While we always recommend that our lender clients make sure the trustee's deed is signed and recorded as soon as possible after a trustee sale, my partner, Joe Demko alerted us to new reason why this is a good idea.
The United States Bankruptcy Court for the Central District of California recently held that the filing of a bankruptcy petition by a borrower can void a trustee sale even where the petition is filed after the trustee sale, so long as the borrower files the petition before the execution of the trustee's deed upon sale.
Joe knows his way around Bankruptcy Court and he follows all the decisions that affect our lender clients. This one is a real eye-opener. As Joe notes, whether or not the decision is correct, foreclosing lenders need to take heed.