What if Lender's Deed Shows Old Legal Description and They Never Recorded an Update

[simplelaguna]

Assume the property is in California.

Bank records liens against 2 lots out of a 5 lot subdivision.

Subdivision is realigned from 5 lots into 4 lots and all lot lines are re-drawn and recorded via a new subdivision parcel map, which was acknowledged and signed by the bank.

The bank never recorded new trust deeds using the new legal descriptions of the 2 lots.

Then 1 of the 4 lots owned by a different person that the bank does not have a lien on is foreclosed on based on the old legal description when there were 5 lots.

This results in the foreclosure buyer showing as title holder based on the old legal description, which if using the new legal description his interest would have a portion of the neighbors lot next to him (which the bank has a lien on the old legal description) and the neighbor a portion of his.

Questions:

1. What effect does this scenario have on the bank's liens that are based on an old legal description? If they acknowledged the new subdivision parcel map / lot lines, but did nothing to protect their lien rights by recording a new trust deed with the new legal description, what would be the impact to them?

2. If the bank now wants to foreclose, can they only foreclose on the old legal description or can they foreclose on the new legal description?

3. What about the foreclosure buyer that thought he was buying a lot based on the old legal description and foreclosed on the old legal description (which is what the deed documented that was foreclosed on, as it also was never updated to show the new legal description)?

4. What other issues might exist for the bank? for the foreclosure buyer? and for the owner of the 2 lots, where there bank has recorded deeds based on the old legal descriptions?

[LandSurveyor]

Without the old legal description and the new legal description to look at, there is really no way to answer any of your questions.

Since more lots were owned and liened than by your example bank (another and different owner/lender combination, right?) these additional parties would have to agree to the new boundary lines and the realignment of the lot lines would involve at least one change of ownership outside of your bank/owner example.

So there is a lot line agreement, or a set of quitclaim deeds out there somewhere validating the new subdivision lines. If not, the new lines are without effect to the extent they are not agreed to by the title holders and lien holders.

But this is just conjecture based on the very scanty information provided.

[simplelaguna]

Thanks for responding and let me try to better explain the example:

There was a new subdivision parcel map created and signed by all owners of the lots, lien holders of the lots, and applicable officials. It was then filed with the county recorders. Also, the land redivsion was completed by a title company. None of the lien holders updated their prior recorded deeds that showed the old legal description. Thus, one lot was foreclosed on the old legal description via a trustee sale and now has the lot line issue with the neighbor based on the correct parcel map boundries.

The lien holder on the remaining 3 lots is the same, but they still have recorded deeds on the old legal description.

ie:

There were lots 1, 2, 3, 4, 5 with two different owners.

3 lots had bank liens and 2 lots were private party liens.

Land was then subdivided, a parcel map created and approved by signature of all parties and recorded with the county recorder.

Lots became 1 ,2, 3, 4 (making each one a little bigger)

with two seperate owners having ownership of 1 & 2 and 3 & 4

lots 1 and 2 retained lien by bank A (old legal description on lien)

lot 3 retained by private party. (old legal description on lien)

lot 4 retained lien by bank A (old legal description on lien)

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lot 3 was foreclosed using old legal description, causing boundry issue with lot 2 based on new subdivision parcel map lot lines.

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Trustee foreclosed on lot 3 using an old legal description that was on the trust deed they foreclosed on.... is it a valid foreclosure? or what does this mean?

and what about the Bank A liens? can they foreclose on the new legal descriptions or what is the impact to them on their lien against lots 1, 2, 4?

[Mr. Knowitall]

It sounds like the original loans weren't refinanced, and the security interests weren't affected by the new division of the property. But we can only guess. It sounds like time to dig up the entire relevant title history and to run it past a real estate lawyer.

[LandSurveyor]

It sounds like the original loans weren't refinanced, and the security interests weren't affected by the new division of the property. But we can only guess. It sounds like time to dig up the entire relevant title history and to run it past a real estate lawyer.

Of course. But where did the problem originate?

As a surveyor, I have redone subdivisions before. Almost always with the original, single owner. A resubdivision when there are now multiple owners is very unusual and there has to be a compelling REASON for the major added cost in surveying and legal work.

Why was this done after the lots were tiltled out?

If the work was done by a title company, as the OP says, why weren't the proper documents filed with county recorder?

Sounds very fishy to me. Banks and other real estate lenders have their own title departments to deal with stuff like this. The title work was obviously not done. Why?