Arizona Wrongful Foreclosure Case – UCC Produce the Note issues discussed…..is a Deed of Trust a Negotiable Instrument in Arizona?
HERE IS AN ARIZONA CASE TALKING ABOUT WHETHER OR NOT A DEED OF TRUST IS A “NEGOTIABLE INSTRUMENT” UNDER THE UNIFORM COMMERCIAL CODE (UCC). We also discuss the Produce the Note defense and wrongful foreclosure elements in Arizona. As we know, many so called “lenders” of securitized loans can never show they have your original note and/or the deed of trust giving them the power of sale. In essence, they are trying to get your house for free where they do not have a legal right to foreclose on your loan. Yes, some people would call that fraud and a a crime. Bankers would refer to it as “business.” And therein lies the rub.
Contreras v. US Bank, No. CV09-0137-PHX-NVW. (Dist. Ariz. 2009).
Facts: Mr. and Mrs. Contreras purchased a home located at 8220 West Georgia Avenue, Phoenix, AZ in January 2006. To purchase the property they obtained a mortgage through Act Lending Corporation doing business as “Act Mortgage Capital”(ACT). The loan amount was $488,000. The mortgage Deed of Trust identified ACT as the Lender and the Trustee. It also names MERS as the beneficiary under the Deed of Trust and states, “MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns.
Almost two years later, Mr. and Mrs. Contreras became unable to make timely payments on the property. On the 2nd of September MERS assigned all beneficial interest under the Deed of Trust to U.S. Bank, as Trustee for CSMC Mortgage Backed Pass Through Certificates, Series 2006-5 (U.S. Bank). Also on the same day the Trustee issued a Notice of Trustee’s Sale of the Property for December 3rd, 2008. The Notice of the Trustee Sale identified U.S. Bank as the current beneficiary and ASC for Wells Fargo Home Improvement as the loan servicer.
When the Contreras’ received the Notice of Trustee’s Sale they made a written demand on U.S. Bank and Wells Fargo Bank, N.A. (“Defendants”) to suspend the sale of the Property or to provide proof of the their right to foreclose. The Contreras’ did not believe that U.S. Bank or Wells Fargo had the right to initiate foreclosure or possession of the original Note. Despite several requests for proof of the right to foreclose and documentation of the chain of Deed of Trust the Contreras’ were removed from their property through a forcible detainer action in Maricopa County Superior Court.
The Contreras’ filed a complaint seeking declaratory judgment that the Defendants were not entitled to enforce the Note of Deed of Trust, the Trustee’s Sale was invalid and void, U.S. Bank is not a bona fide purchaser for value of the Property. Contreras’ also sought monetary damages for wrongful foreclosure based on the Defendants’ breach of their duty to act fairly and in good faith specifically: (1) failing to search for proof of the original Note (2) failing to indentify the current beneficiary under the Note and/or Deed of Trust and (3) failing to provide Plaintiff’s requested detailed accounting.
The Defendant’s filed a motion to dismiss the Contreras’ complaint.
Issues: Should the complaint be dismissed as not stating a claim upon which relief can be granted?
Relevant Questions of Law Decided by the Court: Do the Defendants have to possess the original Note in order to exercise their rights under the Deed of Trust to sell the Property upon default? Is the Deed of Trust a ‘negotiable instrument” under Arizona law or an “instrument” under the UCC? What are the Arizona elements of “Wrongful Foreclosure”?
Holding: The court dismissed the complaint holding that the Deed of Trust is NOT a negotiable instrument under Arizona law and that it is not an “instrument” as defined by the UCC. Additionally, the court held that Arizona has adopted the same standard of several other states for “Wrongful Foreclosure” and that the Contreras’ did NOT meet that standard.
Rationale: (1) The Deed of Trust is Not a Negotiable Instrument or an Instrument under the UCC. Note: this does not appear to be the same as saying the NOTE is not a negotiable instrument.
The court reasoned that because a Deed of Trust is not an unconditional promise to pay a fixed amount of money, is not payable to bearer or to order, is not payable on demand or at a definite time, and states numerous acts that the borrower promised to do in addition to paying money it is therefore not a negotiable instrument. See ARS §47-3104(A)&(B). The court also stated that there is no existing authority that a Deed of Trust requires compliance with the Arizona Uniform Commercial Code.
