Law Review: Supreme Court ruling on eviction after foreclosure
California foreclosure law is complicated. During and after the recession, I counselled hundreds of folks facing foreclosure and loss of their homes. Fortunately that area of my legal practice has slowed dramatically.
If you have any interest in foreclosures you may want to read today’s column about a new California Supreme Court case.
JUST THE FACTS MAN
Westlake Village borrowed money to operate a skilled nursing facility in Thousand Oaks. Westlake defaulted and the note holder instituted a non-judicial foreclosure which is the customary foreclosure — rather than a so-called judicial foreclosure.
That requires service and recording of a Notice of Default, waiting three months, serving and recording and publishing a Notice of Sale three times over 21 days, then the foreclosure sale and auction. (That’s as short a description of a foreclosure as you will ever read.)
The holder of the promissory note, Dr. Leevil, had the foreclosure done and purchased the property at the trustee’s sale being the high bidder.
Following the foreclosure, the trustee records a “Trustee’s Deed” in favor of the new owner, in this case Dr. Leevil, within 15 days of the auction. At that point, the new owner is officially on title to the foreclosed property.
TENANT IN POSSESSION
If property is foreclosed, and the tenant in possession does not vacate, which is often the case, the new owner of the property (purchaser at trustee’s sale) will likely want to evict the tenant. That requires service of a 3-day written “notice to quit” upon the tenant, followed by an unlawful detainer (eviction) lawsuit.
SERVICE OF 3-DAY NOTICE TO VACATE
Dr. Leevil apparently had ants in his pants, and did not wait until he was officially on title, but the day after he purchased the property at auction, he served a 3-day written notice to vacate on the tenant, Westlake Health.
CHALLENGE BY TENANT
Westlake Health must have had a smart lawyer, because it challenged Dr. Leevil’s 3-day eviction notice claiming he was not officially on title to the property when he served the notice, arguing that he had to wait until after recordation of the Trustee’s Deed, then he could serve a 3-day eviction notice.
That became the legal issue in this case. A case of first impression — meaning this issue has never been decided by the courts before.
DEAR READERS, IF ANY
If there is even one reader out there still following this, thank you so much, but I love this stuff. I’m a foreclosure wonk and certified nerd. But a cool nerd I think.
The Court of Appeal ruled for Dr. Leevil concluding that as long as he was on title to the property before filing an unlawful detainer lawsuit, his 3-day notice was good.
The California Supreme Court in a unanimous decision overturned the Court of Appeal, ruling the purchaser at a foreclosure sale, in this case Dr. Leevil, must perfect his title and be the legal owner following recordation of a trustee’s deed, then serve the 3-day notice of eviction.
This column sets a new low on the “Interesting Scale,” but my little mind can get pretty small and into the weeds as we say. Finally I can sleep at night knowing the buyer at a foreclosure sale must be on title before he or she can start eviction proceedings.
Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. Jim’s practice areas include: real estate, development, construction, business, HOA’s, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at firstname.lastname@example.org or http://www.portersimon.com