TOP 10 FORECLOSURE GAME PLAN – YOU NEED TO HAVE A SOUND STRATEGY AND DO NOT TRUST WHAT THE BANKS ARE TELLING YOU!!
THIS IS JUST A QUICK POST TO HIGHLIGHT A FEW THINGS THAT WE CANNOT EMPHASIZE ENOUGH WHEN DEALING WITH FORECLOSURE ISSUES:
CALIFORNIA FORECLOSURE LAWYER DISCUSSES TOP 10 FORECLOSURE TIPS
(1) IF YOU HAVE A REFINANCE LOAN ORIGINATED WITHIN THE LAST THREE YEARS, MAKE SURE YOU GET A TRUTH IN LENDING (TILA LOAN AUDIT). ESPECIALLY IF YOU HAVE EQUITY IN YOUR PROPERTY OR NOT TOO FAR UPSIDE DOWN. YOU MAY HAVE AN EXTENDED THREE YEAR RIGHT TO RESCIND YOUR LOAN AND THIS CAN BE GROUNDS TO ENJOIN A THREATENED FORECLOSURE SALE.
(2) DO NOT TRUST ANYTHING A LENDER OR LOAN SERVICER TELLS YOU. SOME PEOPLE SAY THE RIGHT HAND DOES NOT KNOW WHAT THE LEFT HAND IS DOING. REALLY? I BELIEVE THEY KNOW EXACTLY WHAT THEY ARE DOING, AND WHAT THEY ARE DOING IS LYING, CHEATING, AND DECEIVING YOU INTO BELIEVING THAT THEY ARE WORKING WITH YOU, ONLY TO FORECLOSE ON YOU. ONCE THEY FORECLOSE, YOU WILL HAVE A VERY TOUGH TIME GETTING YOUR PROPERTY BACK, ESPECIALLY IF THE SALE IS TO A BONA FIDE THIRD PARTY PURCHASER. IF YOU ARE FACING A FORECLOSURE DATE, YOU NEED TO KEEP YOU EYE ON THE CLOCK, MUCH LIKE A BASKETBALL TEAM KEEPS ITS EYES ON THE SHOT CLOCK. IF YOU ARE NOT GETTING WHAT YOU WANT, YOU NEED TO SEE IF YOU HAVE ANY GROUNDS TO ENJOIN THE FORECLOSURE PRIOR TO THE SALE. TOO MANY PEOPLE CALL AND SAY THEIR SERVICER WAS WORKING WITH THEM AND NOW THE HOUSE IS SOLD. HAPPENS ALL THE TIME.
(3) THERE ARE SOME THINGS YOU CAN DO IF YOU ARE CONSIDERING FILING BANKRUPTCY THAT COULD HELP PROTECT YOUR RIGHTS AND/OR SET UP A POTENTIAL ADVERSARY PROCEEDING IN A BANKRUPTCY COURT. YOU CAN SEND OUT DEBT VALIDATION LETTERS, QUALIFIED WRITTEN REQUESTS (QWR) UNDER RESPA, DEMANDS TO IDENTIFY THE HOLDER OF THE LOAN, PRESENTATION LETTERS, ETC. YOU CAN MAKE THEM DO SOME WORK, AND YOU NEVER KNOW WHAT YOU MIGHT GET, OR NOT GET IN RETURN. ALL WRITTEN REQUESTS MUST BE SENT CERTIFIED MAIL AND SENT TO AS MANY DEPARTMENTS AT THE LENDER/LOAN SERVICER AS POSSIBLE.
(4) SEEK LEGAL COUNSEL EARLY IN THE PROCESS IF YOU FEEL YOU NEED TO INVESTIGATE YOUR LEGAL RIGHTS, ADDRESS DEFICIENCY JUDGMENTS, SEND QWR’S ETC. SOMETIMES THE BEST THING YOU CAN DO IS TO FORMULATE A REALISTIC GAME PLAN. NOT ALL FORECLOSURE CAN BE STOPPED. MANY CANNOT. BUT PRUDENT PLANNING ABOUT YOUR RIGHTS AND OPTIONS MAY GIVE YOU THE PEACE OF MIND YOU SEEK.
(5) IF YOU HAVE HAD A NOTICE OF DEFAULT OR NOTICE OF SALE FILED (OR OBTAINED COPIES OF A SUBSTITUTION OF TRUSTEE OR ASSIGNMENT OF DEED OF TRUST, POSSIBLY BY MERS) YOU MAY WANT TO CONSIDER A “ROBOSIGNER AUDIT” LOOKING FOR FRAUD IN THE CHAIN OF TITLE. THIS MAY MAKE A FORECLOSURE SALE THE “FRUIT OF THE POISONOUS TREE” AND YOU MAY BE ABLE TO SEEK AN INJUNCTION TO STOP THE FORECLOSURE SALE, AND AT A MINIMUM, HAVE THE LENDER OR LOAN SERVICER RE-DO THE PROCESS (THIS TIME WITHOUT FRAUD).
