Bailey v. Citibank, N.A.

Facts: A property goes into foreclosure though no notice of trustee’s sale is recorded, and the foreclosure process comes to a standstill for a decade leaving the property unoccupied. An adverse possessor occupies the property and pays the taxes. Four years into the occupancy, the mortgage is assigned to a new mortgage holder. The trustee of the mortgage holder initiates a trustee’s sale which is completed, and the mortgage holder acquires title to the property.

Claim: The adverse possessor seeks to quiet title to the property, claiming they own the property since they openly and adversely possessed the property and paid the property taxes for five years.

Counterclaim: The mortgage holder claims ownership of the property as the highest bidder awarded title to the property at the foreclosure sale since the adverse possessor was in possession for only one year after the mortgage holder acquired title.

Holding: The California appeals court holds the mortgage holder under the trustee’s deed issued to the highest bidder at the foreclosure sale is the owner of the property since the adverse possessor had been in possession and paid taxes less than the five-year period under the new ownership. [Bailey v. Citibank, N.A., (2021) 66 CA5th 335]

Editor’s note — To establish title by adverse possession, an occupant needs to show:

  • their possession is based on a claim of righto color of title;
  • they have occupied the property in an open and notorious way which constitutes reasonable notice to the record owner;
  • their occupancy is hostile and inconsistent with the owner’s title;
  • they have been in possession for a continuous and uninterrupted period of at least five years; and
  • they have paid all taxes assessed against the property during their occupancy. [Code of Civil Procedure §§318 et seq.]

Read Bailey v. Citibank, N.A. in full here.

Related Readings:  

Legal Aspects of Real Estate

Chapter 23: Real estate can be stolen

Real Estate Finance

Chapter 44: The nonjudicial foreclosure process