I am a licensed real estate broker in California, so my response is from a brokers viewpoint. The first thing is that, I would NEVER advise a client to purchase a property that has a “Pendency of Action” (lis pendens) recorded. In your case, what that means is a quiet title action was filed at some point prior to the trustee sale. Recording a lis pendens is one of the 5 elements required for a quiet title filing in California. Once that is done, any subsequent buyer IS subject to the outcome of the civil suit to quiet the title. If the plaintiff wins, you have a serious problem, because it is possible the trustee sale could be reversed! If the plaintiff loses, you are in much better shape, but you may want to discuss with a real estate attorney ways to remove any clouds on the title so you have no problem obtaining title insurance. In regards to the previous owner dragging you into the case, it is in their best interest to do so, because your “trustees deed of sale” represents to them an adverse claim to the title! If you want to take the chance, let the case play out and see what happens. Or you can explore an offer of cash for keys, provided they execute a Grant Deed to you upon the payment you agree on. Keep in mind, you only have a Trustees Deed of Sale, which only conveys the rights and interest of the beneficiary (bank), The Grant Deed is still in the name of the previous owner and has not been conveyed.
If you would like any other information regarding real estate transactions in California, you can send me an email at email@example.com.
Take care and good luck,