After loan approval and after the disclosures, Buyer removes all contingencies.  Seller incurs thousands of dollars in obtaining termite clearance and in removing Seller’s junk from her yard, in contemplation of the sale.  Thereafter, however, Buyer’s lender does an about face and disapproves the loan.  Buyer also discovers several conditions regarding the house that Buyer believes were misrepresented (e.g., an open insurance claim, fire damage, mold, water damage and unpermitted work).

THE DISPUTE:  Therefore, within days of these discoveries, Buyer signs a Cancelation of Escrow and demands his deposit back.  The cancellation occurs after all contingencies were removed, so Seller claims Buyer is in default, refuses to agree to allow escrow to release the deposit and claims the right to the entire deposit based on a liquidated damages clause the parties signed.  Both parties agree that the sale is cancelled but cannot agree on entitlement to the deposit.  Seller subsequently, within a month or so of the cancelled sale with Buyer, sells her property to a new buyer for more money:  $870,000.00.  Further, other than typical Seller’s costs (termite, property clean up), Seller’s has no actual damages as a result of the aborted sale.  (Note:  We are assuming for purposes of the Article that this is a good faith dispute between Buyer and Seller; the CAR Agreement at Paragraph 14G states that if a good faith dispute regarding cancellation does not exist a party might be subject to a civil penalty for refusal to sign cancelation instructions according to Civil Code section 1057.3; that code section is not the subject of this Article.)

THE ISSUE:  Should Buyer be able to recover his deposit, or can Seller enforce the liquidated damages clause and keep all the entire deposit?

THE SHORT ANSWER:  As set forth below, notwithstanding the somewhat clear contract language in the customary CAR Agreement, it is likely that Buyer is entitled to recover his deposit under these circumstances (possibly minus minor escrow fees); Seller should only be able to recover, if anything, actual damages as a direct result of Buyer’s default—even though the contract language suggests otherwise.

DISCUSSION

BACKGROUND

First, before trying to solve this dispute, we need to be clear at to what is a liquidated damages clause?  Simply, such a clause is a provision in a contract by which damages for a breach of contract are determined—ahead of time—in anticipation of the breach and usually are enforceable only if determining actual damages is impracticable or extremely difficult.  (Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 976-977.)  In the absence of a reasonable relationship between the liquidated damages and the actual damages the parties could have contemplated for breach, “a contractual clause purporting to predetermine damages ‘must be construed as a penalty.’” (Id. at p.  977.) “‘A contractual provision imposing a “penalty” is ineffective, and the wronged party can collect only the actual damages sustained.’ [Citations.]”  In Ridgley, the California Supreme Court held that a clause in a promissory note imposing a charge of six months’ interest if borrowers prepaid loan principal, but also provided that a charge would not be imposed six months after execution of the note, unless borrowers had made late interest payment or otherwise defaulted, was an unenforceable penalty for late payment.  The court noted:  “[a] liquidated damages clause will generally be considered unreasonable, and hence unenforceable . . . [omitted reference to Civ. Code § 1671(b)], if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.”   (Emphasis added.)  The court noted that the provision operated as a penalty on the borrowers, because it created a severe burden on them if they tried to pay off the note or tried to sell the property to pay off the note; on the other hand, the lender’s actual damages were minimal due to the event (a late payment) triggering the damage provision.

Second, we need to set forth the usual CAR Agreement clause at Paragraph 21B of the Agreement which states as follows:

LIQUIDATED DAMAGES:  If Buyer fails to complete this purchase because of Buyer’s default, Seller shall retain, as liquidated damages, the deposit actually paid.  If the Property is a dwelling with no more than four units, one of which Buyer intends to occupy, then the amount retained shall be no more than 3% of the purchase price.  Except as provided in paragraph 14G, release of funds will require mutual Signed release instructions from both Buyer and Seller, judicial decision or arbitration award.

Note how severe and absolute this language seems:  If Buyer defaults, Seller SHALL (a mandatory word) retain, as liquidated damages, the deposit actually paid.  BUT THINGS IN CONTRACT LAW ARE NOT ALWAYS AS THEY SEEM.

