The Shea Law Office represented the purchasers of a home at a foreclosure sale in a case of first impressions under Montana law.

A  Trustee was appointed to run the foreclosure sale and send notices under Montana’s foreclosure statute before the sale to all individuals and entities that had filed liens on the home.  At the foreclosure sale, the purchasers were the winning bidders for the home.   They paid $737,000 for the home.  Under the foreclosure statute, the winning bidder must make the payment in cash.

Shortly after the sale the purchasers discovered that the Trustee did not notify a number of lienholders of the upcoming sale.   Given that these lienholders did not receive notice of the sale, they did not have a chance to make a bid on the home at the sale.  Also, because they did not receive notice of the sale, under the foreclosure statute their liens remained on the home after the sale.

The purchasers then asked the Trustee, and the Title Company that performed the title search of the home for the Trustee, to take care of the liens. However, the Trustee and the Title Company did not accept responsibility for the liens that remained on the home.   The total amount of the liens on the home was more than double the purchase price. This rendered the purchasers’ new $737,000 home virtually worthless because the purchasers were unable to sell the home, or take out a mortgage on the home (and recapture some of the cash used to buy the home) while the liens remained on the home.   The purchasers were retired and their savings were used to buy the home. The purchasers suffered substantial damages as a result of the Trustee’s and Title Company’s refusal to address the purchasers’ ordeal.

The purchasers then filed a lawsuit against the Trustee and Title Company requesting the Court to order them to take care of the liens, and to compensate them for their attorneys’ fees, costs, and emotional distress damages.  The Trustee asserted he did not have a duty to notify the lienholders of the sale and that the purchasers were obligated to deal with the remaining liens themselves.   The Title Company argued that it owed no duty to the purchasers when it conducted its search for liens on the home.  The Court held that the Trustee did have a duty to notify the lienholders and the purchasers had a right to rely on the Trustee doing this.  The Court also determined that the Title Company owed a legal duty to the purchasers to properly conduct the search for liens on the home.

Following this, the Trustee and the Title Company made payments to the lienholders, and the liens were taken off the purchasers’ home.  The purchasers then settled their damage claims against the Trustee and Title Company on a confidential basis.