(2) Wrongful Foreclosure Elements Not Met By the Contreras.
The Court reasoned that Arizona has adopted the same standard for wrongful foreclosure as other states including Georgia & Missouri, Texas and California. The elements are: (1) a legal duty owed 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.
In this case, the Court held that there was no duty on the Defendants to make any type of accounting to the Contreras or produce any documentation because the Deed of Trust is not subject to UCC rules. Second, the Plaintiffs were in default and the Plaintiffs do not allege that Defendants’ actions caused their default.
Conclusion: UCC rules do not apply to Deeds of Trust in Arizona. A “Wrongful Foreclosure” suit must meet all the elements set forth above in order to succeed.
This cases cited herein shall not be construed as legal advice or a substitute for legal advice and you are advised to consult a Foreclosure Defense or Real Estate lawyer to confirm the above is still current and good law.
FHA RELEASE SERVICING GUIDELINES FOR FANNIE FREDDIE LOANS………BASICALLY AMOUNTS TO MORE WINDOW DRESSING – “CATCH ERRORS AND FIX THEM.”
ITS ALL ABOUT THE MONEY – THE ANSWER TO 99 OUT OF 100 QUESTIONS IS “MONEY”
We all know the Bankers hate regulations and do not want to comply with any of them (no, I am not joking for the sake of coming up with a blog post, I can verify on a good majority of my files failure to comply with RESPA and TILA – two of the main laws they have to deal with). They routinely snub their noses at these laws and force you into court if you want to do something about. That is big business folks. Now the FHA releases some new guidelines for mortgage servicers for Fannie Freddie Loans. Man, I read it and it sounded great, but then I realized all it basically says is to try to ferret out errors and if their are errors, to fix them. Wow, that is just the kind of regulation with TEETH that will surely make these loan servicers stand up straight. Yeah right. More window dressing. In fact., this business is full of window-dressing (things the bankers say that sound great, but which don’t really mean anything).
(1) Like Bank of America talking about principal reduction
(2) Like foreclosure moratoriums and then they sell the note and let someone else foreclose on you
(3) Like a TARP bailout that funds Wall Street bonuses while telling Main Street this ones for you
(4) Like HAMP trial plan mods that come your way making you think you have accomplished a loan modification
(5) Like the servicer saying “don’t worry, we have extended your sale date” (oops, looks like the trustee sold your house maam)
These are just a few that come to mind………yes, there is alot of WINDOW DRESSING in the loss mitigation business. Anything the Bankers or Politicians can say to appease the masses is what they will do. As far as stopping the fraud in the system, and robosigners, the lies and deceit….I am not sure this can be fixed even if they want to. Without proof of ownership of the loan with right to foreclose (i.e. that they “lender” has the note and deed of trust) the whole system is based on lies and cover-up and yet entities like MERS will defend the system to no end.
Anyway, despite the banker commercials that show the white picket fences, and kids and dogs running around the yard, don’t believe everything you see – that is window dressing too!
REALTYTRAC SAYS 288,345 HOMES LOST TO FORECLOSURE FROM JULY-SEPTEMBER 2010. WHERE IS THE BAILOUT MONEY GOING?
I recently read an article on yahoo finance where Realtytrac (a company that tracks foreclosures) says there were almost 300,000 foreclosure sales this year in just the months of July-September 2010. I am putting this here just so you can get a sense of what’s going on in the foreclosure / loss mitigation marketplace. Sort of makes you wonder where all the bailout money is going. One of my shorter blogs, but just something to think about. This month has been as busy as ever with Foreclosure Moratoriums, Robo-Signers, and other FORECLOSURE GATE issues. We thank all of our readers and ask you to please keep coming back for more foreclosure information, stats, updates, and trends.
Strategic Defaults or “Buy and Bail”? What do you call it when you walk away from your home after the lender refuses to do anything meaningful as far as loss mitigation?
There is a new wave of happenings in the loss mitigation marketplace. When a loan servicer or lender fails to modify a loan (especially loans that are upside down and in need of principal reduction) some buyers are deciding to blow off the lender and just walk away from the property.
Well of course the lenders are up in arms about this financial preservation strategy (as I learned in contract law many years ago, this is the concept of “efficient breach” wherein sometimes it is simply in ones best interest to breach a contract). Of course the rules change when the efficient breach is perpetrated on the mighty banks. To them this is “mortgage fraud” or “buy and bail” or “unethical” or “immoral.”