Civil Code section 1675 relates to the dispute raised herein and states in pertinent part as follows:

(c) If the amount actually paid pursuant to the liquidated damages provision does not exceed 3 percent of the purchase price, the provision is valid to the extent that payment is actually made unless the buyer establishes that the amount is unreasonable as liquidated damages.

In other words, a liquidated damages provision is not always valid.  The amount paid must be reasonable.  Section (c) states that the liquidated damages clause above is presumptively valid unless a buyer can prove the amount is unreasonable as liquidated damages.  (See also  Allen v. Smith (2002) 94 Cal.App.4th 1270, 1278, which stated:  “A liquidated damages provision is presumed valid if the deposit does not exceed 3 percent of the purchase price, unless the buyer establishes that amount is unreasonable”.)  (As an aside, and not discussed here, an amount paid pursuant to a liquidated damages clause which exceeds 3% of the purchase price is presumed invalid unless the party seeking to enforce it can establish that the amount actually paid is reasonable. Civ. Code § 1675(d).)

Section 1675(e) states:  “the reasonableness of an amount actually paid as liquidated damages shall be determined by taking into account both of the following:  1) the circumstances existing at the time the contract was made.  2) The price and other terms and circumstances of any subsequent sale or contract to sell and purchase the same property if the sale or contract is made within six months of the buyer’s default.”

In other words, assuming that Buyer was in default for cancelling, Buyer can invalidate the liquidated damages clause (in whole or in part) by meeting both of the above factors.

ARGUMENT

1.   The Circumstances Surrounding the Contract in the Above Hypothetical Demonstrate the Unreasonableness of the Amount of Liquidated Damages.

In one case, the court of appeal held:   “. . . the forfeiture of appellants’ deposit as a result of the delay in delivering a quitclaim deed, a delay which caused the [Sellers] no cognizable damages, constitutes an illegal forfeiture provision and is invalid.”   (Emphasis added.)  (Timney v. Lin (2003) 106 Cal.App.4th 1121, 1129.)  Three facts in Timney are helpful in understanding when a court might strike down an otherwise enforceable liquidated damages clause:  The time delay triggering the potential forfeiture of the deposit was deemed to be slight by the court (three weeks), the delay was not the fault of the buyers (but due to the events of September 11, 2001) and the sellers suffered no clearly identifiable (“cognizable”) damages.

In another case, Buyer deposited $25,000.00 for the purchase of a convalescent hospital.  (Cook v. King Manor and Convalescent Hospital (1974) 40 Cal.App.3d 782.)   The deposit was a non-refundable deposit and was to be used by Seller to get the hospital ready to turn over to the purchaser.  When the Buyer failed to perform the purchase contract, Seller retained the entire $25,000 deposit, which resulted in a suit to recover the deposit by Buyer.  The court of appeal noted:  “There was substantial evidence before the trial court from which it could conclude that it was not, in fact, impracticable or extremely difficult to fix actual damages in event of breach of contract; that the provision regarding payment of $25,000.00 outside of escrow was in fact a penalty or forfeiture which the attorney for [Seller] attempted to conceal and disguise as a bona fide clause for liquidated damages.”  (Id. at p. 476.)  The court found that forfeiture of the entire amount would be an invalid penalty, but the court did determine that the amount the Seller reasonably proved as actual damages was properly withheld by Seller.  As shown by Cook (and even though it predated Section 1675), case law is consistent:  Only actual damages proven by a seller may be retained as liquidated damages.

There is another important component to this analysis.  As to liquidated damages, one court noted “. . . the purpose of enacting sections 1675, et seq. was to protect buyers who fail to complete the purchase of real property and not sellers.”  (Guthman v. Moss (1984) 150 Cal.App.3d 501, 510.)  The buyers in Guthman sought to limit their liability for damages and asserted the validity of a provision that violated Civil Code section 1677 by not being separately signed.  The sellers sought to invalidate the clause because their damages exceeded the deposit amount.  However, in finding that the clause substantially complied with the law and that buyers had the option of enforcing such a clause, the court noted the (helpful) legislative purpose in enacting specific statutes regarding liquidated damages:

“It [the Legislative Law Revision Commission] recommended very carefully drafted statutory limitations (§§ 1675, et seq.) to protect a defaulting buyer ‘from forfeiting an unreasonably large amount [of money] as liquidated damages.’”  (Id.)  “Therefore, notwithstanding the requirement of seller’s signature, we conclude that sections 1675, et seq. were designed solely for the protection of the buyer.”  (Emphasis added.)  (Id. at p. 511.)

