580b Purchase Money Antideficiency Protection Applies to Short Sales

  In a case of first impression, the Fourth Appellate District in Coker v. JP Morgan Chase Bank, holds that the antideficiency protections of Code of Civil Procedure section 580b apply to any loan used to purchase residential real property, commonly referred to as a “purchase money loan,” regardless of the mode of sale. Continue reading

Davis-Stirling: Foreclosure Notice Requirements are Strictly Construed

  The Sixth Appellate District holds that the pre-foreclosure notice requirements of the Davis-Stirling Common Interest Development Act must be strictly construed to create a valid lien. Only valid liens may be recorded and subsequently foreclosed by the association. The case is Diamond v. Superior Court (Casa Del Valle Homeowners Association). The notice and procedural requirements can be found in Civil Code sections 1367.1 and 1367.4 and are summarized here.  Continue reading

Unpaid HOA Assessments: Your Rights Under Davis-Stirling

  Under the Davis-Stirling Common Interest Development Act the amount of any unpaid association assessment, plus the reasonable costs of collection, late charges, and interest, constitutes a debt of the owner. After complying with notice requirements an association may record a lien for delinquent assessments against the property of an owner. The lien may then be enforced through the nonjudicial foreclosure process applicable to powers of sale in mortgages and deeds of trust. Continue reading

Trustee’s Mistake in Opening Bid Amount Justified Refusal to Deliver Deed

  Nonjudicial trustee foreclosure sales are regulated by statute. The result is that, so long as the statutory scheme is strictly followed, trustee sales are final and cannot be undone. Procedural irregularities in the statutory foreclosure process coupled with an inadequate sales price may, however, allow the trustee to exercise discretionary authority to void the sale if the error is discovered prior to delivery of the deed. Continue reading

Loan Servicer May Pursue Judicial Foreclosure in Own Name

   In California a secured lender has two foreclosure options if a note is secured by a deed of trust or mortgage: 1) non-judicial foreclosure and 2) judicial foreclosure. The great majority of lenders proceed by non-judicial foreclosure because it is less expensive and relatively quick. However, there are circumstances where a lender might proceed by way of judicial foreclosure such as when the deed of trust does not contain a power of sale, the lender seeks a deficiency judgment, or the lender has been sued by the borrower. Judicial foreclosures are governed by Code of Civil Procedure section 725a et seq. Continue reading

Modification of Note Does Not Change Its Nature

  Code of Civil Procedure section 580b provides that no deficiency judgment shall lie after a sale of real property under a deed of trust given to the vendor to secure payment of the balance of the purchase price of that real property. Section 580b was drafted in contemplation of the standard purchase money transaction, in which the vendor of real property retains an interest in the land sold to secure payment of part of the purchase price.

  In Weinstein v. Rocha the court confirmed the breadth of section 580b. It held that a written settlement agreement, wherein the parties intended to modify the terms of a promissory note given to the seller to secure payment of part of the purchase price, was simply a modification of the note, not a separate obligation. The settlement agreement did not change the nature of the note — a seller financed note secured by a deed of trust.

  Seller’s remedy, therefore, was limited to foreclosure of the security. If that security is valueless by virtue of the foreclosure of a senior lien, section 580b applies and prevents any deficiency judgment on the note.

Anti-deficiency Statutes Summarized

  The increase in foreclosure and short sales in recent years has sparked some new legislation which expands California’s anti-deficiency laws. California’s present and impending anti-deficiency statutes, all contained in the Code of Civil Procedure, are summarized below. Continue reading

Thinking of Buying Real Property at Foreclosure? Think again.

   If you purchase real property at foreclosure, you might just buy yourself a lawsuit and nothing more. The trustee’s deed, by which you acquire title, is without warranty and is subject to any defects in title, including those which may not appear of record. While you may have a defense to certain claims if you are a bona fide purchaser, it is very costly to defend even frivolous lawsuits. If the claim is colorable and one for which the claimant has title insurance, chances are it will be very expensive to defend. If you lose, you will lose the property too. The notice of pendency of action will certainly put a wrench into any plans you have to resell or borrow against the equity.

  Only very sophisticated investors, with enough financial backing to support lengthy and contentious litigation, should consider purchasing real property at foreclosure and then only after thoroughly vetting the chain of title and comparing it with a preliminary title report. Still, that may not be enough. Only an abstract of title or title insurance, not a preliminary report, offers protection if the representations in the report turn out to be inaccurate. Unfortunately, either may be difficult or impossible to obtain for the purchase of real property at auction, or the cost for a tenuous auction purchase might be considered too high.

   If you have read this advice too late, or discounted it, and purchased property at foreclosure, and have also bought a lawsuit, give me a call. I am here to help.


  I consult with clients and accept cases involving foreclosure, trustee sales, and lien priority, including quiet title and wrongful foreclosure actions. For other types of cases I accept, please scroll my “Home” and “My Practice” pages. If you are seeking a legal consultation or representation, please give me a call at 818-971-9409. – Michael Daymude

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New California Homeowner Bill of Rights

   The legislature has passed two pieces of legislation which together are known as the Homeowner Bill of Rights. They are awaiting Governor Brown’s signature and will take effect, if signed, January 1, 2013. Continue reading

Homeowner Properly Alleged Violation of Civil Code Section 2923.5 as Basis for Wrongful Foreclosure

   The Sixth District in Skov v. U.S. Bank National Association finds a private right of action for violation of Civil Code section 2923.5. Section 2923.5 provides that a mortgagee, trustee, beneficiary, or authorized agent must contact the borrower “in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure” or satisfy due diligence requirements before a notice of default is filed. Accordingly, the trial court which sustained a demurrer to plaintiff’s causes of action for wrongful foreclosure, unlawful business practices, and declaratory relief, erred. Whether a defendant has complied with a statute such as section 2923.5 is a question of fact which, when disputed, cannot be determined on the basis of recitals in judicially noticed recorded documents. The court also held that section 2923.5 is not preempted by the National Banking Act. Chalk one up for homeowners.


  I consult with clients and accept cases involving allegations of wrongful foreclosure, including those alleging violations of Civil Code section 2923.5. For other types of cases I accept, please scroll my “Home” and “My Practice” pages. If you are seeking a legal consultation or representation, please give me a call at 818.971.9409. – Michael Daymude

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