Quote of the Day - A bank is a place that will lend you money if you can prove that you don't need it.
In an opinion driven perhaps more by result than law, the Fifth Appellate District decided late last week that an owner can trump a title obtained at the trustee's sale. How? The justices give it away on page five of the opinion. They recognize that California Civil Code section 2924c allows an owner to cure a default up to five days before the foreclosure sale. But here, the owner cured the default just four days before the sale.
The question, then, is what happens during the five days of twilight after the redemption period expires but before the foreclosure sale?
The Court answers that the owner and the bank can voluntarily agree to the cure and reinstate the mortgage, essentially setting aside the default. People who buy at foreclosure sales know the redemption statute, and figure that if the default isn't cured five days before the trustee's sale, they can safely buy. Not so anymore. An owner can cure a default after the statutory redemption period but before the trustee's sale.
The buyer at the trustee's foreclosure sale had a host of other defenses in its attempt to gain good title: negligence (the bank forgot to inform the trustee that the default had been cured, and the trustee sold the house not knowing about the owner's payment curing the default), the common law presumption of regular and fair foreclosure sales, a third-party buyer's right as a bona fide purchaser, and lack of notice. Like bowling pins, the Court knocked the defenses down one by one.
If you're in the market to buy property at foreclosure sales or considering it; be careful out there kiddies. Land mines are all around.