(6) REMEMBER, IF YOUR HOUSE IS SOLD, THE LENDER/LOAN SERVICER WILL HIT YOU WITH THE “TENDER RULE.” MEANING, IF YOU WANT TO CHALLENGE IRREGULARITIES IN THE FORECLOSURE PROCESS, THEY WILL ARGUE YOU NEED TO FIRST “TENDER” THE FULL BALANCE OF THE LOAN TO CHALLENGE ANY FRAUD, LEGAL NON-COMPLIANCE OR OTHER IRREGULARITIES IN THE SALE. THIS IS A ROTTEN PROPOSITION AND MOST PEOPLE CANNOT MEET THIS REQUIREMENT THAT IS SUPPORTED BY CASE LAW, AT LEAST IN CALIFORNIA. AGAIN, BEING AWARE OF WHERE YOU ARE IN THE PROCESS AND IDENTIFYING EARLY ON WHETHER OR NOT YOU HAVE ANY LEGAL GROUNDS TO HALT A FORECLOSURE IS IMPERATIVE. IN ARIZONA, THERE IS A LAW 33-811 THAT STATES IF YOU DID NOT GET AN INJUNCTION BEFORE THE SALE, YOU WAIVE YOUR DEFENSES TO THE SALE. THAT CAN BE HARSH IF YOU HAD LEGITIMATE DEFENSES BUT DID NOTHING OTHER THAN TRUST THE LYING LENDER OR LOAN SERVICER.
(7) REALIZE THE HAMP “TRIAL PLAN” MODIFICATION IS NO GUARANTEE OF A FINAL PERMANENT RESULT. THE HAMP MODIFICATION RESULTS IN A FINAL MODIFICATION IN SOME CASES, BUT NOT ALL. SOME PEOPLE ARE SURPRISED WHEN THE LENDER REFUSES TO HONOR THE AGREEMENT.
(8) A QUESTION WE GET ALOT IS WHETHER OR NOT THE LENDERS OR LOAN SERVICERS WILL GIVE YOU A PRINCIPLE LOAN BALANCE REDUCTION. WE CALL THIS A “BIGFOOT SIGHTING,” WE HAVE OBTAINED PRINCIPAL REDUCTIONS WITH WELLS FARGO AND WACHOVIA AND WORLD SAVINGS OPTION ARM LOANS. BUT NOT FOR ANY OTHER LENDERS. WE HAVE ALSO HEARD SOME OF THE OTHER LENDERS LIKE CHASE, HAVE ALSO PROVIDED THESE, SO IT IS A POSSIBILITY, BUT PROBABLY NOT REAL LIKELY AT LEAST AS OF THE TIME OF THIS WRITING.
(9) BE THINKING OF BACK-UP PLANS IF YOUR LOSS MITIGATION EFFORTS DO NOT GO WELL (SHORT SALE / DEED IN LIEU ETC.). ALSO BE SURE NOT TO PAY COMPANIES IN ADVANCE FOR LOAN MODIFICATIONS IN CALIFORNIA. THIS IS AGAINST THE LAW PURSUANT TO CALIFORNIA SB94, YET THERE ARE STILL ATTORNEYS AND BROKERS OUT THERE WILLING TO CONJURE UP SOME SCHEME THEY THINK WILL GO UNDETECTED. JUST BE CAREFUL WITH ANYONE CLAIMING TO GET YOUR HOUSE FOR FREE, ELIMINATE YOUR MORTGAGE, ETC. EVEN FILING A LAWSUIT DOES NOT FORCE THESE MAJOR LENDERS AND LOAN SERVICERS TO BACK DOWN OR SETTLE, OR TO HAND OVER A LOAN MODIFICATION (CONTRARY TO WHAT SOME PEOPLE THINK). I HAVE FILED A GOOD NUMBER OF LAWSUITS AGAINST THE LIKES OF WELLS FARGO, INDYMAC, ONEWEST BANK, FANNIE MAE, MERS, BANK OF AMERICA, ETC., ETC., AND I HAVE YET TO FIND THEM WILLING TO LAY DOWN AND CONCEDE TO SETTLEMENT DEMANDS, AT LEAST EARLY ON IN THE LAWSUIT.
(10) WHEN DEALING WITH BANKS, LENDERS, LOAN SERVICERS, ETC., DOCUMENT EVERYTHING, TRUST NOONE, GET IT IN WRITING, ETC. TAKE COPIOUS NOTES FOR YOUR LAWYER IN THE EVENT LITIGATION OR BANKRUPTCY (INCLUDING ADVERSARY PROCEEDINGS) BECOMES A VIABLE OPTION. ALSO REALIZE, LITIGATION IS NOT CHEAP AND IT MAY BE TOUGH TO FIND A LAWYER TO FILE A PREDATORY LENDING OR CIVIL LAWSUIT ON A CONTINGENCY FEE BASIS. JUST SOMETHING TO KEEP IN MIND.