What banks fail to realize is that if they would provide MEANINGFUL MODIFICATIONS WITH ALL THE TAXPAYER FUNDED BAILOUT MONEY THEY RECEIVED PERHAPS PEOPLE WOULD NOT BE BAILING OUT ON THE LENDERS.
IF THE LENDERS (AND THEIR INVESTORS WHO INVESTED IN THE SECURITIZED LOANS) DO NOT WANT TO PROVIDE MEANINGFUL LOAN MODIFICATIONS BECAUSE THEY ARE SEEKING TO DO WHAT’S IN THEIR BEST INTEREST, SHOULD THEY REALLY BE SURPRISED THAT BORROWERS AND HOMEOWNERS ARE PROTECTING THEIR INTERESTS BY PURSUING WHAT SOME WOULD CALL A “STRATEGIC DEFAULT” STRATEGY.
Now, before you exercise these types of strategies, it would be wise to consult with a foreclosure defense lawyer to discuss your options, review your situation, and to analyze whether or not there is any liability in this regard. Whether or not something is immoral or unethical is a different question than whether or not something is illegal and can result in civil liability. Have your case reviewed.
IN THIS MARKETPLACE IT SEEMS THE TIDE IS SHIFTING TO AN EVERY MAN AND EVERY COMPANY FOR THEMSELVES APPROACH REGARDLESS OF THE IMPACT THAT MAY RESULT TO LOCAL NEIGHBORHOODS AND PEOPLE THAT ARE NOT IN DEFUAULT. WHO IS TO BLAME IS A QUESTION OF WHICH CAME FIRST, THE CHICKEN OR THE EGG.
CAN A CALIFORNIA HOMEOWNER DEMAND THAT THE LENDER OR LOAN SERVICER PRODUCE THE NOTE AS A FORECLOSURE DEFENSE STRATEGY?
There is no guarantee the following is correct. Law changes all the time. This is for attorneys only and you should assume the information is not correct. This is general legal information only.
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Unfortunately, court says “no way” and declares THERE IS NO REQUIREMENT THAT THE ANYONE PRODUCE THE ORIGINAL PROMISSORY NOTE AS A PRE-REQUISITE TO PURSUING A PRIVATE TRUSTEE SALE. Here are a few snipets from the case:
MY COMMENTS ARE IN BOLD AND MERELY REPRESENT MY OPINION.
Chilton v. Federal Nat. Mortg. Ass’n, Slip Copy, 2009 WL 5197869 (E.D.Cal.)
ORDER RE PROPOSED ORDER TO SHOW CAUSE AND MOTION FOR TEMPORARY RESTRAINING ORDER
Plaintiff filed a complaint on December 16, 2009, alleging that Defendant, Federal National Mortgage Association, violated unspecified provisions of federal law within “Title 15 U.S.C. and/or Title 18 U.S.C.” because Defendant initiated non-judicial foreclosure on her property, located in Clovis, California, without possessing the genuine original note.” She advances no other bases for relief.
Plaintiff has also filed an “order to show cause and motion for temporary restraining order,” in an attempt to block the foreclosure process.
To obtain temporary or permanent injunctive relief, a plaintiff must demonstrate likelihood of success on the merits. Here, Plaintiff’s only legal theory has been resoundingly rejected as a basis for relief. It is well-established that non-judicial foreclosures can be commenced without producing the original promissory note.
THAT’S THE PART THAT HURTS. I SUPPOSE ANYONE WHO SHOWS UP ON FORECLOSURE DAY CLAIMING TO BE THE HOLDER OF THE LOAN (WHETHER IT IS MERS PRETENDING TO BE THE BENEFICIARY OR THE NOMINEE OF THE LENDER, THE LOAN SERVICER PRETENDING TO BE THE HOLDER OF THE LOAN OR SOME OTHER THIRD PARTY, LIKE WALLMART FOR EXAMPLE, CLAIMING TO BE THE HOLDER OF THE LOAN) GETS AN UNFETTERED RIGHT TO FORECLOSE, AND A FREE PASS FROM ANY JUDICIAL SCRUTINY WHATSOEVER.
