Legal Question in Real Estate Law in California

Re: Notice of Default

It looks like you may have purchased the interest of a second, third or some other lien, and you are at risk of being wiped out and losing the property. I say this, because so many people who have no education in or understanding of the foreclosure process go to trustee's sales and foolishly think that they are purchasing the senior lien on the house and then find out they purchased a junior lien and they lose the house right away because they did not know what they were doing. If this is you, then you either need to pay off the senior lien or pay all the back payments and fees owed by the guy being foreclosed upon and start making the regular payments on the first, just as though you were the original borrower.

Re: Notice of Default

Was it a foreclosure of the first or second deed on the house? The second would have to notify the first who normally would foreclose at the same time. If the first foreclosed, that would wipe out all junior lien holders. You need to clarify what did occur

Re: Notice of Default

Ms. Deming is correct. If you purchased at a foreclosure sale, you took the property subject to the senior encumbrance. This means that the property is still encumbered, and can be foreclosed on. Foreclosure sales only wipe out junior liens, so if a junior foreclosed, you still have a senior lien on the property you purchased.

You need to bring the first current, but you may have also triggered a due on sale clause, and may have to pay off the first entirely. This may be hard to do with the market falling and the interest rate rising.

Very truly yours,

Re: Notice of Default

I also agree with Ms. Deming's answer, but I think it needs a tiny technical correction to avoid a possible misunderstanding. The purchaser at a foreclosure sale doesn't buy the lien. He or she buys the collateral that is subject to the lien.

In this case, it seems as though the collateral you purchased was a house with a sentior note and deed of trust on it.

It's possible to "buy the lien;" that's what happens in the secondary mortgage market, for example, but that's not what happens at a foreclosure sale.