THESE ARE JUST A FEW THINGS THAT COME TO MIND.
Can a lender or their agent (ex, the loan servicer) pursue a non-judicial foreclose on real property via exercising the power of sale contained in the deed of trust, if the alleged creditor has only the note and no assignment and recording of the deed of trust (the security for payment of the note)? Understanding California Civil Code Section 2932.5.
Can a lender or their agent (ex, the loan servicer) pursue a non-judicial foreclose on real property via exercising the power of sale contained in the deed of trust, if the alleged creditor has only the note and no assignment and recording of the deed of trust (the security for payment of the note)? Understanding California Civil Code Section 2932.5.
This article is general legal information only and not intended to serve as legal advice or a substitute for legal advice. As law is constantly changing and evolving, the information may not be 100% complete, accurate or up-to-date. For specific questions about your legal liability in regard to junior loans, please contact a skilled and experienced real estate or foreclosure defense lawyer.
Steve Vondran is a California Real Estate Lawyer who is licensed to practice law in California and Arizona. He also holds a real estate broker’s license in California and Arizona and has a background in mortgage brokering and commercial real estate. HE can be reached at steve@vondranlaw.com or (877) 276-5084.
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First, let’s get some general rules on the table that lenders and their attorneys will rely on when seeking to foreclose on your property:
(1) There is no obligation to produce the original note if a lender seeks to conduct a private trustee sale (i.e. a non-judicial foreclosure that relies on the power of sale contained in the deed of trust). In other words, do not try to file for an injunction in a court of law to fight the lender and challenge whether or not they own the loan, because you have no right to ask who is foreclosing on you in a private sale. Sad yes, but such is the law. Therefore, in a non-judicial foreclosure setting, there is no way to force them to prove they are in fact your creditor with the right to foreclose. Their mere allegation that they have the note is all they need if you challenge them at this stage, and do not expect the judge to rule otherwise.
See our Blog posting on this page for more details: http://www.foreclosuredefenseresourcecenter.com/2010/03/can-a-california-homeowner-demand-that-the-lender-or-loan-servicer-produce-the-note-as-a-foreclosure-defense-strategy/.
(2) In support of their right to foreclose non-judicially, lenders like to use the “security follows the note” argument and line of cases to support their position that if they merely allege that they have the note, then that must also mean they have the security interest (i.e. the deed of trust or mortgage) whether or not the security interest is/was specifically assigned to them – normally by MERS who originally records the security interest in as many as 60 million mortgages across the United States. For this proposition they usually cite two cases: (a) Carpenter v. Longan, 83 U.S. 271, 275 (1873); and (b) Restatement Third of Property (Mortgages) Section 5.4 (1997). Note that these pre-date most loan securitization.
LONGAN: In Longan the United States Supreme Court held: “The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.” Note, this case says only that assigning the note also assigns the security (i.e. the right to foreclose). The case does NOT say that the POWER OF SALE is also assigned when a note is assigned. This is important, because without the power of sale, a lender should be relegated to conducting a JUDICIAL FORECLOSURE SALE AND NOT A PRIVATE TRUSTEE SALE USING THE POWER OF SALE.
RESTATMENT: It appears to be the general rule in California that the transfer of a mortgage note transfers with it the related mortgage – “the mortgage follows the note” as they say. The RESTATEMENT (THIRD) OF PROPERTY (MORTGAGES) § 5.4 (1997), relied on by many lenders in their briefs, states: “a transfer of an obligation secured by a mortgage also transfers the mortgage unless the parties to the transfer agree otherwise.” The rationale is to avoid economic waste to the lender and avoid a windfall to the borrower if the note and mortgage are split – rendering the mortgage note unsecured. The Restatement also cites the case of Carpenter v. Longan, 83 U.S. 271 (1827) “all the authorities agree that the debt is the principal thing and the mortgage an accessory.”
These cases seem to give the lenders wide latitude to just merely claim they own the note (they never want to show it) and have the Court agree that the security naturally follows (whether or not the deed of trust was assigned, acknowledged, and recorded) and that the lender therefore has standing to lift a stay in bankruptcy court. If the lender can show proof of the original promissory note in the BK lift-stay motion, I would say I might agree. But again, they will not want to show the note, and it is up to the BK judge to demand they show this critical piece of evidence before they allow a creditor to lift the automatic stay. If you want legal authority take a look at In re Hwang, 396 B.R. 757 (C.D. California 2008. I have attached a link to my case brief on this important case: http://www.producethenoteattorney.com/2010/05/in-re-hwang-an-overview-of-motion-for-relief-from-automatic-stay-real-party-in-interest-and-constitutional-standing-requirements-in-a-california-bankruptcy-court/
But is the same true if a homeowner files for an injunction trying to prevent a lender from conducting a non-judicial foreclosure sale where there is simply no proof the lender has physical possession of the note and the chain of title does not indicate any assignment or recording of the deed of trust (i.e. the power of private sale never conveyed per 2932.5)?
