REOs Leased by Bank Considered Shadow Inventory?

[NewportSkipper_IHB]

Secret Garden will make someone a cool $100k before expenses.

 

[Nude_IHB]

My intial statement was not about foreclosures, but I see that there is an out for owner-occupant buyers.

I was addressing this:

"but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends"

It's nice to see you admit an error. Welcome to the human race.

 

[usctrojanman29_IHB]

Secret Garden will make someone a cool $100k before expenses.

Or less than $50k after expenses...not worth the trouble. Now if it went for $725k +/- then it'd be a different story.

 

[awgee_IHB]

My intial statement was not about foreclosures, but I see that there is an out for owner-occupant buyers.

I was addressing this:

"but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends"

It's nice to see you admit an error. Welcome to the human race.

Nude, Skippy did not admit to error. He claimed to be addressing something other than the subject at hand, which was whether a lease continued on a foreclosed property. Skippy does not make errors, just excuses.

 

[usctrojanman29_IHB]

If you care to cite, fine. If not, fine also. You usually know what you are talking about and it sounds like you know about this. I do not. It just sounded illogical.

It is illogical, and it is a big PITA these days. I know a guy who bought home at auction. Some squatter forged a lease, even used the former owner's name. The guy who bought the house called the old owner, old owner said I never leased the place. New owner calls the cops, has forged lease dude dragged out in handcuffs for trespassing and probably fraud. Had it been legit, he'd have to wait to sell the place or sell it as investor only with current tenant. Good times.

BTW, the law before applied to normal sales when it came to honoring a lease. The old law for a trustees sale meant you could boot the occupant out as soon as possible. The new law requires you to honor the lease. Only way to boot a legitimate tenant is cash for keys.

Did you see that someone picked up 27 Secret Garden today for $764k? I wonder how the neighbors feel about that?

How about the high bidders on 29 Grape Arbor who are probably willing to pay over $800k for over 700sf less sf of living space?

 

[EvaLSeraphim_IHB]

It's basic real estate law that a lease survives a sale.

I'm not sure which book you read, but you might want to double check it for the details or read a different book. Excluding any implications of S. 896 cited by BLT or any recent changes in the law made by the Legislature, if any, in California a lease generally will not survive a foreclosure sale unless that lease was entered into and recorded prior to the recording of the foreclosing deed of trust. There are some exceptions to this, such as a subordination agreement, but those require the approval of the beneficiary of the deed of trust at issue. In my limited experience, lease recordation and subordination of the DOT to the lease is far more common in CRE than residential.

As always, this post is made for informational purposes only, should not be relied on for any purpose, is worth exactly what you paid for it, and is not intended to create an attorney-client relationship (putative or actual). For advice or counsel related to your specific situation, please consult your own lawyer.

In my version of the English language:

"... in California a lease generally will not survive a foreclosure sale unless that lease was entered into and recorded prior to the recording of the foreclosing deed of trust."

This says the lease has to be signed before the foreclosure is completed. I would think that's patently obvious.

It appears you misread. When I referred to the foreclosing deed of trust, that is the DOT on which the foreclosure is proceeding because a property can be subject to multiple liens (like a first and second mortgage, which are secured by two separate deeds of trust). When I said "foreclosing deed of trust," I did not mean the deed that transfers ownership upon completion of the trustee's sale.

But here, I'll show you my cards:

A lease is generally deemed to be subordinate to a deed of trust if the lease was created after the deed of trust was recorded. On the other hand, when the lease was executed and recorded prior to the recordation of the deed of trust, or if the beneficiary of the deed of trust had notice of an unrecorded lease at the time the trust deed was recorded, the lien of the trust deed is junior to the estate of the lessee.

A lease may also be deemed subordinate by virtue of a subordination agreement. Subordination agreements are often used to adjust the priorities between commercial tenants and the mortgagee of the real estate. Absent such an adjustment, priorities will be governed by the recording acts and related common law principles.

