CA Family Trust, Bankruptcy, & Foreclosure Issue
Dear Legal Forum:
I have a legal question that spans several areas of law (bankruptcy, real estate, & family trusts), and I wonder if anyone out there can provide some insight.
I was renting a home in California for a few years and found out that the landlord was not paying his mortgage. He tried selling the house in a short sale while I was still there, and served me with a 60 day notice when he entered escrow. I left accordingly, leaving the home in immaculate condition. Unfortunately, the landlord is crooked and absconded with a substantial security deposit.
I’ve done a little digging on the landlord (thanks to the PACER court document search engine & county recorder’s office), and discovered the following:
The home is owned by a family trust, and at the time of leasing, it was deeded to the landlord’s son.
During my tenancy, the landlord’s son declared Chapter 7 bankruptcy, but transferred the house deed to his father (my landlord) just prior to doing so.
A year later (still during my tenancy), the landlord declared Chapter 7 bankruptcy (this makes perfect sense to me now because he never fixed anything that broke or needed repair). Just prior to filing for bankruptcy, the landlord deeded the home to yet another family member within the trust.
After I moved out and lost my security deposit, the pending sale fell through. Several months later the landlord was served with a Notice of Default (NOD). After obtaining a copy at the county recorder’s office, I learned that the landlord had stopped paying the mortgage while I was still a rent-paying tenant. So it’s pretty clear now that the landlord was cash-strapped, and that’s the reason for unjustifiably taking my security deposit.
When the home entered pre-foreclosure, the landlord GIFTED the home back to his son (who originally held the deed in the family trust at the time of my leasing).
I don’t know very much about family trusts, bankruptcy, or foreclosure law, but it appears to me that this family has passed the deed back and forth among the trust members in an effort to avoid losing the property in multiple bankruptcies among said trust members. Moreover, it also appears conspicuous that the final gifting of the house was an attempt to delay foreclosure proceedings on the current deed holder. Can you please tell me the following:
If what this family has done is legal, was it done with unclean hands?
Is there a legal term for what this family has done?
Any further comments that you may have would be sincerely appreciated.
Best,
Brian
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