foreclosure during title dispute?

[Ash Housewares]

I don’t post much, but I read this site often. I have a relative* in an unusual situation, and google is failing me.

The property in question is in Nevada, and is on the road to foreclosure. The owner hasn’t made a payment in about 6 months, though prop taxes are current.

The property was inherited around 2004, and a cash-out mortgage taken out shortly thereafter to make improvements. This is the mortgage that is now in default.

Recently, another relative has filed a lis pendens claiming a right to the property. I guess he felt jobbed by not inheriting it himself.

So:
1) Can the foreclosure continue its course with this legal action pending? I think it can since the mortgage pre-dates the lawsuit, but that is only a guess. If yes, will the foreclosure wipe-out the litigation?

2) If the plaintiff wins, what happens to the foreclosure? Will he win a stake (say 50%) in a property that is about to be sold at auction? If so, isn’t he is wasting his time and money?

Any other insights?

*I swear it is not me

[urbanrealtor]

Claiming an ownership right in a doomed property is kinda dumb.

Maybe if the claimant had a BK that could stop the REO but otherwise his claim will be wiped out by the REO.

See if Joe claims he has a bonafide interest in Jim’s house it means fuckall if the bank comes in and says “we get house because you not pay us” (done in the voice of the Amazons from Futurama) and wipe out any subordinate liens.
And the LP would most likely be subordinate.

[svelte]

welcome back, ash. i remember you!

[Ash Housewares]

Thanks, svelte. I never went away, just don’t post much anymore.

And thanks to urban for the info. I don’t think the plaintiff knows that the property is in default since the two aren’t on speaking terms and no NOD has been filed. Maybe I should encourage the two to drop the suit in light that the bank will end up with the property regardless.

[UCGal]

It’s sad when families fight over inheritances. Unfortunately, I’ve seen it more than once in my extended family.

My dad and grandfather both put language in their wills/trusts that specifically addressed this – it basically said anyone who legally disputes the allocations is cut off and gets nothing.

In my grandfather’s case – it was probably necessary. There was a pretty big group of different factions hovering around the executor/trustee at the funeral.

[Ash Housewares]

The will was very clear, but the one guy is claiming he wasn’t mentally all there at the time it was made.

[njtosd]

It really depends on the validity of the second party’s claim to the property. If the 2004 mortgage was taken out by someone who didn’t have an interest in the property (say, if there was fraud involved, coercion of the party who bequeathed the property etc.) then the mortgage didn’t actually attach and the mortgage holder wouldn’t actually have the right to foreclose. This would be highly unlikely though, and very difficult to prove prior to the foreclosure going forward. If the foreclosure goes through, the second party (the one fighting the inheritance) would have to sue to quiet title in his name and prove superior title. There could be state laws (such as statutes of limitation) that might be involved here – and the issue of the mental capacity of the second party is also an interesting one.

[Ash Housewares]

Ok, this has been off my radar for a while but now it’s coming back up. If the person suing to claim the property wins, can they sue the other person (who owned it 2004-present) for the cash from the cash-out refi? Assuming it wasn’t all used to improve the property.

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