Legal Question in Real Estate Law in California

When you bought your house, you most likely paid for it with a loan secured by a deed of trust on the property. When you signed the deed of trust, you gave a "power of sale," also called a bare naked legal title, to a trustee, to secure payment of the deed of trust.

When you defaulted, the lender (the bank) asked the trustee to commence foreclosure proceedings. The trustee, pursuant to Civil Code section 2924 and the sections following, recorded a notice of default. The trustee is required by statute to mail a copy of the notice of default to the trustor (the borrower: you), at the last known address that the trustee has. This should have been your home, but if you requested notice at a different address, the notice may have been sent to that address.

After a period of three (3) months, the trustee records a notice of sale. This is also posted at the courthouse, mailed to the trustor (again, you) and posted on the property.

Like an ostrich with his head buried in the sand, you have ignored all of these notices. Your fatal mistake, however, was listening to a realtor, who is not permitted by law to give you legal advice. (Seriously, I'm not yanking your chain, they are not allowed to, it is a huge scam, and when I hear that commercial on the radio, I barf a little.)

Your time is running out. The trustee will hold an auction, most likely at the closest courthouse near you, and sell your property to the highest bidder, or to the lender at the lender's bid.

You will then most likely be served with a three day notice to get out the property. If you don't get out, the lender has the right under state law to bring an unlawful detainer action against you, where they get a writ of possession against you, and then a sheriff's deputy (who must truly hate his job) throws you out of your home and your possession sit on the grass lawn in front of your home.

And then, and only then, will you know that voting for President Obama was a huge mistake.

I will omit the political commentary. You need to consult a bankruptcy attorney in your area right away. Filing for Chapter 13 bankruptcy might or might not help your situation in the long run, but it will instantly stop the foreclosure sale, and it will at least buy you some time.

Before a trustee's auction sale, a lender must do at least three things. One is exemplified by the notice taped to your door - the notice of sale. However, before that, the lender or its representative must go through two processes, each involving strict notification requirements. The first of these is the result of recent legislation, but was effective May 21, 2009, probably early enough to apply to your situation, and requires the lender to make contact with the borrower not less than 30 days before recording and serving a notice of default. The required contact is for the purpose of explaining the risk of foreclosure and laying out alternatives. The process can be initiated by telephone, and if that doesn't get through, certified mail with a return receipt must be attempted.

Next, the lender must record and serve a Notice of Default. Service must be by registered or certified mail, and many lenders also send a copy by regular mail, since some people regularly refuse or fail to call for their certified mail.

At least 90 days must elapse between recording the Notice of Default and the Notice of Sale, which is what you now find taped to your property, and which must be served and posted at least 20 days before the sale. Usually, lenders allow even more time, to satisfy certain rights of the IRS to have more time to assert any tax lien it has.

This is just a rudimentary outline of the notice and service requirements, but as you can see, there are several (three-or more) occasions upon which you should have received notice by certified mail (or phone call).

Whether you now have a defense that can be asserted to stop the sale may depend upon the reasons you failed to receive, or to act upon, the required notices. If there are return receipts in the lender's hands, who will they show signing the receipt?

So, the answer to your question is "Yes, and no." If the trustee sells your house before you effectively bring the sale to a halt, and the house is sold to an innocent third party who is unaware of any irregularity, you may find it difficult or impossible to reverse the sale. Even if the lender is the high bidder, and is at fault because it didn't serve you or the service was defective, you would need to file a legal action or cross-complain when sued for unlawful detainer.

My advice would be to make a careful review of your mail records, the correctness of the address information the lender is using, whether there is a notice of default recorded (and when), and otherwise gather information that would tend to show who is at fault for an apparent illegal failure to notify.

If there is strong evidence of lender misconduct, you could still file a suit and get a temporary restraining order (TRO) to block the scheduled sale on 9/2. Needless to say, time's a wastin'. However, you maybe should also take a realistic long-term view. Is a legal action going to save your home, or just delay the inevitable? If there has been improper notice, the lender will probably just re-start the process. Spending money on a lawsuit might buy time to get a modification done, but if you can't make the payments, you might need to consider letting a foreclosure go through or consider Chapter 13 bankruptcy.

Finally, I can't help noticing that you are in 95409. I am trustee of a house in Oakmont, and am often in the area. Let me know by direct contact if I can be of further assistance.