Help, My House is Going Up for Sale Next Week

Disclaimer: This is not legal advise.  This is purely for educational purposes.  You are to seek legal council in all legal matters.

I keep hearing people in this situation crying in the last minute not knowing what to do.

This is a quick guide to give you ideas and options of what to do if you find yourself in this situation.

There’s 2 ways to stay a upcoming sale:

1)    Declare a bankruptcy for the purpose of delaying the sale (or you may to go through with it anyway)

2)    File a civil action and get a Temporary Restraining Order.

The quickest solution is to file for a bankruptcy.  There’s 2 types of bankruptcies, Chapter 7 and Chapter 13.

With a Chapter 7 Bankruptcy, all your unsecured liens go away…like credit cards, but the house lien/mortgage is not included.  Chapter 13 will stay a foreclosure sale but the bank will be able pursue you after the BK has been resolved.

To do it yourself, come here: http://www.law.cornell.edu/rules/frbp/

I am not going to dwell too much on the Bankruptcy strategy as others can explain this a whole lot better than I.

The Civil Action Strategy

The other strategy to stay a foreclosure action is using a law suit and sue the bank.  Specifically, you as a debtor have the right to challenge the bank to produce proof of claim before they can proceed with the sale.

The Trustee is not obliged to stop the sale unless:

a) Ordered by the court through a preliminary injunction or a temporary restraining order

b) Made personally liable for the action through a Notice of Cease and Desist.

To clarify, if you want to use any of the strategies described below, you must sue the bank.  This means filing a complaint or petition with your Superior, Circuit or Federal Court.

The Trustee Sale Process

Before we get too far into this, let’s talk about how the Trustee sale process work so you understand the framework.

After the bank issues you a Notice of Default, their next step is to send you a Notice of Trustee Sale.  The Notice of Trustee Sale (NoTS) will have a date, time and location of the auction.

The auction will be held typically at the court house.  If investors come to bid, they have to bring a certified cheque.  Often times these days, it just goes back to the bank.  Funnily enough, the bank does not need to bring any money to the table.  Talk about fair.

Anyway, after the sale proceed, the new “owner” will be issued the new title to the property after their payment.

The new “owner” will need to evict the homeowner from the property.  The way they need to do this is through an unlawful detainer writ.  This is issued through the court.  Before this takes place, the Trustee needs to write an affidavit and record this with the County recorder…certifying everything was conducted correctly.

Delay Tactic #1: Giving the Trustee a Cease and Desist Notice

Once you have filed your civil action, you will be issued a case number.  With this case number, you can create a document called a Lis Pendens which you can file at your County Recorder’s office.  This will give notice to all parties that there is a controversy on the title and that if they wish to buy the property, they do so knowing that there will be a clouded title issue…and that they will not be able to gain title – and title insurance even after they buy the property.

This will be a big deterrent to investors, but not so to the bank.  They don’t care.  They just want to steal your house.  They are relying on the Trustee to do so.  Up until this point, the Trustee is held harmless because they are acting at the request of the Beneficiary.

Once you have your Lis Pendens, you should also include a Notice of Cease and Desist.  After filing your Lis Pendens, you should send (or fax) to the Trustee the Lis Pendens and Notice of Cease and Desist.

Here’s what happens after the Trustee gets this notice.  Remember, before the notice, the Trustee was immune from civil action because they were acting on good faith.  After the notice, they are now informed that there is a problem with the title.  If they proceed, they will be named an accessory to the crime.  In other words, “I told you there was a crime being committed and warned you to stay away.  You ignored my warning and did it anyway.”

In most cases, this should push the sale back a few weeks.  If the Trustee does not comply, then you will need to add them as a co-defendant on your civil action.  He is now 50% liable for the suit…and if he does not show up to defend himself, he will receive 50% of the damages due to default.

Please note that in some States, you might need to get leave from the court to file a Lis Pendens as many people have abused this.

Delay Tactic #2: Subpoena the Trustee

As you recall, the Trustee needs to sign an affidavit and record it with the County Recorder’s Office before the sale can be consummated.  Since you have a pending civil action, you can now subpoena the Trustee to come testify under oath that everything is in order and verified.  In other words, he has personally verified that the bank owns the note and has the right to foreclose.  He swears that the homeowner was properly notified and that he has followed the State Civil Procedures for the foreclosure.

95% of the time, the Trustee will not testify under oath to these facts for some reason.  Who knows, maybe they are afraid to go to jail?

Without this affidavit, the house stays in limbo.  The unlawful detainer writ can not be executed.

You get to stay in your home indefinitely until the Trustee signs the affidavit.

To get a subpoena, simply go to the Court Clerk and ask her to get you the form for a subpoena.  Fill it out and send it to the Trustee.  For the specifics of how to do this, consult your attorney (or if you have Prepaid Legal…just ask your prepaid legal lawyer for free).

Delay Tactic #3: Order a Temporary Restraining Order

A Temporary Restraining Order (TRO) only gives you a short stay, typically 10 to 14 days.  Judges almost always grant these without too much ado.  To file a TRO, you need to first have an open case/civil action.  You need to have served the other side with the civil action.  You must also notify the other side of your motion for a TRO.  You can notify the other party any of the following ways:

1)    In person/writing/process server.  Serving the notice in their office or presense.