Applying Constitutional law standards, States are always free to grant more rights and freedoms that the United States Supreme Court may grant, but states cannot provide less. I would argue that is what California did when it enacted Civil Code Section 2932.5 by requiring an actual assignment and recording of the deed of trust if the lender/mortgagee wants to exercise the power of sale and conduct a private trustee sale – Notice of Default / Notice of Sale – outside the watchful eye of the Court (as would be required in a judicial sale). In other words, if a lender wants to foreclose in a non-judicial private trustee sale fashion, it would seem they need both the endorsed note and physical possession of such – or, physical possession of the note endorsed in blank – AND the assignment of the deed of trust duly acknowledged and recorded as required under California Civil Code Section 2932.5. Without both, I would argue a lender is relegated to a judicial foreclosure sale only, and the Court should enjoin the attempted and threatened private trustee sale. At least that is my honest opinion and it would be great if it worked out that way. There is not a lot of case law on this curious code section.
Let’s take a look at 2932.5 and tell me if you agree. First off, here is a link to the law I am talking about so we can all take a look at it. It is short and sweet so do not be intimidated. http://law.onecle.com/california/civil/2932.5.html I have pasted the law below if you are the type of person who hates opening up links:
“Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.”
Looks to me like the power of sale (i.e. the right to pursue a private judicial foreclosure sale) requires an assignment of the deed of trust and recording of such in the County recorder’s office. If that is not what this law means, then what does it mean? In other words, if a lender conducts a private trustee sale and the chain of title reflects that there has been no assignment or recording of the deed by that lender or its agent, wouldn’t that make the private sale voidable and subject to set aside? See our blog piece on the “lender please don’t make me tender” rule before you get excited. Here is a link to that post.
http://www.foreclosuredefenseresourcecenter.com/2010/03/phoenix-foreclosure-lawyer/
Bolstering this position that the deed of trust must be assigned, acknowledged, and recorded before exercising the private power of sale in California is the case of Strike v. Transwest Discount Corp, 92 CA3d, 735 (1979). In this case the court held:
“A recorded assignment of note and deed of trust vests in the assignee all of the rights, interests of the beneficiary (Musgrave v. Renkin, 180 Cal. 785 [183 P. 145]) including authority to exercise any power of sale given the beneficiary (Civ. Code, § 858)…… The power of sale here derived from the instrument itself. (Civ. Code, § 2932; McDonald v. Smoke Creek Live Stock, 209 Cal. 231).”
Therefore, I would think you have at least a fair argument that a lender seeking to foreclose non-judicially, outside the Courts presence (as in a judicial foreclosure), that they would need to be able to establish that the deed of trust was properly assigned and recorded in addition to owning the note, although as discussed above they don’t have to show the note. If there is no proof of recorded assignment of the security in the County Recorder’s office, I would argue the lender has only the right to foreclose judicially (subject to a four year statute of limitations**), and by filing the Notice of Sale and Notice of Default, the lender has indicated that they are not willing to go that route. The problem is, if you filed for an injunction, they would probably just quickly assign and record the deed of trust killing the argument altogether. If any one else has any other opinions or interpretations, or even case law, I would love to see/hear it.
** There are time limits to file a judicial foreclosure as stated in the case of Aviel v. Ng, 161 Cal.App.4th 809, (2008) where the Court held: “The running of the statute of limitations on an obligation underlying a mortgage or deed of trust bars judicial foreclosure of the mortgage as well as an action to enforce the obligation. Cal.Civ.Code § 2911(1).”
For now, suffice it to say, this might be something to look into or argue if you are going all out and trying to save your home from foreclosure. Before filing any civil lawsuit, you should consult with a real estate or foreclosure lawyer to determine whether you have proper legal grounds to file a lawsuit.
One way this popped up in a bankruptcy case was the lender sought to record the assignment of the deed of trust while the borrower was in bankruptcy court and protected by the automatic stay. We are arguing that this is an attempt to perfect its right to non-judicially foreclose (i.e. they are trying to comply with 2932.5 to get the right to foreclose non-judicially) and that such action to perfect its interest violates Bankruptcy Code Section 362 which prohibits the following:
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property of the estate;
(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;
Again, just trying to give you some things to think about as you fight to save your home from foreclosure. Although the security may follow the note and that may be fine to judicially foreclose, perhaps that security interest must be assigned, acknowledged and recorded in order to preserve the right to conduct the private non-judicial trustee sale under the power of sale contained in the security. The deed of trust itself may also have some language you need to look at that that may dictate other rights.
