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What is proper motion to file in BK to reinstate the stay that was lifted in error?

Riverside, CA |

Trustee's sale held, Ch 13 BK filed prior to execution and recordation of trustee's deed. Trustee's deed is void. Relief was granted only to continue eviction. Trustee's deed is still void and several parties are violating the stay (clouding title/continuous collection) motion for contempt has been filed. What motion can be filed to impose or reinstate the automatic stay as a form of a temp. restraining order to refrain the parties until the contempt hearing?

Motion for reconsideration denied and appeal pending, stay pending appeal denied. These errors were just recently discovered, that the "creditor" erroneously applied Cal Civ Code 2924h to the trustee's deed. Judge made the mistake/assumption that the Movant was correct.

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Attorney answers 3

Posted

You should file for reconsideration of the order granting relief from the stay, raising the issues you have stated supporting the continuation of the stay. If that is denied, then you appeal it, and the original order, if appropriate, AND you ask for continuance of the stay pending appeal.

Posted

If the BK was filed after the Trustee's Sale, the fact that it was filed prior to recordation of the deed is irrelevant. There is no recourse if the BK was not filed prior to the hammer falling at the auction.

Asker

Posted

Wrong. The hammer falling at the auction is only final as to the agreement to sell the property to the bidder. Meaning, the sale is final. But the property must transfer by a deed, and does not transfer by operation of law. The property is still in the debtors' name because the deed has not been executed. Sorry, have contempt motion granted according to this, so I know what I'm talking about and clearly, it's this misunderstanding of Cal Civ Code 2924h that continues this anomaly. The BK was filed after the sale, but prior to the execution and recording of the trustee's deed. It's void. And the reason that it's void is also the reason why "bankruptcy hijacking" is on an uprise in the past year or so. Think about it.

Brian Crozier Whitaker

Brian Crozier Whitaker

Posted

Tell that to all five judges in the Southern District.

Posted

The sucessful bidder is not enjoined from perfecting its interest in the property by recording a deed after the bk was filed. This is how the 9th circuit has interepted section 362 of the bankruptcy code.

Asker

Posted

You're so very wrong. You need to read In re Schwarz. Ninth Circuit holds that ANY post-petition activity is void. Executing and recording a trustee's deed does in fact violate the stay and it is void. All day long. Many attorneys misconstrue Cal. Civ. Code 2924h and Judge Wallace in Ninth District has issued a beautiful order in In re Gonzalez and he dissects EVERY iota of 2924h and to not understand that is a miscarriage of justice.

Justin Drayton Graham

Justin Drayton Graham

Posted

Under Section 362(b)(3) of the bankruptcy code, an exception to the automatic stay allows a party to perfect its interest in real property. So, if the petition is filed after the trustee’s deed issues, the successful bidder and new owner is not barred from recording. In re Gonzalez, 456 B.R. 429 (Cal. C.D. 2011), took up the separate question of whether the 362(b)(3) exception to the automatic stay obtains when the petition is filed BEFORE the trustee’s deed issues. Interpreting Section 2924h of the California Civil Code, the court held that the sale is void if the bidding is complete but the petition is filed before the trustee’s deed issues. In so ruling, Gonzalez declined to follow the long-standing precedents established in cases like In re Garner, 208 B.R. 698 (Bankr.N.D.Cal.1997), In re Stork, 212 B.R. 970 (1997), and In re Engles, 193 B.R. 23 (Bankr. S.D. Cal. 1996), all of which held that the exception does apply even if the petition is filed before the trustee’s deed issues. A legal article commenting on In re Gonzalez noted the following: “Commentators have quickly lined up to argue that the Gonzalez case was wrongly decided, and the decision is not binding precedent on any other court. However, the Court's holding should give lenders and bidders pause. A borrower who files a bankruptcy petition after a foreclosure sale has been completed, but before a trustee's deed has been executed and recorded, now has a colorable argument that the sale is void, although the weight of authority is to the contrary.” http://www.buchalter.com/bt/images/stories/Client_Alerts/when%20is%20a%20trustees%20sale%20really%20final.pdf)

Asker

Posted

The problem with thinking Gonzalez is wrongly decided falls on the misunderstanding of 2924h. The sale "agreement" is final, but property in a trustee's sale must transfer by a deed. If that deed is executed post-petition it does violate the stay. 2924h is constantly used out of context. Much like the "tender" laws that only apply to voidable sales, not VOID sales.

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