If a short sale was approved that means that some bank or investor is or was going to lose money. There are special very serious rules in play when a bank or investor is relying on information to approve a short sale. An arms length transaction is required.
When a quitclaim is recorded "prematurely" then the new buyer executes a deed of trust to a friend it sounds like this is not an arms length transaction and licensed escrow officers do not do these types of activities and keep their career.
If you are not aware of what is happening behind the scenes of this transaction then you need to figure it out on an expedited schedule.
The lawsuit should resolve all issues surrounding the title and a lis pendens will generally keep the status quo during that process.
However, I suspect there is a default involved and the bank might just have to foreclose to clean the title that was soiled this deal gone wrong.
Kevin A. Spainhour, Esq. - Hopefully this information is helpful. My answering this question giving my general thoughts does not create an attorney/client relationship and is not a legal opinion. The only way to create an attorney client relationship is to retain our services and that can be done over the phone, email or in person.
Lots of questions; First, why was QC deed recorded when these things normally get done through title company when short sale or any sale is involved. Did the title company accidentally record it? Next, DId buyer receive money from "friend" for the deed of trust--did buyer and friend know the QC was "prematurely" recorded? Why did owner file suit against buyer? Who recorded the lis pendens? The buyer? None of this makes a lot of sense. Sounds to me like all 3 of you have convoluted in doing something inappropriate that backfired. Whatever person you are, you need a consultation and strategy session (maybe 2 paid attorney hours), in order to determine your rights and options given the true facts. Sounds like there was fraud involved maybe with all 3 of you, but your conversation with be protected by attorney client privilege, so that is the recommendation. As for the title of this post "Can a Note get recorded" I assume you did mean deed of trust, you don't record notes. I will say if the deed of trust was recorded when title to the property was no longer in the buyer's name, then that would be invalid but it still is against the property and would have to be reconveyed-released by the "Friend" or doubtful you will be able to short sell. If friend is owed money and is innocent third party, bigger problem.
The foregoing is for informational purposes only and may not be relied on as attorney-client advice.
I strongly suggest you pay for a consultation with an attorney who can review your case and facts. Notes are not recorded. Deeds of Trust are recorded. Quitclaims are usually not executed in arms length transactions and both lenders and buyers obtain title insurance. This sounds like an expensive mess to clean-up. It appears someone was trying to scam someone and without professional help, screwed up. I agree with my colleague who opined that a lender secured by a deed of trust is likely to foreclose, just to clear title if for no other reason.
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