Guthman indicates that in disputes relating to liquidated damages clauses are to be interpreted in buyer’s favor and in the context of protecting the buyer from unreasonable payments.

Based on the foregoing, there are several reasons why the amount of liquidated damages is unreasonable in the above hypothetical.  First, per Guthman, section 1675 is a buyer protection statute, designed with buyer’s interest in mind, first and foremost.  So, close calls should go in favor of the buyer, and the law seeks mandates that the buyer must not pay an unreasonable amount.

Second, Buyer came into this transaction, not as a sophisticated, veteran homebuyer but generally was inexperienced in real estate matters, reasonably trusting in Seller to properly disclose all material facts, reasonably trusting in the lender’s agent who said Buyer qualified for a loan and reasonably trusting in his own broker to guide him through the process.  These facts are all the more reason to invoke the buyer protection purpose of section 1675 and invalidate the clause.

Third, like the buyers in Timney, the failure of a sale was not Buyer’s fault.   As mentioned, Buyer reasonably removed the contingencies because lender informed him that he was approved for the loan; he removed the contingencies because he reasonably believed the Seller told them everything material about the property.  It was not Buyer’s fault that the lender flip flopped.  It was not Buyer’s fault that the fire damage was not properly disclosed or that Seller’s “open” insurance claim effected Buyer’s ability to obtain homeowner’s insurance.  It was not Buyer’s fault that Seller had failed to disclose unpermitted work, water damage, and mold in the closet.  Had these items been disclosed, had Buyer known the lender would deny his loan (after approving the loan), Buyer never would have removed the contingencies and there would be no question but that the entire $25,000.00 should be returned to him.  Like Timney, the absence of Buyer’s fault demonstrates that enforcing the liquidated damages clause here would be unreasonable.  (Note:  Buyer may have a claim against the lender, but that is not relevant for purposes of this discussion.)

Finally, as soon as the disclosures were made or discovered (as to the loan disapproval and the Property disclosures), Buyer acted quickly to cancel, just like the buyers in Timney.

In other words, the first element of section 1675 unreasonableness should be easily met.  And Buyer meets the second element too.

1.   The Quick Subsequent Sale and the Lack of Evidence of Actual Damages also Demonstrates the Invalidity of the Liquidated Damages Clause.

Recall, the second element in determining the unreasonableness of the clause is evaluating “[t]he price and other terms and circumstances of any subsequent sale or contract to sell and purchase the same property if the sale or contract is made within six months of the buyer’s default.”  (Civ. Code § 1675(e)(2).)

In Smith v. Mady (1983) 146 Cal.App.3d 129, 133, the court stated:  “. . . a vendor of real property is not to be . . . ‘placed in a better position by the buyer’s default (citations omitted.)’” (Emphasis added.)  In Smith, a seller was denied certain damages against a defaulting buyer because the seller was able to obtain a higher price on resale of the property.  The court held:  “The increased resale price should not be disregarded in considering an offset to consequential damages awarded to a vendor against a defaulting purchaser of real property.”  (Id.)  Interestingly, the court noted the timing of the sale as a factor in considering the sale to deny seller some of his damages and stated:  “In cases where the resale at a higher price occurs at a time much more distant from the breach than here, the vendor may show a lower property value at the moment of breach as well as increased costs of continuing ownership. However, in the case at bench the resale took place within a few days after the breach and established the value of the property at the time of breach. Realistically, the vendors here had sold their property to defendants at a price lower than the then value of the real estate.”  (Id.)

In addition to the circumstances surrounding the contract, the law (Civ. Code § 1675(e)(2)) requires consideration of any subsequent sale occurring within 6 months.  The Smith case does not allow a seller to profit from the liquidated damages clause in the event the house sells for more money than the original sale.  Here, in our hypothetical, Seller re-sold the home in a month or so from the cancellation, for a profit, well within the statutory time frame.  Like the sellers in Smith, here, Seller benefitted from Buyer’s cancelation.  Because Seller profited, enforcing the liquidated clause should be unreasonable.  (Note:  there may escrow costs and fees still due to third parties.)

