Foreclosure Sale Error

 In Real Estate
1. Foreclosure Sale Error by Purchaser Costs Hundreds of Thousands of Dollars

In the case of Matson v S.B.S. Trust Deed Network (2020) 46 CA5th 33, the Court of Appeal affired the trial court’s decision that the trustee’s sale is complete when acceptance of the final bid. The successful bidder refused to record the trustee’s deed upon sale when he found out that he had made a huge error and that the property was subject to a first trust deed. The bidder wrongfully thought the deed being foreclosed upon was the first trust deed. The court determined that recording the deed itself is not part of the notice and procedure of the foreclosure sale because it occurs after the sale has been completed.

The court was not persuaded by the buyer’s claim of unilateral mistake of fact. The buyer was not trying to remedy any misconduct by the foreclosure trustee or the beneficiary, but its own “careless” irrevocable offer to buy the property. Accordingly, the court determined that the buyer bore the risk of mistake by engaging in the sale and should have investigated more closely, rather than relying on a private real estate website to find the property that was being held for auction and then ordering a property profile from a title company, which he never read in full. The buyer only checked the notice of sale and that the amount of the loan matched what was published on the website.

Comment: Buying properties at foreclosure auctions is not for beginners. One must have a good relationship with a title company as well a good feel for property values. Most importantly, you must determine what priority the trustee’s deed that is being foreclosed on is in.

About the Author

  • Scott Souders
    Scott Souders Attorney & Author


Scott Souders is a real estate attorney who has practiced real estate law in excess of 43 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

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