A long, long, time ago, Title Companies were allowed to provide good and useful information to Realtors. We, then, could turn around and be good educators to you, my precious Chilluns. Those days are gone, sadly, but that is a soapbox for another time and place!
The following article came to me in the good old days and it is Very Important Information. What happens when we can’t or (gasp) won’t make the mortgage payments on our Glendale Homes? How much time do we have before the wolves are baying at our door, howling for our blood? Read on…
The notice of default process
Foreclosure proceedings are initiated with a Notice of Default (NOD). The Notice of Default is recorded at the request of the lender by the trustee which, in effect, gives notice to the public that the loan is in default. The actual recording of the notice takes place at the County Recorder’s Office in the county in which the property is located. It denotes essential data pertaining to the trust deed, the amount in arrears, address of the property, and the date of recording. In the state of California, the trustor (borrower) has ninety days from the recordation of the notice of default to reinstate the loan (to make the loan current by paying all payments in arrears, any late charges, or other deficiencies). The law requires the lender to accept the trustor’s reinstatement money during this ninety day period.
The following represents, in summary, the assessment lien and non-judicial foreclosure process. The “Pre-Lien” notice is required pursuant to the Civil Code Section 1367.1(g) requires a minimum time period of 30 days between the recording of a Lien and the recording of a “notice of default” which begins the non-judicial foreclosure process. The minimum time period for the non-judicial foreclosure process is three months plus three weeks for publication as set forth in Civil Code Section 2924.
Pre-Lien Notice (Association Members)
With the passage of the Assembly Bill 1317 in 1996, a pre-lien notice is required to be sent to a member who is delinquent in the payment of membership assessments. This notice must include an itemized statement of assessments, late charges and collection costs charged to the member’s account, describe the procedures used by the association to collect delinquent assessment and certain prescribed disclosures. The pre-lien notice must be mailed, by certified mail, to all owners at their last known address and before the recording of a Notice of Delinquent Assessment. With the passage of Assembly Bill 2289 in 2002, the minimum time period between the mailing of the “pre-lien” notice to the member and the recordation of a Notice of Delinquent assessment (“Lien”) is 30 days.
Notice of Delinquent Assessment (Association Members)
The Notice of Delinquent Assessment, when recorded, creates a “Lien” on a property. This lien represents a claim against the real property of the delinquent member. In addition to any requirements specified in the association’s CC&R’s, the Notice of Delinquent Assessment must include the legal description of the subject property, a details of the assessments, late charges, interest and cost of collections, the names of all the recorded owners and, if the lien is to be enforced by non judicial foreclosures, the name and address and appointed trustee. A copy of the lien must be sent, by regular first class and certified mail, to the owners of the property to their last known address. The mailing must occur not later than 10 days from the recording of the lien. An affidavit or declaration of mailing must be completed and maintained in association files to evidence compliance with this mailing requirement.
Notice of Default
After the expiration of 30 days from the recording of the Notice of Delinquent Assessment and absent receipt of payment of all amounts owed to the association, the trustee will prepare a Notice of Default and Election to Sell. The official beginning of the “Trustee’s Sale
Proceeding” (non-judicial foreclosures) occurs when the Notice of Default is recorded by the trustee at the county recorder’s office. There are several parties entitled to receive a copy of the Notice of Default. The trustee will mail a copy of the notice within ten days after recording to the record owners and all persons who have recorded a “Request for Notice” Further, the trustee will send notice to the parties having an interest in the property within thirty days as required by law.
At the time the trustee records the Notice of Default, a “Trustee’s Sale Guarantee” (TSG) is purchased from a title company. The TSG is a type of insurance policy which provides the trustee with certain information that is needed to properly conduct a non-judicial foreclosure and insures the homeowners association and the trustee in the event the information is incorrect or incomplete
Notice of Sale
When the delinquency is not cured within three months from the recording of a Notice of Default and after receiving authorization for the association, the trustee will prepare the Notice of Trustee’s sale. This notice includes, among other information, a description of the property, an estimate of the amounts owed to the association (the “opening bid”) and the time, date and place of the sale of the property. The notice of sale is then sent to a legal newspaper to publish the noticed once each week for three consecutive weeks, the first publication to occur at least 20 days before the conduce of the sale. The notice of sale is recorded, posted on the property and in at least one public place where the sale is to take place. The parties who were mailed a copy of the Notice of Default will not additionally be sent a copy of the Notice of Sale. Any taxing agencies entitled to receive notice will also be provided with the same.
The date of the Trustee’s sale was decided upon at the time the Notice of Trustee’s Sale was prepared. It usually falls within 21-25 days after the end of the Pre-Publication Period, depending upon whether or not there are federal tax lien notification requirements. The exact date is also influenced by the location of the Trustee’s Sale and by the frequency of publication of the newspaper which the trustee is required to use.
Trustees Deed Upon Sale
A trustee’s Deed Upon Sale will be prepared after the sale has been completed. The deed is executed by trustee and sent to the recorder’s office. After recording, it is forward to the purchaser at the Trustee’s Sale. Unlike other types of foreclosure sales, there is no right of redemption after the Trustee’s Sale and the purchaser is entitled to immediate possession. The one exception is the right of the federal government to redeem within 120 days if a federal tax lien affects the property.
No policy of title insurance is given to the party who becomes the owner at the Trustee’s sale. Normally, title insurance becomes involved when the property is subsequently sold or refinanced. Associations have found that it is nearly impossible to sell properties which have foreclosed upon and taken title to because title insurance could not be obtained by subsequent purchasers without the association conducting a “quiet” title action. A “quiet” title action is a judicial proceeding where a court is petitioned to “quiet” any claims from the previous property owner(s) who lost the subject property. If successful, insurable title will result. Many title companies will not provide, with some qualifying conditions, insurable title after assessment lien trustee’s sale to purchasers of association foreclosed properties without the necessity of “quiet” title actions.
There are various reasons why a Trustee’s Sale may be postponed. A bankruptcy, association authorized payment program or legal proceeding may prevent us from holding the sale on the scheduled date. The association and the homeowner my jointly request any number of postponements. However, there is a limit of three postponements by the association or trustee, alone. Sate law requires publication of a new Notice of Sale when there are more than three postponements by the association or trustee. Each postponement must be made to a definite future date. Once the date has been announced, the sale cannot be held prior to that date.