John owns land worth $1 million. John suddenly needs money for medical bills. Jane offers to give John $100,000. In exchange John agrees to pay Jane $150,000 after a year. They also put a deed in escrow. If John fails to pay the $150,000 at the end of the year then escrow records the deed to Jane. John remains in possession of the property.
No he doesn't.
Once that deed is recorded, Jane owns the property. Period.
If anybody is actually contemplating doing that, they need to rethink it, because there is a better way of doing it by Jane lending John the money and writing a mortgage on the property so she becomes a secured lender for that amount and then has the right of foreclosure if John doesn't pay.
My understanding is that this is technically a mortgage and even if John fails to payback the loan at the end of the year Jane does not own the property. Jane must initiate foreclosure proceedings to get back the money she loaned John. The deed that is signed to Jane is invalid clogging of John's right to redemption since it was executed at the same time as the mortgage.
Again, once the signed deed is recorded, Jane owns the property and all she has to do is evict John.
My question is that if John is not aware that he has rights to the property until foreclosure and just assumes Jane owns the property and Jane then subsequently sells the property to someone, what happens?
John appears to very stupid.
But there is nothing to assume. Jane owns the property upon the recording of the deed, whether stupid John knows it or not.
If John later comes back to assert his right to the property does he get it back and force Jane to foreclose?
Wrong again. Once Jane owns the property, stupid John has no rights to assert.
What happens to the third party that bought the property?
Nothing. Once Jane sells the property to somebody else, that somebody else owns it and stupid John has long since kissed the property goodbye.