What is wrongful foreclosure in California? Here is a whiff of how some courts look at this issue.


In California, the tort of wrongful foreclosure requires: (1) a legally owed duty to the Plaintiff by the foreclosing party (2) a breach of that duty (3) a causal connection between the breach of that duty and the injury the Plaintiff sustained, and (4) damages. California courts have further clarified this cause of action by stating: “We are inclined however, to believe that with respect to real property the Murphy case was articulating a rule that has been applied in other jurisdictions. That rule is that a trustee or mortgagee may be liable to the trustor or mortgagor for damages sustained where there has been an illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust. Munger v. Moore, 11 Cal. App. 3d 1, 7, 89 Cal. Rptr. 323, 326 (Cal. Ct. App. 1970)

The court in Munger appears to be saying that if the foreclosure was illegal, fraudulent or willfully oppressive then that foreclosure was wrongful and the party foreclosed on may be entitled to damages. According to California statutory and case law several types of damages are available to victims of wrongful foreclosures.

First, damages are measured by the value of the property at the time of the sale in excess of the mortgage lien against the property (i.e the equity in the property). Second, damages are available in the amount that is sufficient to compensate for all detriment proximately caused by the wrongful conduct. California Civil Code Section 3333. Third, the borrower may be able to obtain damages for emotional distress in a wrongful foreclosure action and if the borrower can prove by clear and convincing evidence that the servicer/trustee was guilty of fraud, oppression or malice punitive damages may be awarded. Where there is a wrongful foreclosure, the borrower may seek punitive damages. In Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 345 [85 Cal.Rptr.3d 532, 554] the Court in acknowledging the right to seek punitive damages said:

“The jury concluded that the nonjudicial foreclosures instituted by the Kachlons were wrongful, and that in pursuing the foreclosure proceedings Mordechai acted “intentionally, fraudulently and in conscious and callous disregard for the rights of the Markowitzes.” These findings are tantamount to the finding of malice….” (emphasis added).

As such, it is clear in California, if the borrower can prove by clear and convincing
evidence that the servicer or trustee was guilty of fraud, oppression or malice in its wrongful conduct, punitive damages may be awarded.

However, an action for the tort of wrongful foreclosure will lie if the trustor or mortgagor (borrower) can establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor’s or trustor’s part which would have authorized the foreclosure or exercise of the power of sale. See Munger v. Moore, 11 Cal.App.3d 1, 89 Cal.Rptr. 323 (Cal.App.1970). This seems to be an obstacle for many homeowners during this financial crisis. Many borrowers are behind on their payments and have fallen victim to predatory lending schemes or have stopped paying based on instructions from their lenders trying to qualify for loan modifications. But does default always mean the mere fact that you have fallen behind on your payments?   This is an interesting issue we have discussed in other blogs the so-called “presentment” defense under the UCC.

First, for a mortgage to be in default, the borrower, or maker of the promissory note, must have dishonored the note. Under UCC §3-502 a promissory note is not dishonored until the maker refuses to pay it when presentment thereof is made. “Presentment” is defined by the UCC as “a demand to pay the instrument made by a person entitled to enforce an instrument.” The UCC also requires that “Upon demand of the person to whom presentment is made, the person making presentment must 1) exhibit the instrument” [emphasis added] (UCC 3-501(B)(2)(a))

Until the proper presentment is made the UCC requires that the “obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply: …2) In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid.” (UCC 3-310(b) & A.R.S. 47-3310(b)) Therefore, the borrower is not in default until the lender can exhibit the instrument, proving dishonor. Default is not simply missing payments. It also includes refusal to pay after presentment has been made. Default must also include an exhibit of the instrument. Thus, the lender in a wrongful foreclosure suit cannot claim the borrower is in default unless they can produce the original note and deed of trust.

If true, this would produce additional problems for the lender/creditor. In fact, I recently reviewed one loan that has a UCC PRESENTMENT WAIVER (evidencing that this is an issue that at least one lender – in that case a reverse mortgage) has considered and apparently given credence to.   According to California case law, the so-called lender would lose the right to foreclose on the security (real estate) if the obligation is unenforceable. Savings Bank v. Asbury (1897) 117 C 96, 48 P 1081; Trowbridge v. Love (1943) 58 CA 2d 746.   As the theory goes, if the lender trying to foreclose on a property cannot prove default by producing the original note and deed of trust then they may not have the right to foreclose at all.   IN FACT, IN SOME DEEDS OF TRUST (LIKE THIS ONE FOR A REVERSE MORTGAGE) THERE IS A SPECIFIC CLAUSE ASKING THAT THE BORROWER WAIVE THEIR “RIGHT” OF PRESENTMENT.

In fact, a recent Massachusetts court ruling invalidated two foreclosure sales based on a failure to prove proper documentation (unbroken chain of mortgage from the originator to the trust) proving the “lender” (the securitized loan trust) had the legal right to foreclose. See Ibanez v. U.S. Bank a recent landmark case from the Massachusetts Supreme Court.