2)    In writing via certified mail/courier.

3)    Via Fax or email

4)    Via telephone. (have a witness)

* Be sure to confirm this with your attorney as each State is different.

Here are some rules of the court you must understand.

1)    With each motion, you need an order.  In other words, when you submit a Motion for a Temporary Restraining Order, you must also supply the court an “Order for a Temporary Restraining Order”.

2)    With each notice submitted to the court, there must be a certificate of service.

3)    What you give to the Court, you must give to the Defendant.  What you give to the Defendant, you must give to the Court.

The judge have very strict rules for his eyes.  He can not “see” your document unless they are in proper order.  In other words, if you go to the Judge asking for a TRO but you have not served it to the other party, he can not “see” it.  He is forbidden to “see it”.  For all intents and purpose, it’s not there.  Some friends of mine had their TRO denied and was wondering why this was the case.

Unfortunately, the judge can simply deny your TRO and not explain it to the home owner.  He is not really obliged to explain the law to you (sadly).

Elements of a TRO

In order for a TRO to be granted, it must fulfill the 4 elements:

1)    If the action were to be allowed to proceed, it will cause greater harm to the victim affected (the moving party).

2)    If in granting the motion, the non-moving party is not caused greater harm in the process.

3)    Likelihood of success based on the merits.  Evidence presented to the court presents the high likelihood of prevailing by the moving party.

4)    It is in the public interest.

It is for this reason that you must submit an affidavit in support of your motion.  In your original petition, you should build enough evidence in support of your case as to convince the judge of your likelihood of success…or enough controversy.  With your affidavit in support of the TRO, you’ve automatically presented superior evidence in support of your case to satisfy the likelihood of prevailing.

Once you file your TRO, you must inform the Court Clerk that you have an emergency and need to have an “ex parte” hearing to have the Judge consider your TRO.  The Court Clerk will give you a time and date for the next available time the judge can hear your case.  Before the judge sees you, you better have your Motion and Order ready…and SERVED to the other party.

As I said, if you have properly served the other party, and you’ve satisfied the 4 elements of the TRO, you should have very little problem having your TRO granted.

Your TRO is only good for 10 to 14 days.

Once you have your TRO, you should immediately notify the Trustee and the Defendant.  I wouldn’t record the TRO at the County because it’s too short lived.  County Record is for a more permanent notice.

But It’s Only 10 Days?!

What you need is a preliminary injunction barring the sale.  A preliminary injunction is ordered by the court to stay the sale until the controversy is sorted out.  You will need to file a “Motion for an Injunctive Relief Barring Sale” and an “Order for an Injunctive Relief Barring Sale”.

The injunction also have the same 4 elements as the TRO.

Once you submit your Motion, the court can take a while to grant your motion.  This is why you need another motion called the “Motion for Shortening Time for an Ex Parte Hearing”.

Sheesh! Another Motion?  Yep.

Like anything, with any motion, you also need an order.  What you submit to the court, you must submit to the other side.

In other words, instead of deciding whether or not to grant your Injunctive Relief in 3 weeks time, the court will agree to hear your motion in a few days.

The point of this hearing is not to plea your case.  It is to see if there is sufficient evidence and controversy to grant your motion of Injunctive Relief to allow for “discovery”.

Again, if you have properly serviced the non-moving party and you’ve satisfied the 4 elements of the Injunctive Relief, you should not have too much of a problem with getting the Injunctive Relief.

Once your Motion is Granted, the Judge will sign your Order.

Take your Order, and notify the Defendant and the Trustee.

You should now file it with the County Recorder’s Office.

Unless the Judge stipulates otherwise, this injunctive relief is in place until the outcome of the case is determined.

Summary

If your sale is like TOMORROW, then you should order a TRO…otherwise, if you have more than a couple of weeks, I would skip it and just go for the Motion for an emergency Injunctive Relief.

Of course, before any of these are available to you, you must file a civil action against the bank…presuming you know how to build a petition/complaint to argue your case.

Here are the steps:

1)    File a Civil Action petition/complaint

2)    File a Motion for a TRO (and an Order)

3)    Notify the other party

4)    Notify the Court Clerk that you need an “ex parte’ hearing to have your Motion granted.

5)    File a Motion for an Injunctive Relief (and Order)

6)    File a Motion for Shortening Time

7)    Appear at the hearing to present the evidence of the controversy (but not argue your case).  Eg. “I had a recent forensic audit and uncovered fraud.   We need time for discovery to resolve this controversy.”

Question: Where Do I get these documents?

I have created and included these documents in my coaching program documents kit:

-       Motion for a Temporary Restraining Order

-       Order for a Temporary Restraining Order

-       Motion for Shortening Time + Order

-       Motion for an Injunctive Relief

-       Order for an Injunctive Relief

-       Petition for Verification of Debt Else Release of Claim

The Petition is prebuilt with the “show me the note” argument using my research of over 1000 hours.  It has been used by me personally for my 4 civil actions against the bank.

The kit also includes guides on how to conduct yourself in court and court procedures.

For more information, come to: http://www.freeandclearin90.com/coaching-program/