1.   Seller Typical Defenses Would Change the Result Absent Establishing Actual Damages.

It is anticipated that Seller would argue that she incurred substantial costs and, therefore, is entitled to the entire deposit both based on the contract language and damages suffered.  However, based on the foregoing, there must be identifiable damage that actually flowed from the alleged breach, and that damage simply does not exist in our hypothetical.

Seller may argue that the cost of termite clearance (sometimes many thousands of dollars) was damage justifying the liquidated damages, but those costs are typically a seller’s expense and not actual damages under the law for liquidated damage purposes.   Also, in our hypothetical, the costs to remove Seller’s “junk” would be a typical demand made by any buyer and should not be seller damage recoverable under the law.

The only evidence in our hypothetical is that Seller profited from the new sale, which should preclude enforcement of the liquidated damages clause and should entitle Buyer to recover his $25,000.00, less possibly some escrow fees.

CONCLUSION

It is important to understand contract terms and the purposes for various clauses.  For a buyer:  do not necessarily give up simply because a contract term seems impossibly clear.  There may still be hope.  For a seller:  do not simply rely on contract language—even terms that seemingly protect you—without considering all the facts and circumstances of the deal.  FOR ALL CONTRACTING PARTIES:  WORDS DO NOT ALWAYS MEAN WHAT YOU THINK THEY MEAN.

Consult with a lawyer about the significance of contract terms before you sign a contract.  And, if you have already signed a contract, consult with a lawyer to help you determine whether the terms are enforceable. You don’t want to go into negotiations or court alone without an experienced Santa Ana Business Lawyer. For a complete list of legal services or to discuss your situation and what options you may have, contact Ashish Patel at the Law Office of Ashish Patel.

Those who buy a tenant-occupied foreclosed property often find that a tenant whose lease has been extinguished by the foreclosure won’t vacate the property. Before filing an unlawful detainer (eviction) lawsuit in court, the new owner has to serve the tenant a three-day written “notice to quit” (leave). The new owner may then file a lawsuit to evict the tenant.

But just how quickly can the new owner get the ball rolling to evict a tenant after a foreclosure? A recent California Supreme Court decision clarifies the timing requirements.

Dr. Leevil, LLC v. Westlake Health Care Center

In the case of Dr. Leevil, LLC v. Westlake Health Care Center, 431 P.3d 151 (Cal. 2018), Westlake Village Property, L.P. (Westlake Village) owned property in Thousand Oaks, California, that it leased to Westlake Health Care Center (Westlake Health). Westlake Village took out a loan, which was secured by the property. Westlake Village later defaulted on the loan, and the bank sold the loan (the promissory note and deed of trust) to Dr. Leevil, LLC (Leevil), which then began a nonjudicial foreclosure. Leevil was the high bidder at the trustee’s sale and, the following day, served a three-day notice to quit on Westlake Health—five days before the trustee’s deed transferring the property to Leevil was recorded. Leevil filed an eviction lawsuit about a month later.

Westlake Health argued that the eviction action was invalid because Leevil served the notice to quit before the trustee’s deed was recorded. The California Court of Appeal rejected this argument, deeming the eviction lawful. Westlake Health then petitioned the California Supreme Court to review the matter.

The California Supreme Court’s Decision

The California Supreme Court reversed the Court of Appeal’s judgment and decided that Leevil had to perfect title (record the trustee’s deed) before serving the three-day written notice to quit on Westlake Health.

The California Supreme Court noted that summary eviction proceedings apply only “in specified circumstances.” (Cal. Civ. Code § 1161a(b)). Under section 1161a(b)(3), summary eviction proceedings are allowed following a trustee’s sale, but only when “the title under the sale has been duly perfected.” Based on the statute’s wording, the Court decided that the perfection of title (recording the trustee’s deed) must happen before the owner could start summary eviction proceedings, including serving a three-day notice to quit.

The bottom line is that, in California, a new owner who gets title to a tenant-occupied property through a nonjudicial foreclosure must be on the property’s title before serving a three-day notice to quit to the tenant.

