Hi, Does your response above apply to Arizona as well or just California?
I have a situation where my client has purchased a property on the court house steps at a trustee sale. The previous owner has child support judgments recorded against the property and it was my understanding that this judgment is junior and should be wiped out. However the attorney for the county family court division is pursuing collection on this? Any thoughts? Thanks
Keep in mind foreclosure only wipes out their secured interest in the property, the county can certainly continue to pursue the prior owner, as well as any excess proceeds fromt he trustee sale. If they really are pursuing the purchaser, and the judgement was really junior, you may need to hire an attorney to address what seems to me to be an unsupported collection effort.
This is a great thread. My question for anyone who knows the Arizona Trustee Auction / Sale Law: Assuming no subordination agreements in place and understanding the priority of existing loans, if I am bidding on the senior loan (first in time) at Trustee Auction, will the second HELOC (showing up on the title report as an Active second-in-time Mortgage) get wiped out?
I bought a house a year ago at trustee sale for 320K, and I recorderd the title at Conty record office. Now i fid out that other lender?? put my house on trustee sale next month (by looking in ypor website/I’m a member , no one notified me the sale) due to default on mortgage payment (on loan 600K). Please let me know what it is and why it happens. Thanks
Julie - you left out a key item… was the loan you bought at trustee sale senior or junior to the one now going to sale. If you bought a second then you need to payoff the first or risk losing the property.
I just came across a foreclosure wherein the loan is an old unreconveyed HELOC ($60K) from 2000. The property changed owners twice since this old HELOC and the last purchaser in 2009 plunked down almost 50% in cash. The property has dropped in value (now worth appx $550K) and yet this old senior (first in line) HELOC from a prior owner is the loan that’s foreclosing. I tried to contact the current homeowner to alert them to this foreclosure (although I suspect they know) as it seems they have ample equity in their home and would fight vigorously to keep it. Who stands to win or lose if this loan (HELOC) is auctioned at the steps. Could an investor profit by buying this loan given the strong likelihood of a mistake by a title company for failing to ensure that the old HELOC was reconveyed?
When purchasing a CA condo in a trustee sale, who is responsible for the lis pendens for the HOA past dues, buyer or trustee?
I assume you mean HOA “lien” not lis pendens. If so then it would be treated like any other lien. In some states, NOT CA, HOA liens can be super senior and are not wiped out by a senior loan going to sale. In CA it depends on whether the lien (not the CCRs) were recorded before or after the foreclosing loan.
My guess is that it will play out like this: 1. If the homeowner is alerted they will (should) contact their title company, and the title company will payoff the loan and stop the sale. That is what title insurance is for. 2. If it does go to sale whomever purchases the property will end up dealing with the current owners title company and settling. I’ve purchased two deals that were similar, though not exactly, like this one. On both we ended up with a settlement with the title company. In one case a lawsuit was filed against us and the foreclosing lender as an apparent effort to try to scare the foreclosing lender into rescinding the sale so the title company wouldn’t have to cut a check. Even on that one the ultimate settlement was very profitable. If you are going to pursue this as an investor just be sure to do thorough research. Title companies and lenders are very sophisticated, and their attorneys can be intimidating. Also don’t both unless the potential for profit is substantial (market value minus your bid minus any senior debts that still need to be paid). For those thinking “but what about the poor homeowner”, know that they’ll be fine. This is the reason title insurance exists, and the title company will take care of them.
Here a new question. I had a second position on property and the frist forclosed at a trustee’s sale. There was a third who was omitted,
I bought the first and didn’t bid in my second ( I bought it directly from the owner the day of the sale). I thought I was getting clear title as I called the trustee to make sure all were notified and got a title report that showed the third. I have a subordination agreement from the third connected to my now wiped out second. does it survive the forclosure, or am I out of luck and the omitted third can just redeem the 1st and take possession…I also sold the property directly after the sale to a third party for what we paid for the first and third…doing a good semaritan thing to protect her also. what a mess
You indicate that you purchased the property directly from the owner the day of the sale. Does this mean that the property did not go to trustee sale or that you were the winning bidder at trustee sale? If the trustee sale happened and it was the first that foreclosed then all junior liens are wiped out. If you “purchased” the property directly from the owner and stopped the sale then all liens would still be attached to the property. You do not tell us what state the property which would have an impact on the answer to the redemption question although typically a junior lien would not have a redemption period following the trustee sale. (this may not be true for all states). If you resold the property we assume that the new owner purchased a title insurance policy which would mean that they have clear and insurable title. If they did not purchase a title policy we highly suggest contacting your local title company and purchasing an owners policy as quickly as possible.
As president of our Home Owners’ Association, I have just received a Notice of Trustee’s Sale for a property in our development. We have several liens on this property for unpaid dues in the amount of approx. $14,000.00. Does the sale of this property in a Trustee’s Sale wipe out our liens or is the new owner responsible for them?
It would only wipe out junior liens… those recorded after the HOA lien. As such you should expect that anyone buying the HOA lien in question would have to pay off the first and second mortgage as well as any past due property taxes. This makes it very unlikely anyone will purchase the lien, and its quite possible the HOA is throwing good money after bad by paying the attorney to foreclose at all. Most second mortgages don’t bother foreclosing at this point for exactly that reason.
We are not initiating the foreclosing. It is being foreclosed by a bank. This is brand new info for us and I don’t really understand this process. We are in Washington State if that makes any difference. It looks like they are delinquent for approx $53,000.00 not incuding our $14,000 liens on a home worth approx $750,000. Our HOA is just a bystander in this process. Are our liens protected in this situation? Will the new owners be responsible or will the liens just disappear? Do we need a lawyer to protect our liens?
Your HOA’s liens will likely be wiped out by the foreclosure, and there is likely little you can do to protect your liens. Couple of things to check: 1. A few states allow HOA liens to be super senior, which means they would not wiped out. I’m pretty sure WA is not one of them, but you check with an attorney. 2. If there is adequate equity in the property to satisfy the foreclosing loan, your liens and other senior debt then it may be worth foreclosing on your liens and selling the property. This could be a lengthy and expensive process so be sure there is sufficient equity. Finally, be sure to check with your associations attorney, while I’m pretty sure the above comments are correct I’m not an expert in WA HOA liens.
Thank you for your help.
Is an “abstract of judgement” made after the senior loan date was made, also wiped out by the property auction?
If by made, you mean recorded, yes, that should be the case. But always look at the underlying issue if you can. Just because it is technically wiped out, does not mean the holder won’t sue you and challenge that. Sometimes that is the real benefit of title insurance, protecting you from false claims.
Thanks for the followup. I did more research and it gets more interesting…the owner took out a Real Estate Note prior to the 1st mortgage with a private party for $500k, which was notarize, and to be paid in full two years later, with interest of 6% per year. During the two year period, the owner refinanced her 1st mortgage, which is now in default. However the default on the Real Estate Not was only filed with the court after the 1st mortgage was taken out. So would I be liable for the Real Estate Note?