Legal Question in Real Estate Law in California

Your lawyer should write to the debtor's lawyer and demand that the debtor vacate the property or they will be liable for your attorney fees and damages. Then your lawyer would file a proof of claim with the bankruptcy court (as property wrongfully detained by the debtor) and also some kind of motion for turnover of the property. Your lawyer might also recommend suing this lender that delayed delivering the deed to you for more than 15 days. In the meantime do not contact the debtor, or the debtor's attorney, except through your own attorney.

I assume that you are referring to the Trustee's Deed Upon Sale, and not a "trusty" deed or a deed of trust, which are separate items altogether. A "Trustee's Deed Upon Sale" is the document used to transfer title to the successful bidder at a nonjudicial foreclosure sale.

A properly held trustee's sale terminates the trustor's (previous owners) rights in the property, and all junior encumbrances and liens are extinguished. The trustee's sale is deemed final upon the acceptance of the last and highest bid. (Civ. Code, sect. 2924h subd. (c).) The sale is deemed "perfected" as of 8:00 a.m. on the actual date of sale if the trustee's deed is recorded within 15 days of the sale, or the next business day following the 15th day if the county recorder in which the property is located is closed on the 15th day. (Civ. Code, section 2924h subd. (c).)

There is no authority in the Civil Code that failure to record within 15 days invalidates the trustee's deed upon sale, but the code specifies that the sale was not perfected as of the day of the sale.

I have not been involved in bankruptcy matters for some time, so if I were you, I would consult with an experienced bankruptcy attorney to determine what impact the previous owner's bankruptcy had on an "unperfected" trustee's sale. You may also want to tailor your question, using the information that I have provided, and repost in the bankruptcy category.

DO NOT follow Mr. Stone's advice until you have consulted with an attorney, or you may be liable for violating the automatic Bankruptcy stay. Mr. Roach's information is correct, but incomplete. Key questions are whether or not you have by now recorded your deed, and if so, whether the debtor recorded a notice of the bankruptcy filing before or after your deed, or not at all. The date of bankruptcy filing is not very important in this situation, but the relative dates of recording the deed versus a notice of bankruptcy is crucial. The 9th Cir. BAP has ruled that you lose the relation back benefit of section 2924h, but at the district court level, at least in N.D. Calif., they are ruling that this is not totally fatal to your case if you recorded ahead of RECORDING a NOTICE of bankruptcy. It is not enough to file for bankruptcy in this situation.

Also, even if they recorded a notice, all is not lost. You have recourse against the trustee and the lender, and you may also still be able to retain the property as well, if there was not any equity in it. Feel free to contact me if you have further questions, but be sure to check the facts I have mentioned regarding dates of recording. Until you know those dates we really don't know anything definitive.

Again, consult with a someone who practices bankruptcy law, and someone who can read.