Rights Against Eviction Due to Foreclosure

After a foreclosure sale, the amount of time you have left in your home is short, unless you decide to challenge the bank. There are a few things you can do to delay or prevent an eviction, depending on your situation.

Fight the Bank

Banks do not always follow the letter of the law. The act of pursuing foreclosure while a modification has been requested, known as dual tracking, is prohibited under the California Homeowner Bill of Rights. If you are a victim of dual tracking, you most likely have grounds to fight an eviction and could actually sue the bank for damages. You should carefully scrutinize all documents and bank claims. If your lender has not followed all of the pertinent regulations, then you may have legal grounds to contest or delay an eviction.

Go to Court

In most states, including California, the homeowner is served a three-day notice to quit following a foreclosure auction. If you do not vacate within three days, the bank or new owner can file an unlawful detainer lawsuit to force you to leave the property. You have the right to contest the unlawful detainer suit in court, but you must respond within five days. Your response must include the legal reasoning for why the bank is not entitled to repossess the home. Such reasons could be that notices were not properly served or that the bank has not proved it has legal title to the property. To have your day in court, you must either show that the bank hasn’t presented enough proof to establish its case or present evidence that establishes a disputed material fact in the case. If you lose, you will be liable for legal fees and possibly back rent for staying in the property.

Redemption Period

Redemption is a period after the foreclosure sale of your home during which you can reclaim title by paying off the remaining balance of your mortgage. State laws vary widely on redemption, but if it applies to your situation, it can protect you from eviction, at least temporarily. In California, the redemption period ranges from three months to a year but is granted only in the course of a judicial foreclosure. You cannot be evicted during the redemption period, even if you do not intend to redeem.

If You Are a Tenant

If you are renting a home and the owner is foreclosed upon, you are protected by the law against immediate eviction. If the new owners intend to continue to maintain the home as a rental property, they must honor the remaining time left on your lease. If the new owner intends to live in the property, your lease can be cut short to 90 days. If you are on a month-to-month lease, you have the right to remain in the unit for 90 days. It is common practice for banks to offer tenants a small amount of cash to leave quickly, known as “cash for keys,” but you do not have to agree to this.

Allow the Law Office of Ashish Patel to fight for you to save your home from foreclosure or to fight the eviction that may come thereafter. We have a well-deserved reputation for representing individuals and against big businesses that try to gain unfair advantages. If a lender harmed one person or one family, chances are that lender harmed hundreds or even thousands. We have the resources and the passion to file and litigate lender liability lawsuits.

If you would like more information, or would like to discuss your situation with a skilled mortgage attorney, please contact us today. We represent clients throughout Southern California.

What Happens When You Miss a Payment?

If you miss a payment, the terms of most promissory notes include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee. (Servicers collect and process payments from homeowners, as well as handle loss mitigation applications and foreclosures for defaulted loans.)

To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement. (Learn more about fees that the lender can charge if you’re late on mortgage payments.)

What Happens When You Fall Behind in a Few Payments?

Once you miss a few mortgage payments, your servicer will probably send a letter or two reminding you to get caught up and letting you know about loss mitigation options, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss ways to avoid a foreclosure, like with a loan modification, forbearance, or payment plan.

Preforeclosure Loss Mitigation Review Period

Under federal mortgage servicing laws that went into effect January 10, 2014, the servicer must generally wait until you are more than 120 days delinquent on payments before making the first official notice or filing for any judicial or nonjudicial foreclosure under state law. (12 C.F.R. § 1024.41).

This 120-day time period should give you sufficient time to explore loss mitigation opportunities.

Preforeclosure Borrower Outreach Requirements

California law requires that your servicer personally contact you (or meet specific requirements for trying to contact you) by phone or in person 30 days before recording a notice of default—the official start to the foreclosure process—to assess your financial situation and explore options to avoid foreclosure. (Cal. Civ. Code § 2923.5).

What Happens When Your Servicer Contacts You?

During the initial contact, the servicer must advise you that:

You have the right to request a subsequent meeting, and

If requested, the mortgage servicer will schedule the meeting—which can be over the phone—to occur within 14 days.

The assessment of your financial situation and discussion of options may occur during the first contact or at the subsequent meeting. Either way, the servicer must also provide you with the toll-free telephone number to find a HUD-certified housing counseling agency.