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NOTICE: The foregoing information is general legal information only and shall not be relied upon as legal advice, or a substitution for legal advice. If you have specific legal questions about your foreclosure case you should seek out the advice of a real estate attorney. In addition, the information posted above may not be 100% complete, accurate or up-to-date. Law is always changing. The Law Offices of Steve Vondran is licensed to practice law in the state of Arizona and California and only seeks to solicit and serve Clients in these two states. Steve Vondran, Esq. is a licensed attorney and real estate broker in California and Arizona. He can be reached by email at steve@vondranlaw.com or toll free (877) 276-5084. This is an advertisement and communication pursuant to State Bar Rules. Please do not send us private or confidential information through any of our above-listed websites. Sending us an email does not create an attorney-client relationship (only signing a legal retainer will do this). Copyright 2010 – Law Offices of Steven C. Vondran – All Rights Reserved.
CALLING ALL WORLD SAVINGS AND WACHOVIA OPTION ARM LOANS………
RUNNING OUT OF TIME FOR WACHOVIA AND WORLD SAVINGS OPTION ARM LOANS
This is an update for all of our Clients who have World Savings and Option Arm Loans. As you may have heard on our radio show www.LoanModRadio.com (The Foreclosure Defense Show), we have been successful helping many homeowners who have World Savings and Option Arm Loans get loan modifications without charging any advance fees. Please note, our program may only be last another month or so for reasons beyond our control.
We have documentable principal reduction (however this is no guarantee of such) in a good number of cases where the Wachovia or World Savings Homeowner was upside-down in their properties and a principal loan balance reduction was needed to make the modification work.
THIS MAY BE OUR LAST CALL FOR LOAN MODIFICATIONS FOR WORLD SAVINGS OPTION ARM LOANS AND WACHOVIA OPTION ARM LOANS. IF YOU HAVE ONE OF THESE TYPES OF LOANS CALL US TO DISCUSS OUR FANTASTIC LOAN MODIFICATION PROGRAM.
PART OF THE REASON FOR OUR SUCCESS ON THE OPTION ARM LOANS COMES FROM OUR UNDERSTAND OF THESE PREDATORY LOANS. YOU CAN LEARN MORE ABOUT NEGATIVE AMORTIZATION OPTION ARM LOANS AT WWW.OPTIONARMLAWYER.COM
QUIET TITLE 101 – A GENERAL OVERVIEW OF CALIFORNIA QUIET TITLE LAW
QUIET TITLE ACTIONS IN CALIFORNIA – A BASIC OVERVIEW
The following is general legal information and is not to be construed as legal advice or a substitute for legal advice. The information below many not be complete, accurate, or up-to-date as law can, and does frequently change. For specific questions about your quiet title case, contact a real estate or foreclosure defense attorney to review the facts of your case.
Steve Vondran, Esq. practices Real Estate, Foreclosure Defense & Bankruptcy Law in Phoenix, Arizona, and California where he is licensed to practice law. He can be reached atsteve@vondranlaw.com or (877) 276-5084.
CALIFORNIA QUIET TITLE LAW – A GENERAL OVERVIEW
The statutory provisions for Quiet Title in California can be found in the California Code of Civil Procedure Sections 760.10-760.060. A Quiet Title action is basically a legal action that seeks to “quiet title” to property where adverse claims are made against the property. For example, where a lender wrongfully forecloses on a property and claims the property as their own, but the homeowner challenges this.
Here is the California Quiet Title Statutory Law (there are also cases interpreting these quiet title provisions). Bolded and italics material are provided by me:
760.010. As used in this chapter:
(a) “Claim” includes a legal or equitable right, title, estate, lien, or interest in property or cloud upon title.
(b) “Property” includes real property, and to the extent
applicable, personal property.
760.020. (a) An action may be brought under this chapter to establish title against adverse claims to real or personal property or any interest therein.
(b) An action may be brought under this chapter by parties to an agreement entered into pursuant to Section 6307 or 6357 of the Public Resources Code to confirm the validity of the agreement.
(c) Nothing in this section shall be construed to limit the right of members of the public to bring or participate in actions challenging the validity of agreements entered into pursuant to Section 6307 or 6357 of the Public Resources Code.
760.030. (a) The remedy provided in this chapter is cumulative and not exclusive of any other remedy, form or right of action, or proceeding provided by law for establishing or quieting title to property.
(b) In an action or proceeding in which establishing or quieting title to property is in issue the court in its discretion may, upon motion of any party, require that the issue be resolved pursuant to the provisions of this chapter to the extent practicable.
760.040. (a) The superior court has jurisdiction of actions under this chapter.
(b) The court has complete jurisdiction over the parties to the action and the property described in the complaint and is deemed to have obtained possession and control of the property for the purposes of the action with complete jurisdiction to render the judgment provided for in this chapter.
(c) Nothing in this chapter limits any authority the court may have to grant such equitable relief as may be proper under the circumstances of the case.
760.050. Subject to the power of the court to transfer actions, the proper county for the trial of an action under this chapter is:
(a) Where the subject of the action is real property or real and personal property, the county in which the real property, or some part thereof, is located.
