"I was carrying a second deed of trust on a property I sold almost three years ago and recently found out that

Question

the owners moved out, walked away from the house. According to what I can tell there are new owners in the house and the property was sold at a foreclosure sale. How can I collect the $28,000 that I loaned to the first buyers now that the house went into foreclosure?"

Answer 1

Call a lawyer.  You probably can't.  The 1st mtgee sold the house at auction and didn't worry about enough to pay you too.  He probably got less than he was owed, so you're out in the cold.  Probably a good lesson, learned the hard way.

Answer 2

You probably cannot collect now, especially if you did not record your deed of trust at the county level.

However, there are always exceptions to the rule, so I would definitely talk with a real estate attorney about this matter.

Good luck!  I hope you get your money back.

Answer 3

Dear Rdaniels,

         You should first check with the County Recorder to determine if you in fact have a valid recorded Deed of trust against the property. If so and the senior trust deed holder (the 1st. T.D.) completed a foreclosure, your interest remains valid and you have a right to conduct your own foreclosure against the property.

       Did you have a written promissory note and a recorded trust deed? If not, your recourse is personal against the borrowers to whom you loaned the first buyers. It would render your loan unsecured and no liability exists against the new owners.

  If foreclosure was commenced by a secured lender junior to your 2nd Mtg., The new owners do not have clear title to the property and you go ahead with your own foreclosure.

   Nevertheless, it is my suspicion that your 2nd Mortgage was only in your mind and not properly executed and filed in accordance with the law.

    If your preliminary evidence indicates the existence of a valid trust deed, turn the matter over to a trust deed service company to conduct foreclosure or find a local real estate attorney.