What Happens if the Servicer Can’t Contact You?

If the servicer cannot get in contact with you, it can’t record the notice of default until 30 days after it has done all of the following:

Sent a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

Attempted to contact you by telephone at least three times at different hours and on different days at the primary telephone number on file. This requirement is deemed satisfied if the servicer determines that the primary telephone number, secondary telephone number, or any other numbers on file have been disconnected.

Sent a certified letter two weeks after the telephone requirements are met that provides a way for you to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours.

Posted a prominent link on its website homepage with information about options to avoid foreclosure, financial documents borrowers should collect if they want to discuss such options, a toll-free telephone number to call to discuss alternatives to foreclosure, and the toll-free telephone number to find a HUD-certified housing counseling agency.

Applicability

These outreach requirements are applicable to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property that contains no more than four dwelling units.

Exclusion

The servicer doesn’t have to contact you—or attempt to contact you—to assess your financial situation and explore options to avoid foreclosure if you notify the servicer in writing to cease further communication with you.

The Breach Letter

Additionally, most California deeds of trust contain a clause that requires the lender to send a notification letter (called a breach letter) informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure.

The letter must specify:

The default

The action required to cure the default

A date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and

That failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.

If you don’t cure the default and the servicer has met all other obligations, the foreclosure process will begin.

California law bans dual tracking, which is where a servicer simultaneously evaluates a borrower for a loan modification and pursues a foreclosure of the property.

If you submit a complete first lien loan modification application at least five business days before any scheduled foreclosure sale, the servicer can’t proceed by recording a notice of default or notice of sale, or conducting a trustee’s sale until:

It makes a written determination that you’re not eligible (and the appeal period has expired)

You don’t accept an offer within 14 days, or

You accept an offer but default or breach the modification. (Cal. Civ. Code § 2923.6).

The California Homeowner Bill of Rights

On September 14, 2018, Governor Brown signed a bill that permanently reinstated expired provisions of the Homeowner Bill of Rights (HBOR). To learn more about HBOR and how it protects homeowners in the foreclosure process, see California Foreclosure Protection: The Homeowner Bill of Rights.

California Foreclosure Process

Residential foreclosures in California are typically nonjudicial. This means the foreclosure happens outside of the state court system. (For more information on this topic, see our article What is a Power of Sale Foreclosure?)

Notice of Default

The nonjudicial foreclosure process formally begins when the trustee records a notice of default at the county recorder’s office. The notice of default includes information like the nature of the breach and how to cure it.

Within ten days of recording, the trustee mails a copy of the notice of default to the borrower and anyone requesting such notice. Within one month, the trustee mails a copy of the notice of default to any other interested parties, such as the borrower’s successor in interest and junior mortgage holders, among others.

The notice of default gives the borrower three months to cure the default. (Cal. Civ. Code § 2924).

Notice of Sale

If you do not cure the default, a Notice of Sale will be recorded. (It can be recorded up to five days before the end of the three-month period.) The Notice of Sale will contain the time and place of the sale, along with other information such as the property address. The foreclosure sale date must be at least 20 days after the end of the three-month period.

The Notice of Sale will be:

Posted at the property and in a public place in the city where the property is to be sold at least 20 days before the sale date

Published once a week for three consecutive weeks with the first publication occurring at least 20 days before the sale date, and

Mailed to the borrower, anyone who requested notice, and any successor in interest (among other parties) at least 20 days before the sale date. (Cal. Civ. Code § 2924b, § 2924f).

The Foreclosure Sale

The borrower can reinstate at any time until five business days prior to the sale date in a nonjudicial foreclosure. (Cal. Civ. Code § 2924c).

The foreclosure sale must be held between the hours of 9 a.m. and 5 p.m. on any business day, Monday through Friday. (Cal. Civ. Code § 2924g). The property will be sold to the highest bidder, which is usually the foreclosing lender, and then it becomes REO.

Deficiency Judgment Following Sale

A deficiency judgment is not allowed following a power of sale foreclosure in California. Because residential foreclosures are usually nonjudicial, this means that most Californians going through foreclosure don’t have to worry about being on the hook for a deficiency judgment. (Find out more about Deficiency Judgments After Foreclosure in California.)

