Legal Question in Real Estate Law in California

Re: bankruptsy n forecloser because of it

When a debtor files bankruptcy, all legal or administrative proceedings to collect or enforce claims against the debtor are brought to an immediate stop by the "automatic stay." This is a key feature of Federal bankruptcy law. It is easy, however, for secured creditors to petition the bankruptcy court for relief from the automatic stay, and that sounds like what is being asked for from the judge on April 16th. The judge will probably grant the relief, especially if the landlord has no equity in the house, which is a common situation these days.

As I understand it, the relief becomes effective ten days after it is granted. If so, on April 26 the foreclosure process will be right back at the point it was prior to the filing of the bankruptcy. If it was one week from trustee's sale, it'll be one week again. There is one exception to this; if the delay due to the automatic stay was over 365 days, any Notice of Sale would be stale and a new Notice must be recorded, giving you at least 20 and often 31 more days, but the delay here probably wasn't anywhere near 365 days long.

The Notice of Sale is supposed to be posted on the property; if it is a single-family building, it must be posted on a door, and if this is not possible, in some other conspicuous location.

You are not entitled to a 30-day notice. After the sale, the buyer may contact you to discuss the situation, may inform you by way of a three-day notice to quit that your tenancy has ended, or may invite you to remain as a tenant under a new lease. If you have been a good tenant, the buyer, who is probably looking for an investment (or which is the lender itself) may be hoping to find a good tenant for the place.

If there is a sale, it could be around May 1, and if you got a 3-day notice instead of an offer to stay on, you could get perhaps another 30 to 40 days before the sheriff could toss you out by resisting the unlawful detainer the buyer would file, but this is not recommended.

Also note that lenders, trustees and courts are crowded with foreclosure traffic these days, which slows things down sometimes, and also lenders are getting such bad prices at foreclosure sales that many are waiting for demand to recover before foreclosing.