Trustee’s Sale Guarantee
The trustee’s sale guarantee is frequently issued in western states in connection with an anticipated nonjudicial foreclosure. The guarantee generally insures as to the record status of the title and encumbrances, recorded instruments requiring notices of sale, and persons entitled to notice.
Pending Bankruptcy Against Owner
The fact that bankruptcy proceedings are pending for the present owner of the estate or interest being foreclosed under the Deed of Trust that is the subject of this guarantee under Docket or Case Number _________. Before the power of sale under said Deed of Trust is exercised, permission or approval of the Bankruptcy Court must first be obtained.
Comment: Because of the automatic stay, you must use this provision if the owner is in bankruptcy proceedings. You must also disclose any known lienholder’s bankruptcy.
IRS Right of Redemption
The right, if any, of the United States to redeem said land within 120 days from the date of the Trustee’s Sale, in the event applicable notice is given, as provided for by the Federal Tax Lien Act of 1966, Public Law 89-719 and effect of failure to give proper and timely notice of the foreclosure to the United States.
Comment: You must add this exception if a subordinate federal tax lien attaches to the title, since the IRS is then entitled to 25 day notice prior to sale and to subsequent right of redemption.
See Underwriting Manual
Priority of Mechanic’s Liens
No assurance is given as to the priority existing between said Deed of Trust and any mechanic’s liens hereinafter shown, nor as to the priority existing between said mechanic’s liens.
Comment: It is customary to add this exception if the guarantee reflects mechanic’s liens. Mechanic’s liens may attain priority over the deed of trust, although notice will be given to them to properly extinguish their interest to the extent allowed by law.
Request for Notice
A request recorded ____________ that a copy of any Notice of Default and of any Notice of Sale under the above Deed of Trust be mailed to ________________, at __________________.
Comment: In some states, an interested person may (or must to receive notice) request a notice of default or sale. If so, it must be shown in the TSG.
Numerous Judgment Liens
Various liens (none of which are federal or state tax liens) that have been recorded in the Office of the County Recorder against persons with the same or similar names as the vestee herein.
Comment: This exception is appropriate if numerous liens (not federal or state tax liens) such as judgment liens may apply to the owner. If state law requires notice of sale to these creditors, customers will generally want the liens shown.
No Policy Will Be Issued
For Informational Purposes Only: No assurance can be given as to the validity of the Trustee’s sale to be held in the near future and no insurance will be given to the purchaser at said sale without further investigation.
Comment: You should use this exception if you doubt the validity of the deed of trust, if litigation with the borrower is pending or threatened, of if other facts cast doubt on the validity of the possible foreclosure.
Notice of Default to Lienholders
For Informational Purposes Only: Attention is called to the provisions of applicable law relative to publication or personal delivery of Notice of Default when no notice has been requested by the record owners of the lien.
Comment: If a subordinate lienholder has not requested notice of default, state law may establish requirements for notice to the lienholder.
Publish Notice of Default if Trustor Provides N
For Informational Purposes Only: Attention is called to the provisions of applicable law relative to publication or personal delivery of the Notice of Default, as no address of the trustor was shown in said Deed of Trust and no such notice has been requested by the trustors in said Deed of Trust.
Comment: If the trustor did not provide an address for notice of default, state law establishes requirements for notice.
Soldiers’ and Sailors’ Civil Relief Act
Attention is directed to the Soldiers’ and Sailors’ Civil Relief Act of 1940 which restricts foreclosure proceedings against persons in the service of the United States.
Comment: If the owner is an individual, a foreclosure may be stayed if that person is or was in the military within 3 months prior to foreclosure.