A lease which is subordinate to the deed of trust is extinguished by the foreclosure sale. A foreclosure proceeding destroys a lease junior to the deed of trust, as well as the lessee's rights and obligations under the lease. As stated in section 15.1 of the Restatement Second of Property, Landlord and Tenant (1977), “{i}f the sale of the landlord's interest is forced by one having a paramount title to that of the tenant, such as a mortgagee whose interest existed at the time the lease was made, the tenant's interest will be defeated by the sale.”

Dover Mobile Estates v. Fiber Form Products, Inc., 220 Cal. App. 3d 1494, 1498-1499 (1990).

May I see your cards now?

 

[usctrojanman29_IHB]

It's basic real estate law that a lease survives a sale.

I'm not sure which book you read, but you might want to double check it for the details or read a different book. Excluding any implications of S. 896 cited by BLT or any recent changes in the law made by the Legislature, if any, in California a lease generally will not survive a foreclosure sale unless that lease was entered into and recorded prior to the recording of the foreclosing deed of trust. There are some exceptions to this, such as a subordination agreement, but those require the approval of the beneficiary of the deed of trust at issue. In my limited experience, lease recordation and subordination of the DOT to the lease is far more common in CRE than residential.

As always, this post is made for informational purposes only, should not be relied on for any purpose, is worth exactly what you paid for it, and is not intended to create an attorney-client relationship (putative or actual). For advice or counsel related to your specific situation, please consult your own lawyer.

In my version of the English language:

"... in California a lease generally will not survive a foreclosure sale unless that lease was entered into and recorded prior to the recording of the foreclosing deed of trust."

This says the lease has to be signed before the foreclosure is completed. I would think that's patently obvious.

It appears you misread. When I referred to the foreclosing deed of trust, that is the DOT on which the foreclosure is proceeding because a property can be subject to multiple liens (like a first and second mortgage, which are secured by two separate deeds of trust). When I said "foreclosing deed of trust," I did not mean the deed that transfers ownership upon completion of the trustee's sale.

But here, I'll show you my cards:

A lease is generally deemed to be subordinate to a deed of trust if the lease was created after the deed of trust was recorded. On the other hand, when the lease was executed and recorded prior to the recordation of the deed of trust, or if the beneficiary of the deed of trust had notice of an unrecorded lease at the time the trust deed was recorded, the lien of the trust deed is junior to the estate of the lessee.

A lease may also be deemed subordinate by virtue of a subordination agreement. Subordination agreements are often used to adjust the priorities between commercial tenants and the mortgagee of the real estate. Absent such an adjustment, priorities will be governed by the recording acts and related common law principles.

A lease which is subordinate to the deed of trust is extinguished by the foreclosure sale. A foreclosure proceeding destroys a lease junior to the deed of trust, as well as the lessee's rights and obligations under the lease. As stated in section 15.1 of the Restatement Second of Property, Landlord and Tenant (1977), “{i}f the sale of the landlord's interest is forced by one having a paramount title to that of the tenant, such as a mortgagee whose interest existed at the time the lease was made, the tenant's interest will be defeated by the sale.”

Dover Mobile Estates v. Fiber Form Products, Inc., 220 Cal. App. 3d 1494, 1498-1499 (1990).

May I see your cards now?

*waiting patiently for skippy's response*

 

[Nude_IHB]

My intial statement was not about foreclosures, but I see that there is an out for owner-occupant buyers.

I was addressing this:

"but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends"

It's nice to see you admit an error. Welcome to the human race.

Nude, Skippy did not admit to error. He claimed to be addressing something other than the subject at hand, which was whether a lease continued on a foreclosed property. Skippy does not make errors, just excuses.

He implied he made an error in asserting one thing applied to all circumstances when addressing something else. Granted, I am bending over backwards to make the effort, but... carrot and stick, you know?

 

[EvaLSeraphim_IHB]

Eva - As a renter, can I have my lease recorded? Just march a copy down to the recorders office, fill out some paperwork, pay a fee, and say please?

I think you can (emphasis on "think"). You should have the assessor's parcel number and legal description with you to be safe. I think if you Google around you can find a form that has some legal mumbo jumbo at the beginning and will allow you to attach a copy of the lease. It may not matter much if all the liens on the house were recorded prior to the lease. Then again, you never know what changes the state and feds will make in the future to alter the current law.

