Subject To Dilemma
Subject To Dilemma
I am in California, and new to foreclosures, though I have invested in TDs and have owned a couple of rental houses for a number of years. I have an opportunity to buy out the current holder of 2nd TD, at a good discount. Both the 1st & 2nd are in default, however so far only the 1st has sent a Notice of Default. My plan is to buy out the 2nd, cure the 1st and foreclose from my position as (the new) holder of the 2nd.
Scenario No. 1: Once the Trustee Sale takes place (at which I am the successful bidder), and I own the property, where does that leave me with the holder of the 1st? How do I avoid being put in the position of having the beneficiary of the 1st accelerate the loan based on the due-on-sale clause? Are there legal protections available that protect me from this worst-case scenario?
Scenario No. 2: Same general details as above, only instead of foreclosing, suppose I approach the trustor/owner and convince them to sell to me on the basis of a deed-in-lieu-of-foreclosure? Same questions/concerns apply: Once I acquire the property from the Trustor, where does that leave me with the holder of the 1st? How do I avoid being put in the position of having the beneficiary of the 1st accelerate the loan based on the due-on-sale clause? Are there legal protections available that protect me from this worst-case scenario?
What typically happens in one or both of these situations?
Any pitfalls I should be on the lookout for?
General as well as specific advice is greatly appreciated! Thanks!
Tod
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