Legal Question in Real Estate Law in California

Re: Foreclosures

When you purchase a foreclosre at the sale, you must pay the entire amount of the loan on the property, plus fees. Generally the lender doing the foreclosure starts the bidding at what they are owed. If there is a secondary financing, that would be wiped out. You would be responsible for property taxes and any homeowners dues or assessments, which always take precedence over the lenders.

Re: Foreclosures

everything of record recorded before the forclosure of the hoa amount but nothing after that unless the bidding goes up over the amount of the hoa lien. you will need cash in full or an approved line of credit so i would contact the company dealing with the forclosure and have your line approved before hand. i have dealt in this for 30 years and if you wish to consult with me i am in the sf bay area at 925-945-6000.

Re: Foreclosures

A foreclosure by trustee sale is an auction to the highest bidder. If the trustee is dissatisfied with the bids, all bids may be rejected. Otherwise, the property is sold to the high bidder without regard to the amount(s) of the liens or the supposed "market" value of the property.

Thus it is theoretically possible to buy a property that appraises at $1,000,000 and has a $500,000 first mortgage against it for $100,000. This doesn't often happen.

All interests junior to that of the foreclosing creditor are said to be "sold out." That means the junior creditors lose their interest in the collateral, not that they no longer are owed money by the borrower, but their chances of collecting are rather slim.

After the foreclosure sale, the trustee will distribute the proceeds first to paying the costs of sale, then to paying off liens in priority order. Priority means date order of recording, except for mechanics' liens it is the date the work started, but note that there are special, very complex rules governing tax liens. Any surplus sale proceeds are paid to the foreclosed borrower.

The trustee's deed conveys title held by the foreclosed borrower as of the date of the deed of trust and free and clear of the lien of the deed of trust under which the foreclosure sale was conducted and any junior liens.