Legal Question in Real Estate Law in California

Re: Trustee's Deed Upon Sale

The trustee who conducted the sale has no obligation, legal or otherwise, to assist you with senior liens. Any surplus money over and above satisfying the sum owed to the lender whose deed of trust was the subject of the foreclosure, will go to the trustor,(the people who got foreclosed upon). It is your responsibility to find out who/where the senior lienholder is and to start making payments, and the smart thing to do is to research this before you purchase at a trustee's sale. If you do not start making payments, eventually they will send you a notice of default (or it that has already been recorded, a notice of trustee's sale )and start their own foreclosure and if you permit it to go forward, then they will extinguish whatever interest you have. If the trustor was not paying on the junior lien, it is likely the senior is in default too, so you had best find out the status. You may want to purchase a title report and that will let you know if they have recorded a notice of default yet, and if not, at least there will be information from whence you can track them down.

Re: Trustee's Deed Upon Sale

The proceeds of a trustee's foreclosure sale are distributed as follows:

1. To the cost and expenses of the sale, including the trustee's fees.

2. To the payment of the obligation of the note secured by the deed of trust that was foreclosed.

3. To the outstanding balance of any obligations secured by junior liens, in the order of their priority. (Usually by date of recordation.)

4. To the trustor (original borrower) or the trustor's successor in interest.

(Civ. Code sec. 2924k subd. (a).)

The purchaser at a trustee's foreclosure sale takes title subject to senior liens. (A senior lien is one that is usually recorded prior to the one being foreclosed.) (Streiff v. Darlington, 9 Cal.2d 42, 45.)

Since you took title subject to the senior trust deed, it must be paid or it will be foreclosed on, and you will lose any rights that you have to the property, although you will not be personally liable on the promissory note.

To find out who to pay, you should have a title search performed, and begin with the original beneficiary of the deed of trust. Assignments of the deed of trust should also be matters of record.

Your purchase at the trustee's foreclosure sale may also have triggered the due on sale clause of the senior trust deed. It may be necessary to take out a loan to pay off this senior trust deed to protect your property rights.

Very truly yours,