In a recent California decision, the trustee was holding a sale of a Sacramento property. The auctioneer read from a script which had all the correct information, including the legal description of the property, but gave an Arcola Avenue street address, which was not the same property. The Arcola sale should have had an opening bid of over $300,000, but the bid here started at $50,000. A buyer seeking the Arcola property won the auction, thinking it got a great deal on the property; the Court said no.
Under California law, trustee’s sales are required to strictly follow statutory procedure. Inadequacy of price alone will not justify setting aside the sale. However, gross inadequacy, plus even slight unfairness or irregularity is sufficient to set aside the sale.
Here, the auctioneer announced the legal description and starting bid for one property, while announcing the street address of a different property, which the court found created a fatal ambiguity in determining which property was for sale. Thus, it should be set aside.
(Millennium v. TD Service Co. (2009) Cal 3DCA C059875)
The court contrasted this case with a matter where the beneficiary miscalculated the minimum bid at $10,000, rather than $100,000. That mistake was outside the conduct of the sale itself, and did not justify setting aside the sale. Another similar situation arose in a Sacramento foreclosure, where the minimum bid should have been Six Million dollars, but the property sold for $2,000. As reported in the Sacramento Bee, the beneficiary’s attorney and asset manager both driving from the Bay area, got delayed by a traffic accident. They walked in to the auction minutes late after the sale had closed. Why didn’t they have the trustee submit the minimum bid (as is often done), rather then relying on getting there in time?