The Court went on to state:
“Non-judicial foreclosure under a deed of trust is governed by California Civil Code Section 2924 which relevant section provides that a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process.” California courts have held that the Civil Code provisions “cover every aspect” of the foreclosure process, (case cited), and are “intended to be exhaustive,”(another case cited). There is no requirement that the party initiating foreclosure be in possession of the original note.
AFTER LEVELING THIS BLOW THE COURT CITED A FEW OTHER CASES THAT RESULTED IN THE SAME OUTCOME FOR PLAINTIFFS ASSERTING THE “PRODUCE THE NOTE” FORECLOSURE DEFENSE STRATEGY (OBVIOUSLY IN AN ATTEMPT TO TELL FUTURE LITIGANTS IN CALIFORNIA “GIVE UP TRYING TO VERIFY ANYONES CREDENTIALS”):
(1) See, e.g., Nool v. HomeQ Servicing, — F.Supp.2d —-, 2009 WL 2905745 (Sep. 4 2009) (“There is no requirement that the party initiating foreclosure be in possession of the original note.”);
(2) Candelo v. NDEX West, LLC, 2008 WL 5382259, at *4 (E.D.Cal. Dec.23, 2008) (“No requirement exists under statutory framework to produce the original note to initiate non-judicial foreclosure.”);
(3) Putkkuri v. ReconTrust Co., 2009 WL 32567, *2 (S.D.Cal. Jan.5, 2009) (“Production of the original note is not required to proceed with a non-judicial foreclosure.”);
(4) Phillips v. MERS Mortgage Electronic Registration Systems, 2009 WL 3233865, 9 (E.D.Cal.2009); Vargas v. Reconstruction Co., 2008 U.S. Dist. LEXIS 100115, at *8-9 (E.D.Cal. Dec. 1, 2008).
WE HAVE PREVIOUSLY DISCUSSED THE KANSAS SUPREME COURT CASE THAT DISCUSSED THE ROLE OF MERS IN WHICH THE COURT SEEMED TO SUGGEST THAT MERS WAS NOT A BENEFICIARY UNDER THE DEED OF TRUST JUST BECAUSE THEY SAY THEY ARE IN THE DOCUMENT. THE COURT ADDRESSED PLAINTIFF’S RELIANCE ON THAT CASE:
“Plaintiff’s reliance on Landmark National Bank v. Kessler, 216 P.3d 158, 2009 Kan. LEXIS 834 (Kan.2009), is misplaced. That case concerned a company, Mortgage Electronic Registration Systems, Inc. (“MERS”), that acted on behalf of a lender to finalize a second mortgage on Kessler’s home. For procedural reasons not relevant to the present case, it became necessary for the Kansas court to determine whether MERS possessed an interest in the second mortgage, eventually concluding that under the specific facts of that case, MERS was more like an agent than a buyer/owner of the note.”
THE COURT CONTINUED:
“In reaching this conclusion, the Landmark court noted: Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. “The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. [Citation omitted.] Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. [Citation omitted.] The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo.App.2009).”
THE COURT CHIMED IN ON THIS LEGAL REQUIREMENT:
“This language merely stands for the proposition that one possessing the deed of trust cannot foreclose on a mortgage without (1) also possessing some interest in the promissory note, or (2) obtaining permission to act as agent of the note-holder. This has nothing whatsoever to do with possession of the “original” promissory note document, i.e., the original piece of paper with original signatures, etc., the possession of which is not required to initiate non-judicial foreclosure in California. Because Plaintiff cannot possibly establish any likelihood of success on her current claim for relief, it is not necessary to set her motion for temporary injunctive relief for hearing. Her motion is DENIED. IT IS SO ORDERED.”
