California Court of Appeal Holds That The Purchaser Of Real Property At A Foreclosure Sale Can Serve A Notice to Quit Before The Foreclosure Deed Is Recorded

In Levill v. Westlake Health Care Center, filed on March 7, 2017, the California Court of Appeal held that California’s post-foreclosure eviction statute (Code of Civil Procedure §1161a) does not require the recording of a foreclosure deed before service of a notice to quit upon the occupants of the property. The Court of Appeal concluded that statute merely requires the recording of the foreclosure deed and service of the notice to quit before the date an eviction is filed – the order of these events does not matter.

This decision directly contradicts the holding in U.S. Financial, L.P. v. McLitus (2016) 6 Cal.App.5th Supp., decided on November 30, 2016. In that case, the Appellate Division of the San Diego Superior Court held that service of a notice to quit before the recording of a foreclosure deed renders invalid any subsequent unlawful detainer proceeding.

So, which decision is correct? Because the foreclosure eviction statute is vague on this point, various arguments have been advanced such as: (1) the notice to quit can be served as soon as the foreclosure sale is completed, (2) the notice to quit can be served as soon as the foreclosure sale is completed as long as the foreclosure deed is recorded within 15 days of the date of the sale (under the foreclosure statutes, a non-judicial foreclosure sale is deemed perfected as of 8:00 a.m. on the date of the sale as long as the foreclosure deed is recorded with the county recorder within 15 days of the sale), (3) the notice to quit can be served as soon as the foreclosure deed is delivered to the purchaser because the recording of a deed is not required to transfer title, and (4) the notice to quit cannot be served until the foreclosure deed is recorded with the county recorder. It would make sense that the foreclosure deed should be recorded before service of a notice to quit so that the world has constructive notice of the change of ownership. However, the statute does not contain this requirement and the cardinal rule of statutory construction is that courts cannot add words to statutes.

In any event, under the Doctrine of Stare Decisis, the new Court of Appeal opinion takes precedence over the San Diego Superior Court Appellate Division decision. Unless the California Supreme Court or Legislature step in, the purchaser of real property at a foreclosure sale does not need to wait for the recording of the foreclosure deed to serve a notice to quit. As long as the deed is recorded and notice to quit is served before the eviction action is filed, the order of these events does not matter.

For further information, please contact Ruzicka, Wallace & Coughlin, LLP at (949) 748-3600; website: www.rwclegal.com.

The law firm of Ruzicka, Wallace & Coughlin, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice.

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March 12, 2017 | Landlord-Tenant Law |