HOA Law Blog
By Sandra Gottlieb, SwedelsonGottlieb, Community Association Attorneys
There has been some confusion as to whether a community association’s trustee, after a nonjudicial foreclosure sale (for the collection of delinquent assessments), may record a trustee’s deed upon sale prior to the expiration of the 90-day right of redemption required by California Civil Code Section 1367.4 and California Code of Civil Procedure Section 729.035. A plain reading of California law provides no explicit answer.
Some contend that it would not make sense to record a trustee’s deed upon sale prior to the expiration of the 90-day right of redemption because title to the property cannot transfer until the right of redemption period passes. Others would simply point to the law and ask why the legislature would not explicitly provide for this requirement, like it has with many other nuances pertaining to the right of redemption for nonjudicial foreclosures.
At SwedelsonGottlieb, we have always looked beyond the surface when dealing with community association legal issues. In this case, we took a look into the legislative history, which helps us answer this issue. In 2006, AB 2624 was proposed and later introduced as California Code of Civil Procedure 729.040. The legislative history of AB 2624 shows that it was the legislature’s intent that a certificate of sale be only recorded after a sale “so that no one can record anything against the property superior to the new buyer or the potential redeemer.” Further, those in support of AB 2624 argued that when a trustee receives notice that a homeowner seeks to redeem the property, this lets the trustee “know not to convey the trustee’s deed to the purchaser at the end of the 90 days without first determining whether the redemption has gone forward.”
This language makes clear that it was the legislature’s intent to safeguard against having a trustee’s deed be recorded (and thus a property’s title transferred) with out first determining whether the defaulting homeowner has come forward to redeem the property. Further, the legislature has also made it clear that AB 2624 was in large part introduced to mirror the judicial foreclosure redemption process because of a lack of clear procedures for nonjudicial foreclosures. Because title to a property cannot transfer until after the strict right of redemption period following a judicial foreclosure, this is instructive that the legislature wanted to prevent the recording of a trustee’s deed until after the expiration of the 90-day right of redemption for a nonjudicial foreclosure.
The law is not always clear on its face, so community associations should seek out the advice of legal counsel who practices in this area to ensure compliance with the laws, especially if a deep look into the law’s history is the only way to find out what it’s saying.
Sandra Gottlieb is a community association attorney and partner at SwedelsonGottlieb. She can be contacted via email: slg@sghoalaw.com
Are you in or near Orange County? See Sandra speak on assessment collection at this upcoming event on July 30, 2013.