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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Consequences of overlooked junior liens or interests.. Posted by JD on March 24, 2002 at 8:59 AM In Reply to: Consequences of overlooked junior liens or interests.. posted by Ward-CA- on March 24, 2002 at 8:05 AM In Colorado the rules are a little different. By both Statute (ommitted part rule) and Case law the winning bidder can either affirm the ommitted parties lien, or notice the ommitted party via a Court Action similar to a quiet title action, offering them a right of redemption. Failure of the ommitted party to exercise this Court ordered right of redemption would result in their their being expunged from title. This sounds neat and clean, but becomes problematic if a lien holder attempts to enforce their lien years latter after the property has been sold once or twice. I successfully collected on an 'omitted' judgment which I had purchased four years after the sale. I am following a half a dozen other omitted judgements which I know were not noticed due the foreclosure process. I plan to make offers on them in a few years. The last title company to insure the property will have to pay off the judgments I buy. In CO I don't think that you can sue the foreclosing Lender for such an ommission (no warrenty at sale). If you know of Statue or case law to the contray please let me know. : : Ward, : : In the event a senior lienholder fails to give notice of a foreclosure to a junior lienholder (i.e., the junior lienholder is not made a defendant in the foreclosure lawsuit), and the property is subsequently sold at auction, what are the junior lienholder’s remedies, and, most importantly, what are the implications to the third-party buyer? : : Thanks : =•=•=•=•=•=•=•=•=•=•= : Rob, : Almost all foreclosure jurisdictions require the party processing a foreclosure to notify anyone that’s adversely affected by their impending foreclosure action. The rule gives such vulnerable interest holders an opportunity to cure the foreclosure themselves, before they’re wiped off title or wiped out altogether, under the theory of advances. : The penalty for failure to properly notify someone entitled to such a notice is that the non-noticed lien or interest remains on title! : Such a consequence could severely affect a bidder at the foreclosure sale if a junior lien she expected to be wiped off the property remains intact due to the oversight of the processor of the foreclosure. : If the error is caught very early on, say immediately after the foreclosure auction, like we teach our trainees to check for, then the consequence of the non-notice error is minimal. That’s because there’s still time to cancel the sale, based on mistake, and return the unprocessed cashier’s checks to the winning bidder. The foreclosure processor would then send out new notices of sale, this time to every party adversely affected by the impending foreclosure and conduct the auction again. : However, if the error is caught a good while after the foreclosure auction, after the bidder’s checks have been cashed and the monies distributed, it’s nigh near impossible to put humpty dumpty back together again. In such a situation the foreclosing agent is going to beg off, saying that they’re sorry about the oversight, but that there’s nothing they can do since the auction proceeds have been irretrievably distributed. : You’d be forced to sue them for negligence, the consequence of which has been to burden the title of the property with more remaining liens or interests than there would have been if they hadn’t screwed up and gave proper notice to everyone that was entitled to such. : You’d win your lawsuit and the overlooked lien or interest would be removed at the expense of the foreclosure processor or the title company that provided them with a faulty title report, but you’d still have to bear you own expenses in going through the legal process—to the tune of about $10,000 or more. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : In Colorado the rules are a little different. By both Statute : (ommitted part rule) and Case law the winning bidder can either : affirm the ommitted parties lien, or notice the ommitted party via : a Court Action similar to a quiet title action, offering them a : right of redemption. Failure of the ommitted party to exercise this : Court ordered right of redemption would result in their their being : expunged from title. This sounds neat and clean, but becomes : problematic if a lien holder attempts to enforce their lien years : latter after the property has been sold once or twice. I successfully : collected on an 'omitted' judgment which I had purchased four years : after the sale. I am following a half a dozen other omitted judgements : which I know were not noticed due the foreclosure process. I plan to : make offers on them in a few years. The last title company to insure : the property will have to pay off the judgments I buy. In CO I don't think : that you can sue the foreclosing Lender for such an ommission (no warrenty at sale). : If you know of Statue or case law to the contray please let me know. : : : : Ward, : : : In the event a senior lienholder fails to give notice of a foreclosure to a junior lienholder (i.e., the junior lienholder is not made a defendant in the foreclosure lawsuit), and the property is subsequently sold at auction, what are the junior lienholder’s remedies, and, most importantly, what are the implications to the third-party buyer? : : : Thanks : : =•=•=•=•=•=•=•=•=•=•= : : Rob, : : Almost all foreclosure jurisdictions require the party processing a foreclosure to notify anyone that’s adversely affected by their impending foreclosure action. The rule gives such vulnerable interest holders an opportunity to cure the foreclosure themselves, before they’re wiped off title or wiped out altogether, under the theory of advances. : : The penalty for failure to properly notify someone entitled to such a notice is that the non-noticed lien or interest remains on title! : : Such a consequence could severely affect a bidder at the foreclosure sale if a junior lien she expected to be wiped off the property remains intact due to the oversight of the processor of the foreclosure. : : If the error is caught very early on, say immediately after the foreclosure auction, like we teach our trainees to check for, then the consequence of the non-notice error is minimal. That’s because there’s still time to cancel the sale, based on mistake, and return the unprocessed cashier’s checks to the winning bidder. The foreclosure processor would then send out new notices of sale, this time to every party adversely affected by the impending foreclosure and conduct the auction again. : : However, if the error is caught a good while after the foreclosure auction, after the bidder’s checks have been cashed and the monies distributed, it’s nigh near impossible to put humpty dumpty back together again. In such a situation the foreclosing agent is going to beg off, saying that they’re sorry about the oversight, but that there’s nothing they can do since the auction proceeds have been irretrievably distributed. : : You’d be forced to sue them for negligence, the consequence of which has been to burden the title of the property with more remaining liens or interests than there would have been if they hadn’t screwed up and gave proper notice to everyone that was entitled to such. : : You’d win your lawsuit and the overlooked lien or interest would be removed at the expense of the foreclosure processor or the title company that provided them with a faulty title report, but you’d still have to bear you own expenses in going through the legal process—to the tune of about $10,000 or more. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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