There you have it friends, as we have been telling callers to our office seeking foreclosure defense, DO NOT RELY ON “PRODUCE THE NOTE” AS A SILVER BULLET FORECLOSURE DEFENSE THAT IS GOING TO STOP YOUR FORECLOSURE WITH AN INJUNCTION AND GET YOUR HOUSE FOR FREE. IF THERE ARE GLARING IRREGULARITIES, AND OTHER LEGAL GROUNDS TO GET YOU INTO COURT VALIDLY, THEN YOU MAY WANT TO TAG ON THIS CLAIM AND SEE IF YOU CAN GET A DIFFERENT OUTCOME FROM A DIFFERENT JUDGE, BUT SUFFICE IT TO SAY AS A STAND-ALONE LEGAL THEORY, THERE IS SIMPLY NOT MUCH TEETH TO THE THEORY. MOST OF THE CASES WHERE YOU HEAR OF SOME SUCCESS COME FROM FLORIDA AND OHIO AND OTHER “JUDICIAL FORECLOSURE” STATES WHERE THE LENDER IS FORCED TO FILE IN COURT TO START THE FORECLOSURE PROCESS. IN THESE CASES, THE ISSUE BECOMES A QUESTION OF “STANDING” AND “REAL PARTY IN INTEREST.” THERE IS ALSO THE BANKRUPTCY ANGLE THAT WE WILL BE EXPLORING IN GREATER DETAIL IN FUTURE POSTS.
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In a similar case, NEWBECK v. WASHINGTON MUTUAL BANK, Slip Copy, 2010 WL 291821 (N.D.Cal.), the Court essentially held the same way when a Plaintiff tried to argue “produce the original note” as a strategy to set aside a foreclosure sale that had already occurred. In this case the Court first discussed the dreaded issue of challenging a foreclosure sale that had already been finalized, and the Court’s comments shed light on how one-sided the laws are when you dare take on a “lender” in Court
“Plaintiffs ask the Court to set aside Washington Mutual’s foreclosure sale of their property. They assert that Washington Mutual did not have possession of the original mortgage note or the deed of trust under which it was secured and, as a result, it was not entitled to foreclose. A plaintiff seeking to set aside a foreclosure sale must first allege tender of the amount of the secured indebtedness. Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109, 51 Cal.Rptr.2d 286 (1996) (citing FPCI RE-HAB 01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018, 1021-22, 255 Cal.Rptr. 157 (1989)); Smith v. Wachovia, 2009 WL 1948829, at *3 (N.D.Cal.). Without pleading tender or the ability to offer tender, a plaintiff cannot state a cause of action to set aside a foreclosure sale. Karlsen v. Am. Savings & Loan Ass’n, 15 Cal.App.3d 112, 117, 92 Cal.Rptr. 851 (1971) (citing Copsey v. Sacramento Bank, 133 Cal. 659, 662 (1901)); Smith, 2009 WL 1948829, at * 3 (citing Karlsen ). Plaintiffs allege neither tender nor their ability to offer tender. Thus, they do not state a claim to set aside the foreclosure sale.
THIS MEANS, IF YOU ARE CHALLENGING A FORECLOSURE SALE AND SEEK TO SET IT ASIDE (ON WHATEVER PROPER GROUNDS YOU MAY HAVE) YOU NEED TO AT LEAST ALLEGE A WILLINGNESS AND ABILITY TO TENDER. IF ALL ELSE FAILS, YOU MAY WANT TO TELL THE JUDGE THAT YOU WILL TENDER THE FULL BALANCE DUE AFTER YOU COLLECT ON YOUR FRAUD JUDGEMENT. SOMETIMES THIS MAY BE ALL YOU HAVE WHEN YOU ARE WAY UPSIDE DOWN ON YOUR PROPERTY.
THE COURT THEN WENT ON TO DISCUSS WHAT MIGHT HAPPEN EVEN IF YOU COULD TENDER:
“Even if they alleged tender, the basis on which they appear to seek relief does not support their claim. In California, there is no requirement that a trustee produce the original promissory note prior to a non-judicial foreclosure sale. See, e.g., Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1186 (N.D.Cal.2009); Smith, 2009 WL 1948829, at *3; Neal v. Juarez,2007 WL 2140640, *8 (S.D.Cal.) (citing R.G. Hamilton Corp. v. Corum, 218 Cal. 92, 94, 97, 21 P.2d 413 (1933); Cal. Trust Co. v. Smead Inv. Co., 6 Cal.App.2d 432, 435, 44 P.2d 624 (1935)).California Civil Code Sections 2924 through 2924k “provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” Knapp v. Doherty, 123 Cal.App.4th 76, 86, 20 Cal.Rptr.3d 1 (2004) (quoting Moeller v. Lien, 25 Cal.App.4th 822, 830, 30 Cal.Rptr.2d 777 (1994)). Knapp explains the non-judicial foreclosure process as follows: Upon default by the trustor [under a deed of trust containing a power of sale], the beneficiary may declare a default and proceed with a nonjudicial foreclosure sale. The foreclosure process is commenced by the recording of a notice of default and election to sell by the trustee. After the notice of default is recorded, the trustee must wait three calendar months before proceeding with the sale. After the 3-month period has elapsed, a notice of sale must be published, posted and mailed 20 days before the sale and recorded 14 days before the sale. Knapp, 123 Cal.App.4th at 86, 20 Cal.Rptr.3d 1 (citation omitted).
