When a person knows that a home is going to be lost in a foreclosure, it is very tempting to try and take everything that is not nailed down and sometimes stuff which is nailed down. Sometimes, the homeowner thinks they have a right to take everything they purchased or maybe they think the removal of the property will not affect the value of the property. However, before anything is removed from a home in foreclosure, here are the laws you should know.
First, under California Civil Code Section 2929, “no person whose interest is subject to the lien of a mortgage may do any act which will substantially impair the mortgagee’s security. “ A violation of this law, will give rise to a claim for “waste.” Also, while California Civil Code Sections 580(b) and (d) create bars to deficiency claims by a lender after a trustee’s sale, there is an exception for “bad faith waste.”
Second, bad faith waste is anything done with reckless, intentional or malice towards the lenders. So, if property is intentionally removed from the property even if it was not done with recklessness or with malice and it substantially impair a lender’s security, a claim for waste will still remain. The statute of limitations for bringing the claim will usually be 4 years from the date of the foreclosure.
Third, claims for waste usually arise when fixtures or permanent items are removed. An easy definition of a fixture is anything nailed down or becomes permanently attached to a property whether inside the house or outside. So that means the following should not be removed: built-in anything including bookcases, bbq and shutters. It also means that light fixtures, doors and tile work should not be removed. If it is nailed down, screwed in or was especially made for the house, it should stay with the house.
Fourth, a claim for waste can continue in bankruptcy under Bankruptcy Code Section 523(a)(6) if the court finds a wrongful act, done intentionally and which necessarily causes injury and is done without just cause or excuse. The possibility of a claim being made is REAL. We had a judgment entered against a debtor in Oakland in 2010 for waste for removal of fixtures valued at $77,000,
In conclusion, if a property is going to be lost in foreclosure, nothing should be removed from the property if it is nailed down or has become a permanent part of the property. It is fine to take the washer/ dryer, refrigerator and anything that is just plugged in. If you have a favorite lamp or chandelier and want to take it, it should be replaced with a similar quality product.
If you going to be losing a home, a real estate or bankruptcy attorney will be able to advise you whether a short sale may be a better alternative for you than a foreclosure. Also, if you have other debt which you are unable to pay off such as credit cards, lines of credit or car loans, a bankruptcy may be the best alternative for you. I see people every day for a FREE 30 minute consultation in my offices located in Walnut Creek, Antioch and Brentwood.
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© 2011 Joan Grimes