Legal Question in Real Estate Law in California
We were working on trying to short sell our rental house in California. The second mortgagor was moving very slow, so we were in the process of shortselling it for a few months. We were out of town for a few weeks. When we came back we called to the bank and found out that our house was foreclosed and sold to the bank. I have a few questions: 1. What the sale price will the bank put in 1099 form? It is important for us for calculating capital gain tax.
2. How can we find out if it was a public or judicial sale?
3. Was the bank supposed to notify us about the sale?
2 Answers from Attorneys
1. Huh? You don't have a capital gain, you lost the house.
2. If it was a nonjudicial foreclosure, it would have been a trustee's sale, which is public. If it was a judicial foreclosure, you would have been served with a summons and complaint, asking for foreclosure. If the foreclosure was through a trustee's sale, you have no right to redeem. If it was by lawsuit, you have a right to redeem.
3. Judicial foreclosures are commenced by filing a lawsuit, as pointed out in number two. Nonjudicial foreclosures are commenced by the lender recording a notice of default. You should have received a notice of default.
You are the mortgagor, the lender is the mortgagee. Second lenders are often reluctant to show much interest in a short sale because if the first forecloses, they become unsecured general creditors of the borrower, and can sue without regard to the antideficiency laws.
Answers to your questions: (1) Assuming this was a trustee sale, which it must have been (see below), the trustee should provide you with a report. Ask the bank for the report, or information on how to contact the selling trustee they used.
(2) Are you reading your mail? A trustee's sale requires that you be notified by certified mail. A judicial foreclosure requires a lawsuit which in turn requires service of a summons and complaint on each defendant. Judicial foreclosures are rather uncommon, and with crowded court calendars, would usually require more than a year after filing before coming to trial.
(3) Yes. See Civil Code section 2924f. Notice of a trustee sale must be mailed, posted on the property, and filed with the county recorder at least 20 days before the sale.
Sounds to me as though you may have failed to notify the lender of your current address, or you were away at a critical time without having your mail forwarded or opened and handled by a friend or relative.
The bank itself, the trustee, and/or public records would be your information source, or perhaps there is a stack of unopened mail somewhere.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
