Who would prevail in this case? (long) - Posted by Natalie-VA
Posted by Natalie-VA on May 11, 2006 at 10:16:18:
I see Elizabeth’s recent deal in NJ has sparked some debate, so I thought I’d throw out one that I recently encountered.
We are a deed of trust state (Virginia). It’s non-judicial with no rights to redemption.
I bought a property a few months ago at trustee sale (foreclosure). Prior to paying my balance and receiving the trustee’s deed, another settlement agent reported that the seller had sold the property prior to the trustee’s sale.
They did their settlement on a Friday, Monday was a Holiday, and they sent their deed down for recording on Tuesday. The trustee sale was held Tuesday morning, prior to their deed being recorded. They sent the payoff to the trustee (attorney who conducted the foreclosure), and he received it the following day.
At this point the new buyer owns the property and has 2 deeds of trust recorded against it. The question is, what happens if I pay my balance and record the trustee’s deed?
I sought legal advice and my attorney and the trustee concurred that I would then own the property, and the prior deed and DOTs would be wiped out. The attorney for my title insurer also agreed with this, but would not insure my title. They said that even though I would be legally in the right, they would have to spend money defending that.
To make a long story longer, I didn’t have a good enough spread to incur legal fees on this one, so I let it go and got my deposit back. The trustee and I were both frustrated that bad behavior was being rewarded (the other settlement agent screwing up), but felt we should just move on. If I had a larger spread, I would have fought it.
Does anyone have any thoughts on how this might have played out?