I don't know if this is any good, but here is one site with forms.

 

[CapitalismWorks_IHB]

It's basic real estate law that a lease survives a sale.

You just got served by BLT. That has gotta hurt, especially after trying to go big league with your definitive statement on real estate law. Shall we add that to the list of things that are beyond your area of expertise?

I hope you like crow. Yummy, yummy crow. Thank you, Sir, can I have another?

Boy I am hungry, but it looks like your gonna be eating that Crow Pie all by yourself. And yes, if you read my comments to your ravings on several previous threads, you should find several more tasty treats.

 

[awgee_IHB]

Eva - As a renter, can I have my lease recorded? Just march a copy down to the recorders office, fill out some paperwork, pay a fee, and say please?

I think you can (emphasis on "think"). You should have the assessor's parcel number and legal description with you to be safe. I think if you Google around you can find a form that has some legal mumbo jumbo at the beginning and will allow you to attach a copy of the lease. It may not matter much if all the liens on the house were recorded prior to the lease. Then again, you never know what changes the state and feds will make in the future to alter the current law.

I don't know if this is any good, but here is one site with forms.

Sorry to be so obtuse, but one last? question.

Are you saying that it doesn't matter if my lease is recorded if the mortgage was entered first or an actual lien was entered first?

Presently there are no liens or NODs or anything else on our leased home. I check regularly. I was just thinking about being prepared.

 

[awgee_IHB]

My intial statement was not about foreclosures, but I see that there is an out for owner-occupant buyers.

I was addressing this:

"but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends"

It's nice to see you admit an error. Welcome to the human race.

Nude, Skippy did not admit to error. He claimed to be addressing something other than the subject at hand, which was whether a lease continued on a foreclosed property. Skippy does not make errors, just excuses.

He implied he made an error in asserting one thing applied to all circumstances when addressing something else. Granted, I am bending over backwards to make the effort, but... carrot and stick, you know?

Yeah, I knew that. And I find it odd that some folks can not just say, "I was wrong."

 

[EvaLSeraphim_IHB]

Eva - As a renter, can I have my lease recorded? Just march a copy down to the recorders office, fill out some paperwork, pay a fee, and say please?

I think you can (emphasis on "think"). You should have the assessor's parcel number and legal description with you to be safe. I think if you Google around you can find a form that has some legal mumbo jumbo at the beginning and will allow you to attach a copy of the lease. It may not matter much if all the liens on the house were recorded prior to the lease. Then again, you never know what changes the state and feds will make in the future to alter the current law.

I don't know if this is any good, but here is one site with forms.

Sorry to be so obtuse, but one last? question.

Are you saying that if the it doesn't matter if my lease is recorded if the mortgage was entered first or an actual lien was entered first?

Presently there are no liens or NODs or anything else on our leased home. I check regularly. I was just thinking about being prepared.

Wow... that's a rare circumstance. As Trojan said, "First come, first served," or the more formal, "first in time, first in right." If there are no recorded liens on the house and you record the lease, you should be in good shape for any liens that crop up later (except for things like tax liens that have priority by statute). But please don't rely on my fuzzy memory. Really. Spend a couple hundred on a lawyer who is up to date on these things. I don't want you to have a potentially false sense of security and possibly lose money as a result of my bloviating.

Also, see disclaimer in post responding to Newport Skipper, above.

 

[NewportSkipper_IHB]

My intial statement was not about foreclosures, but I see that there is an out for owner-occupant buyers.

I was addressing this:

"but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends"

It's nice to see you admit an error. Welcome to the human race.

Nude, Skippy did not admit to error. He claimed to be addressing something other than the subject at hand, which was whether a lease continued on a foreclosed property. Skippy does not make errors, just excuses.

I had a feeling you unignored me.

 

[irvine_home_owner_IHB]

My intial statement was not about foreclosures

Wait... isn't this what this thread is about? Leases on foreclosures?

Maybe you need to edit that $1500 to $1400 again.

 

[NewportSkipper_IHB]

I admit one could be confused that I was addressing foreclosures only, but my repsonse was addressing this post. I thought it was obvious.

