To answer your question in order:
1. A trustee sale is the last action in a foreclosure. The normal timeline for a foreclosure is:
- Owner stops paying their mortgage
- Bank starts calling to collect
- 30 - 180 days afte the first missed payment the bank files notice of default
- No less than 90 days later the bank files a notice of trustee sale. This notice is served on the home owner directly or posted on the front door in clear site from the street.
- No less than 21 days after the notice is posted, the home is sold in a Trustee Sale, on the court house steps (literally).
- the home may go back to the bank (if the owner owes more than it is worth) or sell to neutral third party, if there is equity in the home.
2. The fact that you have lived there for three years and paid rent, even though on a verbal agreement, may be sufficient to prove that you are a tenant. I strongly suggest that you pick a phone tomorrow to a good attorney, preferably one who knows tenant law in California, and find out if you are protected under Tenant / Landlord laws AND what that protection is in the case of a foreclosure.
3. The fact that the house needs major repairs does not delay when you will need to move out.
4. I recommend that you call the Trustee and advise them that you, a tenant, are living and have been living in the property for the past 3 years. Also, get their fax number, put in writing, and fax it them. This will probably not stop the Trustee Sale, but at least they will be on notice that there is a tenant occupancy situation there.
5. Contact an attorney to see if the following law applies to you. The Governor of California signed a SB 1137 on July 8, 2008 to protect tenant occupants of foreclosed homes.
I am sorry to hear that your are going to lose your home and with so little notice. Based on my answer to No. 1 above, you can see that your landlord had plenty of notice that they were losing the house to foreclosure. It is a real shame they did not share this knowledge with you.
You are really in a situation where you could use legal advice, not advice from Realtors. Contact your Ombudsman, legal aid, or the City Attorney for information or a referral.
Hopefully, everything will work out for you and you will have sufficient time to move out. Homeowners are often given little or no notice to move and the homeowner still lives in the property. I do not know how this will impact your need to move out. Best of luck and Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes