The seller sold the building. Now her trust is foreclosing.
The buyer alleges the seller concealed a city repair order issued six days before closing. The buyer sued to rescind the purchase and halt the foreclosure.
This week’s case: a buyer alleges the seller concealed a city repair order, and sued to rescind the 2023 purchase and halt the foreclosure. Per the recorded Notice of Default, the party foreclosing is the seller’s own trust.
801 Oro, LLC v. Makhlouf, et al.
Court: Los Angeles County Superior Court
Filed: June 29, 2026, about three months after the Notice of Default was recorded. The buyer is represented by counsel.
Causes of Action: fraud (concealment), negligent misrepresentation, failure to disclose, unfair business practices, wrongful foreclosure, and declaratory relief.
In February 2023, the buyer, an LLC, purchased a 12-unit apartment property in San Pedro for $3,300,000, per the MLS listing, borrowing $3,140,000 of it on a first deed of trust, per the recorded deed of trust.
Six days before the deed of trust recorded, the Los Angeles Housing Department issued the seller a Notice and Order to Comply on the property: inoperable smoke detectors, hazardous receptacles, unpermitted electrical work, plumbing leaks, and a rodent infestation, among other violations. That order is attached to the complaint. The buyer alleges the seller concealed it along with a history of tenant complaints, told the buyer the building was her “baby” in “excellent shape,” and kept the buyer’s inspector out of the problem units.
The buyer alleges the concealment inflated the price by roughly $1,500,000. It also alleges the lender funded the purchase without an appraisal and without a California lending license.
On March 19, 2026, three years into the loan, the foreclosure trustee recorded a Notice of Default stating the February 1, 2026 installment went unpaid, with $130,871.48 to cure as of March 17, 2026. Per that notice, the beneficial interest under the deed of trust is now held by the seller’s trust. The complaint does not explain how the seller came to hold the loan. It pleads that the buyer was not in default and that the buyer tendered the amount owed.
The buyer seeks damages, rescission of the purchase, an order halting the foreclosure, and modification of the loan.
Attached to the recorded Notice of Default is a declaration with a checked box the beneficiary did not need to check. It may be the strongest evidence available to the buyer, the complaint does not yet raise it, and the beneficiary signed it herself.
🔒 Paid below: which box, the exposure it created, and three lessons for lenders.
