Removing Cloud on Title Caused by Bankruptcy Filing

Posted on: March 17, 2014

We represented an investor who purchased real property at a foreclosure Trustee Sale on the same day that the property owner filed for Bankruptcy, without notice of the bankruptcy filing, which was not recorded. A few days later, our client recorded the Trustee’s Deed Upon Sale thereby perfecting title back to 8:00 a.m., the day of the sale.

Three months after the sale, the foreclosing lender first learned of the bankruptcy filing and recorded a Notice of Rescission of the Trustee’s Deed.  We filed suit to quiet title and brought a motion in Bankruptcy Court for orders that the automatic stay was void from the beginning – the order was granted.  With the Bankruptcy orders removing any threat of violation of the automatic stay, the foreclosing lender reissued a new Trustee’s Deed Upon Sale to our client, which cleared title so that our client could sell the property.

Posted in: Case Results • • •