I SUPPOSE YOU ARE NEVER ALLOWED TO ASK WHO THE “BENEFICIARY” IS OR MAKE ANYONE PROVE THAT POINT BEFORE THEY TAKE YOUR HOUSE. ARE YOU ALSO ALLOWED TO ASK WHO THE BENEFICIARY IS FOR PURPOSES OF COMPLIANCE WITH CALIFORNIA CIVIL CODE SECTION 2923.5 AND THE DECLARATION THAT IS MADE UNDER THIS SECTION? WE WILL DISCUSS THIS ISSUE IN ANOTHER BLOG POST.
ANYWAY, I DIGRESS, THE COURT CONTINUED:
“A properly conducted nonjudicial foreclosure sale constitutes a final 13 adjudication of the rights of the borrower and lender.” Plaintiffs have not pointed to controlling authority to show that this statutory scheme requires production of the original promissory note or deed of trust. Thus, even if they alleged tender, to the extent that they allege irregularities in the foreclosure sale based on Washington Mutual’s failure to produce the original promissory note or deed of trust, they do not state a claim.
AS DISCUSSED ABOVE, ONLY OUT OF STATE CLAIMS FOR PRODUCE THE NOTE WERE CITED (THESE COME FROM THE JUDICIAL FORECLOSURE STATES).
“Plaintiffs cite various out-of-state cases, which apply non-California law to judicial foreclosure actions. See In re Foreclosure Actions, 2007 WL 4034554 (N.D.Ohio); In re Foreclosure Cases, 2007 WL 3232430 (N.D.Ohio); Landmark Nat’l Bank v. Kessler, 289 Kan. 528, 216 P.3d 158 (2009); U.S. Bank Nat’l Ass’n v. Ibanez, 2009 WL 3297551 (Mass.Land Ct.). Because these cases do not apply California’s non-judicial foreclosure sale statutes, they do not support Plaintiffs’ position.”
SO THERE YOU HAVE IT, MORE PROOF OF THE MOUNTAIN YOU MUST CLIMB TO GET TO THE PROMISED LAND. AS WE TELL OUR CLIENTS, FORECLOSURE DEFENSE IS NOT AN EASY BUSINESS.
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KEYWORDS: CALIFORNIA FORECLOSURE DEFENSE LAWYER / PHOENIX FORECLOSURE DEFENSE LAWYER / ARIZONA LOAN MODIFICATION LAWYER / PRODUCE THE NOTE FORECLOSURE DEFENSE STRATEGY / SCOTTSDALE LOAN MODIFICATION / PHOENIX BANKRUPTCY LAWYER / PHOENIX BK ATTORNEY / NEWPORT BEACH FORECLOSURE LAWYER / INJUNCTION TO STOP FORECLOSURE / TRO / LIS PENDENS / SB1137 / FILE CHAPTER 7 BANKRUPTCY / MERS / SECURITIZED LOANS / QWR.
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AUTHORS NOTE: IF THE CALIFORNIA FORECLOSURE STATUTES GOVERN THE FORECLOSURE SALE PROCESS, AND IF NOTHING ELSE REALLY MATTERS, THEN YOU NEED TO TAKE A CLOSE LOOK AT WHETHER THAT STATUTE IS BEING COMPLIED WITH WHEN LOOKING TO OBTAIN AN INJUNCTION TO HALT FORECLOSURE.
2010 is a new year, but will the loan mod scammers go away? Consumers must remain vigilant.
AN UPDATE ON CALIFORNIA LOAN MODIFICATION SCAMS AND SB 94 – CONSUMERS MUST REMAIN ALERT AND VIGILANT
Well the last year has been pretty crazy in the loan modification business. We have seen lots of companies being shut down by the California Department of Real Estate and California State bar (ex. brokers, attorneys, “attorney-backed” and “attorney-based” law centers and fictional “law groups” etc.) who were found out as being nothing more than scams, shams, and ripoff artists.
