Legal Question in Real Estate Law in California

Re: real estate

I assume that you did not have the sale go through an escrow company. You will have to sue for breach of contract, rescission, quiet of title and other causes of action. The paralegal was practicing law without a license and committed negligence on top of it, therefore, he or she may be joined. Contact me directly.

Re: real estate

I wouldn't focus too heavily on the paralegal; what he did wasn't necessarily illegal practice of law. The more important thing is what documents were drawn up and what they say. Here are some questions for you:

1. Did you sign and deliver a deed, and has it been recorded?

2. If there were any existing liens on the house at the time of sale, were they paid off, assumed by the buyer, or still in place?

3. How much do they owe you in comparison with what you've already received? Is it over $25,000?

4. Are they obligated to pay you interest on the money you've (in effect) lent them? Did you get a promissory note or the like?

5. Do you know who is living in the house right now?

6. Is it insured?

Your exact legal posture may be determined by the answers to the foregoing questions, or follow-up questions to the answers. Your payment is not quite two weeks late as I write, but that's cause for serious concern, especially if your inquiries don't receive straight answers.

You probably have what's called a vendor's lien on the house, as provided for by California Civil Code section 3046: "One who sells real property has a vendor's lien thereon, independent of possession, for so much of the purchase price as remains unpaid and unsecured otherwise than by the personal obligation of the buyer." The vendor's lien is good against the buyer and anyone claiming under him, except a buyer or encumbrancer in good faith and for value. This puts you in jeopardy of losing your lien if the buyer resells or borrows against the equity in the house.

I'd say very prompt and pre-emptive filing of a lawsuit to enforce the lien would be a very good idea. I'll do a little research on enforcement of vendor's liens and if I find some remedies of note I'll post another answer.

Re: real estate

Here's my follow-up. I'm reasonably sure you have a vendor's lien, but if you don't act on it, the vendor's lien can be eroded or rendered useless by sale or mortgaging of the house to unsuspecting third parties who don't know about your lien. Unlike most other kinds of liens, a vendor's lien is not recorded or recordable, so only you and the buyer and maybe some people in cahoots with him know about it, and all others could be regarded as bona fide purchasers (or encumbrancers) for value and without notice.

So, these people are possibly already trying to refinance or unload your (former) house, or are renting it out to God-knows-whom. You are in imminent danger of (a) not getting paid, and/or (b) losing your right to a lien on the house that you could foreclose to get your money. So, very prompt action may be warranted.

That brings me to the remedies available to you. You could sue for breach of contract (for the money) or for rescission, to quiet title, or to foreclose on your vendor's lien.

The trouble with suit for breach of contract is that it leaves your claim on the house exposed, since it does not assert your lien. The other three causes of action all assert real property claims and would allow filing and recording a "lis pendens" (notice of pendency of action) against the property. Such a notice prevents a third party from being a bona fide purchaser without notice of the legal warts and bumps on the property, since a recorded lis pendens is "notice to the world" of the facts set forth therein.

Between the three, I like a suit to foreclose the vendor's lien best, because it forces a sale of the house to produce enough money to pay you. A suit for rescission would put you back in ownership (if successful), but you would have to pay back all money the buyer put up, not only what he paid to you on the first installement, but also any liens he paid off for you. As to a quiet title suit - I don't think this is viable, because basically there is no dispute about title here, the buyer has title; this is only a dispute about a payment of money (well, I could argue otherwise on several theories, but it's not an obvious winner).

That leaves suit to foreclose on your vendors's lien as the preferred choice in that you can file a lis pendens and when the dust settles you will be paid off; you won't re-acquire the house (unless you are the winning bidder at the foreclosure sale!) but you won't have to repay any money to the buyer.

If you'd like to pursue action quickly, please feel free to contact me directly to discuss the details.

Re: real estate

You may be able to sue them for the funds. Was there any security or was an escrow company involved. We will have to review your contract and paperwork. You are welcome to contact us by e-mail and we can review your documents by PDF or fax since you are out of state.