Legal Question in Real Estate Law in California

We purchased a bank foreclosure recently, and it went through escrow fine, and closed properly. Now we received a letter from the previous homeowners claiming they filed a UCC-1, on the property while they were the owners. They say that either the escrow company owes them the money or us the new owners. Is this valid, that they can file a lein on their own property for improvements, and get foreclosed, then try to recover from the new owner?


Asked on 11/04/09, 1:44 am

3 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Probably not. First of all, a UCC-1 is used to perfect a lien on personal property, not real property. Next, the UCC-1 filing is nothing more than a way of publicizing the fact that a security interest exists in the personal property described in the UCC-1; it does not create a right that does not already exist in a valid agreement between a debtor and a creditor.

I couldn't say for absolutely sure that these former owners have no valid lien without reviewing the UCC-1 as filed, and then perhaps the underlying security instrument it references, but I'd say I'm 98% sure these people are just blowing smoke. The proper way to create a lien on real property is to record it with the county recorder, and even then, only certain kinds of claims qualify to be recorded, such as deeds of trust and mechanics' liens.

Materials used to make improvements become part of the real property once attached to it.

UCC-1 information is available to WestLaw subscribers on line, and I'd be willing to look it up for you if you contact me directly and give me the exact names of the supposed "creditors" and perhaps also the address.

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Answered on 11/09/09, 11:22 am
Scott Linden Scott H. Linden, Esq.

Clever, but very unlikely enforcable.

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Answered on 11/09/09, 1:02 pm
Terry A. Nelson Nelson & Lawless

Nice try, no brass ring. Turn it over to your Title Insurance company to handle.

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Answered on 11/09/09, 3:43 pm


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