Some of the reasons these companies were the subject of cease and desist (or desist and refrain) letters is the following:
They held themselves out as loan modification specialists and loan modification experts when in fact they had no special skill, training, experience, or track record.
They took advance fees without the proper advance fee agreement that received a letter of non-objection from the DRE.
They collected advance fees but failed to properly place funds in a Client trust account.
They failed to properly provide verified accountings as required by the California Department of Real Estate.
They failed to have all of the loan modification advertising approved by the DRE.
They took files that were in notice of default (this applies to the non-attorneys) in violation of the Foreclosure Consultant Law.
The committed other acts of outright fraud, misrepresentation, deceit and false advertising.
In the case of Loan Modification Attorneys they may have illegally partnered with non-attorneys (such as brokers and foreclosure consultants) that would not only tout the attorneys services – taking the form of an illegal runner or capper – but also illegally splitting what could be construed as a legal fee, and engaging in other shady conduct that violates an attorneys code of ethics.
In addition, Post SB94, some entities accepted an advance fee in violation of SB94 which prohibits both attorneys, brokers, and foreclosure consultants from accepting any type of advance fee for loan modification or foreclosure forbearance work.
They failed to provide refunds when their contracts stated they would, or where verbal representations of 100% money back guarantee were given.
Yes, there were a whole lot of callous and cavalier people/companies raking homeowners over the coals for their own personal gain, and without any morals or scruples. I guess you could say there were a bunch of Bernie Madoff’s in the loan modification business.
From what we could tell, the Attorney loan mod scammers often were either the “newbie” Attorneys who had no clue what was going on and didn’t care (and may have had a hard time finding legal jobs in the tough economic climate following law school) and/or 20 or 30 year attorneys who could care less whether or not the State bar stripped their license to practice law (I think some of these attorney violators were racking up so much money, and trying to ship it off-shore for their retirement purposes). In fact, we heard one Southern California Attorney, who was disbarred for his loan modification shennanigans, had over 1,700 loan files that he had charged over $6,000 a piece to help modify their loans (yes, that is about 11 million dollars). This information was relayed to our office by the Federal Trade Commission (FTC) who helped stopped the attorneys scam, and put the joker out of business.
Other attorney/brokers that we have seen have been callous and calculating, and when approached with demands for loan modification refunds, have simply said “if you sue me I will file bankruptcy…” This is the attitude of a lot of scammers.
There was one scammer that our office dealt with, Mr. Jason Adelman of Bakersfield (we believe he was runnning a Nevada Company), who agreed to settle his loan modification scam suit, but then disappeared starting up a new “Investment” company in the Bakersfield area. Our information also shows that this guy is a youth football coach and/or little league coach in the Bakersfield area. This guy failed to have an approved advance fee agreement, and failed to perform reasonable services or provide refunds upon demand.
This is just a flavor of the things we saw from the loan modification side of life in 2010. Taking this for what it is, and given the large number of complaints from California homeowners dealing with these types of heartless vultures, it is no wonder SB 94 was passed.
Now some “enterprising” lawyers (one in particular in southern california) have broken their loan modification contract into THREE PIECES (charging for each service after it is performed) in an effort to snub their noses at SB 94. This particular firm is also bringing in about 200 files per month, or so we are told. This is the nature of the loan modification beast in California, and homeowners are advised to be very suspect and wary when dealing with a loan modification company. Do not pay any advance fees for loan modification work to either an attorney, “law center,” “law group,” “Attorney-based” company, foreclosure consultant etc.
In many cases, as a homeowner, you can try to do your own loan modification. Yes, it will most likely not be an easy task as most will testify. However, you should try to contact your lender and see if they are willing to work with you, and submit your financial documentation and see if they will provide you any type of loan modification assistance. Loans are getting modified, but not always on the terms the homeowner wants. If you are lucky, and if you have a bona fide hardship, and meet the financial criteria, you may be able to save yourself some money by doing your own modification.
Our firm has offices in Newport Beach, California, and Phoenix, Ariozna. We still help select clients in Arizona who are seeking various loss mitigation solutions including loan modifications, deed-in-lieu of foreclosure, short sales, and bankruptcy – Chapter 7. As for California, we take Wachovia and World Savings Option Arm Loans on a “no-up-front-fee basis (Contingency if you will) meaning you really have nothing to lose.
