Legal Question in Real Estate Law in California

Re: Foreclosure during a Class Action Suit against Developer?

Winning in a lawsuit usually depends upon proving that you were harmed before the date the suit was filed. Harm that occurs to you after the date of filing the suit can be added to your judgment if it was forseeable and claimed in the initial complaint. However, unforseen additional harm caused by the same defendant cannot be claimed without amending or supplementing the complaint.

Extending these general principles from ordinary lawsuits to class-action suits suggests to me that you will probably not lose status as a member of the class by selling the property, in that all the harm for which you are likely to be compensated in an eventual settlement would be what happened while you were still an owner, or could be attributed to your former ownership (e.g., because you got a lower sales price than you otherwise would have because of the defects alleged in the suit).

This situation is parallel to stock-fraud class actions, where a victim is entitled to be a class member and to share in the recovery based on owning the stock during the time of the fraud, and ownership at the time of the settlement (or even at the time the suit is filed) is not necessary or even relevant.

Nevertheless, to really be sure you would have to review the court files to see how the plaintiff class is defined (and keeping in mind the remote possibility that the plaintiff class might be REdefined later in a way unfavorable to you). If you are included in the class definition even if you sell now, your worries are slight.

Finally, you don't say why you are nervous about asking "the firm which represent us." Law firms have duties of loyalty and care with respect to all clients, including "mere" members of classes they represent. Perhaps you should reconsider and ask them. If they breached a duty to you by leaking your problems to the other side, or even to a third party lender, they would be liable to you for the harm they caused.