Legal Question in Real Estate Law in California

Re: Is This Loan Legal?

If the house is truly held by a trust, then you are not "half owner". Rather, if the facts are as you laid them out, you are only a co-trustee. The trust document will set forth the powers of each co-trustee. For example, it may indicate that any trustee has the sole authority to bind the trust to a transaction (such as a loan); and in such a case, your consent would not have been required to obtain the loan.

At any rate, if the loan is in foreclosure, you need to promptly get yourself to an attorney familiar with foreclosures. The time frames are short here, and the deadlines are critical and sometimes without recourse.

We are real property litigators with extensive experience in foreclosures, from both sides of the fence. If/When you are ready to proceed, please feel free to call or email for a no charge consult. Good luck.

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Re: Is This Loan Legal?

You may have an action in Superior Court for injunctive relief and recission against the bank to stop the foreclosure. A Chapter 13 bankruptcy filing could stall the sale until its sorted out- but the filer must qualify for Chapter 13. One thing that is not clear is where did the loan money go ? Who received it ? A Court could require that the money be given back as a conditional trade off to the foreclosure being stopped. This is preliminary guidance statement, and no attorney-client relationship is created until a retainer agreement is signed. Thank you. www.natebernsteinlaw.com.

Re: Is This Loan Legal?

First of all, I would need to see the deed to the property to see how title is actually held. Then I would need to review all loan documents. It is possible that you may need to file a lawsuit against the lender to stop foreclosure.

Re: Is This Loan Legal?

You can take action to protect your interest and to look into the legality of the foreclosure given the circumstances. But, it will cost $$ since it is not something that an attorney will help you with on a contingency. I don't know how much equity there is to protect, but that is the best that can be done.

Re: Is This Loan Legal?

An attorney working for you would first need to verify all the facts you've given; your facts seem a bit inconsistent, and I think there's a good possibility that you've either left something out or the facts aren't excatly as you think they are.

The first factual issue is whether the house was in a joint tenancy or in a trust at the time of your father's death. It is also possible that your parents' interest was in the trust and yours was not, but such an interest would be a tenancy in common, and not a joint tenancy.

The next interesting issue is whether the lien of the home equity line of credit affects only your mother's share of title, or the entire property. It is legally possible for a co-owner to borrow on his or her's part interest without the other co-owner's signature, and perhaps even without their knowledge, but this rarely happens because banks and other lenders don't consider a half interest in a house as very good collateral. This problem (stupidity) and not illegality may be the reason the bank fired the employees but still thinks it has the right to foreclose. The document that would disclose this information is the bank's deed of trust securing the note, and it should be available for inspection and copying at the County Recorder's office. Under these assumptions, the bank can foreclose, but only on a half interest!

If, somehow or other, the bank has improperly taken a lien on both ownership interests, and you didn't sign, and if the property isn't trust property over which your mother has power to act in her capacity as (co-)trustee, the foreclosure is improper. The ways to stop it are (1) call the bank's attention to its error and get them to stop voluntarily, or (2) sue them and ask for a preliminary injunction.

The third possibility -- the lien runs to the entire house, you didn't sign, BUT your mother had the power as (co-)trustee to take out the loan -- presents a situation where the bank will be able to foreclose on the entire property unless you can pull off a long shot by convincing a court that your mother was incompetent or subjected to duress, undue influence or fraud. All very long shots.