(b) Where the subject of the action is personal property, the county in which the personal property is principally located at the commencement of the action or in which the defendants, or any of them, reside at the commencement of the action.
760.060. The statutes and rules governing practice in civil actions generally apply to actions under this chapter except where they are inconsistent with the provisions of this chapter.
CALIFORNIA QUIET TITLE LAW SUMMARY
So, in short, the main purpose of a quiet title action is to establish title against adverse claims to real property or personal property. As set forth above, the remedy of quiet title can be combined with other causes of action or other remedies. And, in any action or proceeding in which establishing or quieting title to property is in issue, the court may, in its discretion and on the motion of any party, require that the issue be resolved pursuant to the California Code Of Civil Procedure provisions relating to quiet title actions.
In regards to proper jurisdiction for a California quiet title lawsuit, the quiet title lawsuit must be brought in the superior court of the county where the real property is located. Once the Quiet Title Action is before the court, the court has complete power to determine title issues.
NOTE: SECTION 761.020-761.040 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE SETS FORTH SPECIFIC PLEADING REQUIREMENTS AND LIS PENDES RULES WHEN FILING A QUIET TITLE LAWSUIT. THE RULES CAN BE FOUND HERE:
761.010. (a) An action under this chapter is commenced by filing a complaint with the court.
(b) Immediately upon commencement of the action, the plaintiff shall file a notice of the pendency (THIS IS THE “LIS PENDENS” WE HAVE TALKED ABOUT THIS IN OTHER BLOG ARTICLES) of the action in the office of the county recorder of each county in which any real property described in the complaint is located.
LIS PENDENS NOTE (NOW CALLED THE NOTICE OF PENDENCY OF ACTION): This lis pendens puts other parties on notice of your claim to real property and usually stops anyone from buying or selling your real property while the lawsuit is pending. The lis pendens can later be removed, or dissolved by Court order. Please note, there are very specific requirements for filing a lis pendens that you will need to be familiar with (google “vondran lis pendens” for more information).
761.020. The complaint shall be verified and shall include all of the following:
(a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.
(b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.
(c) The adverse claims to the title of the plaintiff against which a determination is sought.
(d) The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.
(e) A prayer for the determination of the title of the plaintiff against the adverse claims.
REQUIREMENTS OF THE DEFENDANTS ANSWER TO A CALIFORNIA QUIET TITLE LAWSUIT:
761.030. (a) The answer shall be verified and shall set forth:
(1) Any claim the defendant has.
(2) Any facts tending to controvert such material allegations of the complaint as the defendant does not wish to be taken as true.
(3) A statement of any new matter constituting a defense.
(b) If the defendant disclaims in the answer any claim, or suffers judgment to be taken without answer, the plaintiff shall not recover costs.
761.040. (a) The defendant may by cross-complaint seek affirmative relief in the action.
(b) If the defendant seeks a determination of title as of a date other than the date specified in the complaint, the cross-complaint shall include the date and a statement of the reasons why a determination as of that date is sought.
PARTIES IN A CALIFORNIA QUIET TITLE ACTION (PARTY ISSUES).
California Code of Civil Procedure Section 762.010-762.090 states that the when filing the Quiet Title Lawsuit, the Plaintiff must name as defendants all persons known or unknown claiming an interest in the property and other rules regarding proper parties in a quiet title action are addressed in these sections.
Here are those Sections:
762.010. The plaintiff shall name as defendants in the action the persons having adverse claims to the title of the plaintiff against which a determination is sought.
762.020. (a) If the name of a person required to be named as a defendant is not known to the plaintiff, the plaintiff shall so state in the complaint and shall name as parties all persons unknown in the manner provided in Section 762.060.
(b) If the claim or the share or quantity of the claim of a person required to be named as a defendant is unknown, uncertain, or contingent, the plaintiff shall so state in the complaint. If the lack of knowledge, uncertainty, or contingency is caused by a transfer to an unborn or un-ascertained person or class member, or by a transfer in the form of a contingent remainder, vested remainder subject to defeasance, executory interest, or similar disposition, the plaintiff shall also state in the complaint, so far as is known to the plaintiff, the name, age, and legal disability (if any) of the person in being who would be entitled to the claim had the contingency upon which the claim depends occurred prior to the commencement of the action.
762.030. (a) If a person required to be named as a defendant is dead and the plaintiff knows of a personal representative, the plaintiff shall join the personal representative as a defendant.
(b) If a person required to be named as a defendant is dead, or is believed by the plaintiff to be dead, and the plaintiff knows of no personal representative:
(1) The plaintiff shall state these facts in an affidavit filed with the complaint.
(2) Where it is stated in the affidavit that such person is dead, the plaintiff may join as defendants “the testate and intestate
successors of ____ (naming the deceased person), deceased, and all persons claiming by, through, or under such decedent,” naming them in that manner.
