Quit claim deed before upcoming auction

I have noticed on serveral foreclosures we are following that a Quit claim deed to the owner or current owner trust shows up in the month of auction. What is the strategy of the current owner to do this? Does this mean it will usually lead to cancel the auction.

Hi Natalie,
There are some interesting foreclosure delaying strategies out there. We have seen owners records a quitclaim/grant deed or even a fraudulent substitution of trustee in order to delay a foreclosure. The simple recording of a property transfer will not delay or cancel a sale but you may want to review the document to see if you can determine the intent of the owner. You may also want to check the county grantor/grantee index to see if there was also a lis pen dens that was filed. Not that this necessarily would cause a sale to postponed or be rescinded but it could indicate that you may have an owner that is willing to put up a fight. Recently an investor saw a grant deed and a lis pen dens on a property that was vacant. Upon further research he saw that there was also a recent release of lis pen dens filed. He felt confident that the owner had attempted to use this strategy to fight a foreclosure but had given up and moved on. Based on that information he felt comfortable bidding on the property.
A recent transfer could mean nothing or it could be a huge warning sign.

if a quit claim deed is issued and the back taxes are paid before the aucuion it becomes a legal sale of property correct this would stop the foreclosure and auction but if the quit claim deed was filed and the taxes not paid how long would it be before the property would go back into forcloslure?

Hi Rebecca, Transferring the beneficial interest in the property does not stall or stop a foreclosure. In fact, most Deeds of Trust have an acceleration clause that states that the lender can call the entire amount due and payable if there is a change in the beneficial interest of the property (ownership). You quitclaim deed would not stop or stall a foreclosure.

Ok so if a deed is filed and the back taxes that is the only way to stop the auction of the property thanks

A bankruptcy or other lawsuit will provide a temporary stay of the sale. The filing of a grant deed WILL NOT stop a sale.

What if the person transferred their interest in the property long before the banks started their foreclosure process. Would this make a difference?

When is the previous owner deemed ‘free’ from ancillary costs (liabilityinsurance/property management assessments, etc) during the foreclosure process? After auction? If an owner is ‘walking away’ from a property, when are they technically no longer the owners?

Hi Cindy, You are the legal owner until the the Trustee sale and the recording of the Trustees Deed.