very familiar with the real estate law, more so than most lawyers. So my husband and i are leaving our fate up to him. It would be interesting to see what happens. No matter what the outcome is, my husband and I will at least be able to say, we fought to the end for our home! I’ll keep you all posted.


#18

To answer your questions, yes, we have been saving up money. And yes, we owe more than what our home is worth. And yes, we did put 20% down on our house when we first bought it. Honestly, if it weren’t for my relative who’s representing our case pro bono, yes, we may have walked away sooner. Now we want to see this through. I am a professional business woman myself with 25 years of experience so I know and understand how deals work. Since I am already facing financial loss, I want to see this through.


#19

Reva,
I have to agree again with Miketh?s points above. Weigh carefully the merits of ?moving on,? and finding new lower cost housing before cementing your path to litigation. While your pro bono attorney may be a relative with noble intentions, he will no doubt seek attorney fees from the bank/lender, or possibly a portion of the judgment if you win the case. Lawyers like to litigate (or sue and settle) ? it?s what they do. We all have our biases and mine, admittedly, is pro-investor.

From your first post, this sounds like the trustee sale was only a matter of days ago? And I presume the bank/lender(s) involved have already been served with your lawsuit? The lenders’ attorneys will review your allegations and if they feel vulnerable (merit to your case), they *may* choose to rescind the sale and *not* send the Trustee’s Deed Upon Sale (TDUS) to the investor. This must happen quickly, as once TDUS is issued and then ‘recorded’ by the investor, it becomes more problematic for the bank/lender to ‘cancel’ (as there is now a ‘new’ owner). At that point, any sale reversal would likely be a matter for the court (i.e. your litigation running its course).

If your lis pendes was ‘recorded’ *before* the trustee sale (I believe that’s the case?), then that’s to your advantage, as it provides all parties with a type of ‘constructive notice.’ However, that does not necessarily strip the investor (who bought the DOT covering your property) of ‘bona fide purchaser (BFP) for value’ status. A BFP has substantial insulation from liability in any litigation surrounding their purchase. I understand that naming the investor is a ?point of leverage,? and no doubt ‘so advised’ by your counsel. But your real target is the bank/lender(s) (more than one, as there were loan assignments?).

While your attorney may see things differently, keep in mind that losing your house, and conceding possession to the investor, does *not* prevent you from going forward ?full speed ahead? with your case versus the bank/lender(s). If you win in court, and no longer own/have possession of your home, the court may award you a compensatory judgment over and above the award for any bad behavior by the bank/lender(s). How much $$$? Who knows?

There are too many unknown variables to speculate on the merits or ultimate outcome of your case. So take my ?2 cents worth? ramblings for what they are worth. But please do keep us posted on the proceedings/outcome.