"I know nothing about leasing laws, but logically it seems like if the lease is made with the previous owner, the lease/contract ends when ownership ends. If there are any costs involved with the early cessation of the lease, it seems the responsible party would be liable for those costs."

Absent foreclosure, that is wrong.

 

[NewportSkipper_IHB]

It's basic real estate law that a lease survives a sale.

You just got served by BLT. That has gotta hurt, especially after trying to go big league with your definitive statement on real estate law. Shall we add that to the list of things that are beyond your area of expertise?

I hope you like crow. Yummy, yummy crow. Thank you, Sir, can I have another?

Boy I am hungry, but it looks like your gonna be eating that Crow Pie all by yourself. And yes, if you read my comments to your ravings on several previous threads, you should find several more tasty treats.

Dude, no way, no how I got served by BLT. Eva? Yeah, ok. BLT was as wrong as wrong gets. Once on the domestic violence provision and a second time by claiming it's all Section 8 stuff.

 

[CapitalismWorks_IHB]

It's basic real estate law that a lease survives a sale.

You just got served by BLT. That has gotta hurt, especially after trying to go big league with your definitive statement on real estate law. Shall we add that to the list of things that are beyond your area of expertise?

I hope you like crow. Yummy, yummy crow. Thank you, Sir, can I have another?

Boy I am hungry, but it looks like your gonna be eating that Crow Pie all by yourself. And yes, if you read my comments to your ravings on several previous threads, you should find several more tasty treats.

Dude, no way, no how I got served by BLT. Eva? Yeah, ok. BLT was as wrong as wrong gets.

LOL. Fair Enough.

 

[no_vaseline_IHB]

My intial statement was not about foreclosures

Wait... isn't this what this thread is about? Leases on foreclosures?

Maybe you need to edit that $1500 to $1400 again.

Why would he let the facts get in the way of his argument now? Just for kicks?

 

[IrvineRealtor_IHB]

This year's update:

The Effects of Non-Judicial Foreclosure on Tenant-Occupied Property in California

Posted by Christopher Martz

In this Emerging Issues Analysis, San Francisco attorney Christopher Martz discusses recent developments surrounding the effects of non-judicial foreclosure on tenant occupied property. The focus is on California law, but recent federal legislation, the “Protecting Tenants at Foreclosure Act of 2009,” drastically alters the legal landscape following non-judicial-foreclosure on tenant-occupied property, both in terms of whether a residential lease survives the foreclosure sale and the steps necessary to terminate an extinguished lease or tenancy. This article highlights these important developments and exposes common pitfalls for tenants and property-owners alike. Mr. Martz writes:

Residential Lease Survives Non-Judicial Foreclosure for Remainder of Its Term. The Protecting Tenants at Foreclosure Act of 2009 (PTFA) provides that an unexpired residential lease will survive foreclosure for whatever amount of time remains on the lease [Pub. L. No. 111- 22, § 702(a) (2009)]. Tenants who enter into a fixed-term lease before the notice of foreclosure are now entitled to remain in possession for the remainder of the lease term provided the lease meets the three-pronged test to qualify as bona fide. A lease is bona fide under PTFA if [Pub. L. No. 111- 22, § 702(b) (2009)]:

The tenant is not the mortgagor or the mortgagor's child, spouse, or parent;

The lease is the result of an arms-length transaction; and

The rent due under the lease is not substantially less than market rent, unless the rent is reduced by a subsidy. The protections of PTFA extend to subsidized tenancies as well. In such cases, the immediate successor in interest following non-judicial foreclosure takes the property subject to both of the following [Pub. L. No. 111- 22, § 703 (2009)]:

The lease with the tenant; and

The Housing Assistance Payment (HAP) contract with the local housing authority.

link:

http://law.lexisnexis.com/webcenters/lexisone/Emerging-Issues-Analysis/The-Effects-of-Non-Judicial-Foreclosure-on-Tenant-Occupied-Property-in-California/

awgee - IMO it would be a waste of time and energy to have your lease recorded.

http://www.rockabilly-rules.com/images/product_images/popup_images/dapper_dan_2.jpg

xoxo

-paterfamilias