In summary, where the Defendants fail to follow statutory law (ex. where you have notary fraud in the chain of title NOTICE OF DEFAULT, NOTICE OF SALE, ASSIGNMENT OF DEED OF TRUST, OR SUBSTITUTION OF TRUSTEE – and where the notary refuses to produce their notary transaction logs for a given transaction following a written request for such proof of valid signatures, etc.) this type of fraud can be argued to violate the duties set by the California foreclosure laws such as Civil Code Section 2924, 2934, and 2932.5 which require duly recorded documents be notarized and recorded with the County Recorder.  Where you have false and forged signatures by robosigners, and a notary that does not verify a signing parties credentials, or signatures, and cannot produce a notary log, there may be a legal argument to be made that the resulting foreclosure sale was “fruit of the poisonous tree” as I like to say, and argue the sale was tainted with fraud, oppression, and breach of duties.



About Vondran Real Estate Litigation
Steve Vondran is the author of all blog posts on this website. He is a real estate lawyer who can represent you in financial elder abuse, distressed real estate issues, short sale, predatory lending, foreclosure defense, wrongful foreclosure, lis pendens, injunctions, state and federal real estate litigation, arbitration, real estate broker compliance, accusations, real estate zoning & land use, eminent domain and other real estate law issues. Call (877) 276-5084


13 Responses to “What is wrongful foreclosure in California? Here is a whiff of how some courts look at this issue.”
  1. Anonymous says:

    Under duress of robosigning a wrongful foreclosure I forged a temporary restraining order, and now have pleaded guilty to a felony.

    I wad the victim of the original fraud, but as a result of feeling helpless, my life as I knew it is now over now.

  2. Foreclosure Defense Attorney Steve Vondran says:

    Amazing that there false declarations and notary fraud is OK, but when a borrower does it there is a serious issue. Wow. Amazing.

  3. Linda says:

    Yeah. Same logic applies to the homeowner getting a “free house,” when it is the servicer who is stealing homes.

  4. Foreclosure Defense Attorney Steve Vondran says:

    Without knowing who the party entitled to enforce the note is (proof of possession of an endorsed note) you are right.

  5. Foreclosure filings rose to a record for the second consecutive month in April as banks increased efforts to seize homes from delinquent borrowers. A total of 342,038 properties received a default or auction notice or were seized, that’s what I’ve heard.

  6. Foreclosure Defense Attorney Steve Vondran says:

    Wait, I thought they wanted to modify?? LOL Thank you for your comments.

  7. sef krell says:

    Steve, have you had any success challenging robo signings at demurrer?
    Do you reallege fraud in the ist amended complaint as to the banks production of robo signed docs upon which they are asking the court to take judicial notice? thanks sef

  8. Anjali Kristian says:

    My private lender is trying to forclose on a $40,000.00 loan. He claims we missed 1 and 1/2 payments in April and May. He gave us no reciepts and his proof consists of his bank deposit entries. Our house and property are valued at approx. $400,000.00. I know my husband was out of his mind for not getting reciepts from him, but this supposedly happened in April/May and he is just now threatening foreclosure. Can he legally do this?
    I think he wants to force a sale of our house because he needs money.

  9. Kelli says:

    What I find more ironic on a personal level is, With 4 sale and purchases of my mortgage and no assignments recorded, and the fact that my lender cannot produce the “Note”. I fit the cookie cutter mold to this American story and have been fighting the good fight for over two years. In this time, my mortgage was bought and sold TWO MORE TIMES, (two times prior to this). Now that my mortgage is in the hands of a small REAL ESTATE INVESTMENT PARTNERSHIP, who specialize in “DISTRESSED PROPERTIES” foreclosure is eminent.. They will take 225,000 to cash them out prior to foreclosure which is $100,000 less then what I owe, although any and every Government Program thats states they can help have not been able to. They make it IMPOSSIBLE to qualify for a ” SHORT REFINANCE”, you cannot get a trusting friend or family member to purchase in a “SHORT SALE” because of the Arms Length Rule.Now they have a Supposed SHORT SALE- BUYBACK program with “Non Profit Investors!?! HuH?? What another JOKE! I will lose my home come February…..Still I fight the good fight everyday, searching online for a MIRACLE because I don’t see life beyond that!

  10. Foreclosure Defense Attorney Steve Vondran says:


    I feel your frustration. The scales are tipped in the banks favor. You are entitled to know who buys your note (who the new owner is under TILA). Make sure you demand to know this.

    I wish you the best of luck. You may want to have your foreclosure and short sale options reviewed. You may never know if you have any other options available. Best of luck.

  11. California says:

    Been in bk for over a year
    Deutsche says they have the note ….. but of course they don’t have to show it
    but mers assigned the note & td after nod & substitution were acknowledged
    If mers assigned the note to Deutsche but Deutsche claims ownership before are there 2 notes?
    aztec on the nod claims “duly appointed trustee” but isn’t substituted till 30 days after substitution
    they claim nothing else … not agent, servicer…..only “duly appointed” even sign it as Trustee
    the law says you can’t act as Trustee before the acknowledgement of the substitution
    Seems to me I have two Trustees and two notes
    ,my bk will most likely be dismissed in 5 days, which will kill my adversary, which is still in the motion to dismiss stage
    I could use some HELP :-)

  12. Foreclosure Defense Attorney Steve Vondran says:

    Sounds like a real mess. I cannot give legal advice over the internet and would have to know more about your case. We do offer paid consultations which can include document and chain of title review if you are interested. Steve


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  1. […] does have some good information in regards to the UCC laws and wrongful foreclosure in CA; Do you have grounds to file a wrongful foreclosure lawsuit? – Foreclosure Defense Resource Center : … Best Regards, Cat Damiano LoanSafe.org Moderator The comments by me and the materials […]

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