The Law Offices of Steven C. Vondran, P.C. is licensed to practice law in the States of California and Arizona. Mr. Vondran is a licensed real estate broker in both states as well. Currently the firm handles Real Estate, Bankruptcy, and Foreclosure Defense work in addition to assisting real estate brokers in the area of Broker Law. He can be reached at steve@vondranlaw.com or by phone at (877) 276-5084. Emails are not confidential and create no attorney-client relationship. This is an advertisement and communication pursuant to state bar rules. We only seek to solicit and serve homeowners, real estate investors, and brokers in California and Arizona.
Commercial Loan Modifications (the next phase?). Advance Fee Agreement!
COMMERCIAL LOAN MODIFICATION ADVANCE FEE AGREEMENT FOR SALE
Okay, so SB 94 was passed preventing California DRE brokers (and Attorneys and others) from taking advance fees for loan modification and mortgage forbearance work. This has literally run many loan modification companies (both the loan mod scammers and legitimate loan modification companies) right out of business. As loan modifications can take anywhere from 3-15 months to complete, most companies cannot afford to operate financially in this type of environment.
Keep in mind, SB94 only prohibits the collection of advance fees for residential loan modifications. California licensed DRE brokers may start, or continue serving commercial clients in the area of loan modification / loan workouts / loan restructuring. I recently contacted the California Department of Real Estate (DRE) and learned they are still approving commercial loan modification advance fee agreements.
During the early days of the residential loan modification business, I did have the privilege of helping roughly 50+ companies get approved with a DRE approved advanced fee agreement (“approved” really means the advance fee agreement had received a “letter of non-objection” from the department).
During this period, I was also able to get a COMMERCIAL ADVANCE FEE AGREEMENT APPROVED, WHICH AGREEMENT RECEIVED A LETTER OF NON-OBJECTION FROM THE CALIFORNIA DEPARTMENT OF REAL ESTATE.
It is fairly common knowledge that the commercial market lags behind the residential market and will be facing their own financial issues, including the need for loan modification, loan workout, loan restructuring, and short sale work. If you have commercial real estate and commercial loan experience, you may want to investigate the commercial loan modification arena.
If you feel you are a good fit, and want to serve this segment of commercial real estate clients in financial distress, contact us to discuss our previously approved commercial loan modification agreement.
For those of you who have previously tried to draft your own residential and commercial loan modification agreements, and present it to the department for approval, you probably realize what a difficult task it can often be to get your agreement approved. If you make one tiny mistake (and their are lots of potential grounds for denial of your commercial advance fee agreement) you are basically denied and must make the edits, and re-submit the advance fee agreement, costing you lost time, and potential lost sales.
IF YOU ARE LOOKING TO GET INTO THE COMMERCIAL LOAN MODIFICATION MARKET AND SERVED FINANCIALLY STRAPPED COMMERCIAL PROPERTY OWNERS AND INVESTORS, AND YOU INTEND ON COLLECTING ADVANCE FEES FOR YOUR SERVICES, YOU WILL NEED AN ADVANCE FEE AGREEMENT THAT HAS BEEN PREVIOUSLY APPROVED BY THE DEPARTMENT OF REAL ESTATE.
DISCLAIMER / CAVEAT: Please note that although our commercial advance fee agreement has been previously approved for usage in the State of California (it received a letter of non-objection) the DRE is always permitted to impose new requirements, and/or not comply with previous approved versions of the advance fee agreement. Therefore, although our commercial loan modification agreement has been previously approved, the DRE has the inherent power and authority to require new or updated criteria, and re-submission of our commercial advance fee agreement may be required. We have had this happen in the past.
The Law Offices of Steven C. Vondran, P.C. is licensed to practice law in the States of California and Arizona. Mr. Vondran is a licensed real estate broker in both states as well. Currently the firm handles Real Estate, Bankruptcy, and Foreclosure Defense work in addition to assisting real estate brokers in the area of Broker Law. He can be reached at steve@vondranlaw.com or by phone at (877) 276-5084. Emails are not confidential and create no attorney-client relationship. This is an advertisement and communication pursuant to state bar rules. We only seek to solicit and serve homeowners, real estate investors, and brokers in California and Arizona.
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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