(3) Where it is stated in the affidavit that such person is believed to be dead, the plaintiff may join the person as a defendant, and may also join “the testate and intestate successors of ____ (naming the person) believed to be deceased, and all persons claiming by, through, or under such person,” naming them in that manner.
762.040. The court upon its own motion may, and upon motion of any party shall, make such orders as appear appropriate:
(a) For joinder of such additional parties as are necessary or proper.
(b) Requiring the plaintiff to procure a title report and designate a place where it shall be kept for inspection, use, and copying by the parties.
762.050. Any person who has a claim to the property described in the complaint may appear in the proceeding. Whether or not the person is named as a defendant in the complaint, the person shall appear as a defendant.
762.060. (a) In addition to the persons required to be named as defendants in the action, the plaintiff may name as defendants “all persons unknown, claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to plaintiff’s title, or any cloud upon plaintiff’s title thereto,” naming them in that manner.
(b) In an action under this section, the plaintiff shall name as defendants the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.
(c) If the plaintiff admits the validity of any adverse claim, the complaint shall so state.
762.070. A person named and served as an unknown defendant has the same rights as are provided by law in cases of all other defendants named and served, and the action shall proceed against unknown defendants in the same manner as against other defendants named and served, and with the same effect.
762.080. The court upon its own motion may, and upon motion of any party shall, make such orders for appointment of guardians ad litem as appear necessary to protect the interest of any party.
762.090. (a) The state may be joined as a party to an action under this chapter.
(b) This section does not constitute a change in, but is
declaratory of, existing law.
WHO BEARS THE BURDEN OF PROOF IN A CALIFORNIA QUIET TITLE ACTION? THE ANSWER WILL USUALLY DEPEND ON WHETHER DEFENDANT HOLDS LEGAL TITLE OR WHETHER TITLE IS DISPUTED.
In a California Quiet Title lawsuit (WHERE LEGAL TITLE VESTS IN DEFENDANTS), the Plaintiff must bear the burden of proof (this is the case in most civil lawsuits). The normal burden of proof in a civil lawsuit is “preponderance of the evidence.” However, in a Quiet Title action, the standard of proof is higher and the Plaintiff must establish its right to title by “CLEAR AND CONVINCING” proof. See California Evidence Code Section 662 which discusses the burden of proof in a Quiet Title case:
662. The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.
IF TITLE TO REAL PROPERTY IS “DISPUTED” (AS OPPOSED TO HAVING LEGAL TITLE HELD BY A DEFENDANT) THEN THE TYPICAL “PREPONDERANCE OF THE EVIDENCE” STANDARD WILL APPLY.
A JUDGEMENT IN A QUIET TITLE ACTION IS NORMALLY CONCLUSIVE ON ALL PARTIES KNOWN OR UNKNOWN WHO WERE PARTIES TO THE ACTION.
California Code of Civil Procedure Section 764.030 States:
764.030. The judgment in the action is binding and conclusive on all of the following persons, regardless of any legal disability:
(a) All persons known and unknown who were parties to the action and who have any claim to the property, whether present or future, vested or contingent, legal or equitable, several or undivided. Except as provided in Section 764.045, all persons who were not parties to the action and who have any claim to the property which was not of record at the time the lis pendens was filed or, if none was filed, at the time the judgment was recorded.
HOWEVER, A QUIET TITLE ACTION WILL NOT NORMALLY AFFECT TITLE TO PARTIES WHO WERE NOT A PARTY TO THE ACTION IF THEIR CLAIM WAS KNOWN, OR REASONABLY SHOULD HAVE BEEN KNOWN.
California Code of Civil Procedure Section 764.045 states:
764.045. Except to the extent provided in Section 1908, the judgment does not affect a claim in the property or part thereof of any person who was not a party to the action if any of the following conditions is satisfied:
(a) The claim was of record at the time the lis pendens was filed or, if none was filed, at the time the judgment was recorded.
(b) The claim was actually known to the plaintiff or would have been reasonably apparent from an inspection of the property at the time the lis pendens was filed or, if none was filed, at the time the judgment was entered. Nothing in this subdivision shall be construed to impair the rights of a bona fide purchaser or encumbrancer for value dealing with the plaintiff or the plaintiff’s successors in interest.
THERE ARE NO DEFAULT JUDGMENTS – EVIDENCE IS REQUIRED IN A QUIET TITLE LAWSUIT:
California Code of Civil Procedure Section 764.010 States:
764.010. The court shall examine into and determine the plaintiff’s title against the claims of all the defendants. The court shall not enter judgment by default but shall in all cases require evidence of plaintiff’s title and hear such evidence as may be offered respecting the claims of any of the defendants, other than claims the validity of which is admitted by the plaintiff in the complaint. The court shall render judgment in accordance with the evidence and the law.
Quiet Title Case: Mangindin v. Washington Mutual Bank, 637 F. Supp.2d 700, (N.D. Cal.) 2009.