Eviction Following Foreclosure

If you don’t vacate the property following the foreclosure sale, the new owner will probably:

Offer you a cash-for-keys deal, or

Take steps to evict you.

The eviction process starts with a three-day Notice to Quit. If you still don’t leave after three days, the new owner will go through the court system to evict you and obtain possession of the property.

Allow the Law Office of Ashish Patel to fight for you to save your home from foreclosure or to fight the eviction that may come thereafter. We have a well-deserved reputation for representing individuals and against big businesses that try to gain unfair advantages. If a lender harmed one person or one family, chances are that lender harmed hundreds or even thousands. We have the resources and the passion to file and litigate lender liability lawsuits.

If you would like more information, or would like to discuss your situation with a skilled mortgage attorney, please contact us today. We represent clients throughout Southern California.

If you entered the U.S. as a nonimmigrant and if you meet all the requirements for a green card in one of the following categories, you may be eligible to adjust your status. However, you must have entered the U.S. legally.

1. Family relationship (through an approved Form I-130, Petition for Alien Relative)
2. Employment (through an approved Form I-140, Immigrant Petition for Alien Worker)
3. Fiancé(e) visa (K-1 visa) (through an approved Form I-129F, Petition for Alien Fiancé(e), after you are married to the sponsoring U.S. citizen)
4. Asylum or refugee status
5. Cuban citizenship/nationality

You must meet all the requirements for permanent resident status in the U.S. to get a green card through adjustment of status. If you belong to one of the eligible categories, you can request to adjust from your nonimmigrant status to that of permanent resident status by filing Form I-485. The above mentioned categories have specific criteria that need to be met to file an application for adjustment of status.

The most important benefit of adjustment of status is that you can get your green card while you are in the U.S. without returning to your home country to complete visa processing. All categories of nonimmigrants may not be eligible for a green card through adjustment of status.

You can complete Form I-485 on your computer or by hand. As always, it is best to consult with a qualified and experienced Santa Ana basedimmigration attorney in order to assess the proper course of action for your own unique situation.

The filing fee for Form I-485 is $1,140.

Making the decision on how to file immigration forms isn’t an easy one, and hiring an attorney who specializes in it can help. For a free consultation to weigh your options, you can contact Ashish Patel.

One option is Chapter 7 referred to as a “liquidating” or “straight” bankruptcy. It is the most common as nearly two-thirds of all bankruptcies are Chapter 7, says Patel. Those filing for this type have to list all assets and liabilities. A bankruptcy trustee is then appointed by a bankruptcy court to determine if there are any assets worth liquidating. By submitting to the Chapter 7 bankruptcy process, the debtor is discharged. This means, he or she is no longer legally liable for unsecured (credit cards, medical bills) debt.

One misconception people have concerning bankruptcy is the status of someone’s home. One might assume, that if someone has a home, the trustee will liquidate it in order to pay off the creditors. In many cases since the housing bubble burst, says Patel, many people who have filed for Chapter 7 bankruptcy in Santa Ana are underwater in their mortgages. That is, their homes are worth less than what they owe on their mortgage. Therefore, they are of no interest to a trustee.

Another misconception they have is that those filing for a Santa Ana Chapter 7 bankruptcy are just trying to duck their financial obligations, but Patel doesn’t find that to be true. To ensure that those who file in Santa Ana, Chapter 7 is the appropriate bankruptcy option, courts apply a “means test” which was enacted by Congress in 2005.

Sometimes, a person has too many assets or nets a certain monthly income to be eligible for a Chapter 7 bankruptcy. In those cases, especially when a home is not underwater, the debtor is required to file a Chapter 13 bankruptcy. According to Patel, in a Chapter 13 bankruptcy, the debtor must create a payment plan to pay the creditors of unsecured debt. This plan must be approved by the bankruptcy court. Upon payment, the debtor receives a discharge. However, Chapter 13 bankruptcies take longer, but this is often the better option for those wanting to keep their homes and certain assets.

Making the decision to file for bankruptcy isn’t an easy one, and hiring an attorney who specializes in it can help. For a free consultation to weigh your options, you can contact Ashish Patel.