QUIET TITLE IN THE FORECLOSURE CONTEXT: TENDER ISSUES
Under California law, a plaintiff seeking to quiet title in the face of a foreclosure must allege tender or an offer of tender of the amount borrowed. See Arnolds Management Corp v. Eischen, 158 Cal.App.3d 575, 578, 205 Cal.Rptr. 15 (1984). This may make Quiet Title a more difficult proposition in a foreclosure case.
QUICK SUMMARY OF CALIFORNIA QUIET TITLE LAW
(1) THE COMPLAINT AND ANSWER TO A QUIET TITLE ACTION MUST BE VERIFIED (ESSENTIALLY MEANING MADE UNDER OATH) AND NAME ALL KNOWN OR UNKNOWN PARTIES CLAIMING AN INTEREST IN THE PROPERTY.
(2) THE QUIET TITLE COMPLAINT MUST DESCRIBE THE PROPERTY WITH A LEGAL DESCRIPTION AND COMMON ADDRESS DESCRIPTION.
(3) PLAINTIFF IN A CALIFORNIA QUIET TITLE ACTION MUST SET FORTH WHAT THE ADVERSE CLAIMS (SETTING FORTH SPECIFIC FACTS) ARE AND WHAT TYPE OF DETERMINATION IS SOUGHT.
(4) QUIET TITLE ACTION MUST SET FORTH THE DATE THE DETERMINATION IS SOUGHT AND A PRAYER FOR RELIEF TO DETERMINE PLAINTIFF’S TITLE AGAINST THE ADVERSE CLAIMS.
(5) A QUIET TITLE LAWSUIT MUST BE BROUGHT IN THE PROPER COUNTY.
(6) ANY PERSON WHO CLAIMS AN ADVERSE INTEREST IN THE PROPERTY MAY JOIN IN THE LAWSUIT EVEN IF THEY WERE NOT NAMED AS A A DEFENDANT.
(7) A QUIET TITLE LAWSUIT REQUIRES PROPER USE OF THE LIS PENDENS PROCEDURE (NOTICE OF PENDENCY OF ACTION).
(8) IN A QUIET TITLE ACTION, THE OWNER OF LEGAL TITLE (CHECK THE TITLE REPORT) IS PRESUMED TO BE THE OWNER, AND THIS CAN ONLY BE REBUTTED BY A SHOWING OF CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY.
(9) GENERALLY SPEAKING, THERE ARE NO JURY TRIALS IN A QUIET TITLE ACTION AS THESE ACTIONS ARE “EQUITABLE” IN NATURE (NOT SEEKING MONEY DAMAGES) SO THE COURT WILL DECIDE PLAINTIFF’S CLAIM AND EQUITABLE DEFENSES MAY BE ASSERTED BY OPPOSING PARTIES. THE EXCEPTION WOULD BE IF PLAINTIFF IS OUT OF POSSESSION OF THE PROPERTY AND IS FILING THE QUIET TITLE ACTION TO REGAIN POSSESSION – IN THESE CIRCUMSTANCES THE CLAIM MAY BE DEEMED “LEGAL” IN NATURE AND A JURY TRIAL MAY BE REQUESTED. SEE MEDEIROS V. MEDEIROS, 177 CAL APP. 2d 69, (1960). THE PRUDENT PRACTICE IS TO ALWAYS REQUEST A JURY TRIAL WHEN FILING A PLEADING IF THAT IS WHAT YOU WANT. RAISE IT OR WAIVE IT IS THE GENERAL RULE.
(10) GENERALLY SPEAKING, A JUDGMENT IN A QUIET TITLE LAWSUIT IS CONCLUSIVE AND BINDING ON ALL PARTIES TO THE LITIGATION, BUT MAY NOT BE BINDING ON PARTIES NOT INVOLVED IN THE QUIET TITLE LAWSUIT BUT WHOS CLAIMS WERE KNOWN OR REASONABLY APPARENT. THERE ARE NO DEFAULT JUDGMENTS – CLEAR EVIDENCE IS REQUIRED.
(11) IN A QUIET TITLE ACTION IN THE FORECLOSURE OF A RESIDENCE, THE COURT MAY REQUIRE THE PLAINTIFF TO “DO EQUITY” OR TENDER AMOUNTS OWED OR IN ARREARS OR PAY THE ENTIRE BALANCE. A PARTY CANNOT USUALLY “GET EQUITY” IF THEY DON’T “DO EQUITY”.
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KEYWORDS: CALIFORNIA LIS PENDENS / PENDENCY OF ACTION / QUIET TITLE ACTION / CALIFORNIA QUIET TITLE LAWSUIT / BURDEN OF PROOF IN QUIET TITLE CASE / QUIET TITLE IN FORECLOSURE CASE / LAWSUIT TO QUIET TITLE / CALIFORNIA FORECLOSURE DEFENSE LAWYER / PHOENIX FORECLOSURE LAWYER.
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