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TITLE 14. LIEN
CHAPTER 2. MORTGAGE
Article 1. Mortgages in General
California Civil Code Section 2920-2944.5
2920. (a) A mortgage is a contract by which specific property,
including an estate for years in real property, is hypothecated for
the performance of an act, without the necessity of a change of
possession.
(b) For purposes of Sections 2924 to 2924h, inclusive, "mortgage"
also means any security device or instrument, other than a deed of
trust, that confers a power of sale affecting real property or an
estate for years therein, to be exercised after breach of the
obligation so secured, including a real property sales contract, as
defined in Section 2985, which contains such a provision.
2921. A mortgage may be created upon property held adversely to the
mortgagor.
2922. A mortgage can be created, renewed, or extended, only by
writing, executed with the formalities required in the case of a
grant of real property.
2923. The lien of a mortgage is special, unless otherwise expressly
agreed, and is independent of possession.
2924. Every transfer of an interest in property, other than in
trust, made only as a security for the performance of another act, is
to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until (a) the trustee,
mortgagee, or beneficiary, or any of their authorized agents shall
first file for record, in the office of the recorder of each county
wherein the mortgaged or trust property or some part or parcel
thereof is situated, a notice of default, identifying the mortgage or
deed of trust by stating the name or names of the trustor or
trustors and giving the book and page, or instrument number, if
applicable, where the same is recorded or a description of the
mortgaged or trust property and containing a statement that a breach
of the obligation for which the mortgage or transfer in trust is
security has occurred, and setting forth the nature of each breach
actually known to the beneficiary and of his or her election to sell
or cause to be sold the property to satisfy that obligation and any
other obligation secured by the deed of trust or mortgage that is in
default, and where the default is curable pursuant to Section 2924c,
containing the statement specified in paragraph (1) of subdivision
(b) of Section 2924c; (b) not less than three months shall thereafter
elapse; and (c) after the lapse of the three months the mortgagee,
trustee or other person authorized to take the sale shall give notice
of sale, stating the time and place thereof, in the manner and for a
time not less than that set forth in Section 2924f. In performing
acts required by this article, the trustee shall incur no liability
for any good faith error resulting from reliance on information
provided in good faith by the beneficiary regarding the nature and
the amount of the default under the secured obligation, deed of
trust, or mortgage. In performing the acts required by this
article, a trustee shall not be subject to Title 1.6c (commencing
with Section 1788) of Part 4. A recital in the deed executed
pursuant to the power of sale of compliance with all requirements of
law regarding the mailing of copies of notices or the publication of
a copy of the notice of default or the personal delivery of the copy
of the notice of default or the posting of copies of the notice of
sale or the publication of a copy thereof shall constitute prima
facie evidence of compliance with these requirements and conclusive
evidence thereof in favor of bona fide purchasers and encumbrancers
for value and without notice. The mailing, publication, and delivery
of notices as required herein, and the performance of the procedures
set forth in this article, shall constitute privileged
communications within Section 47. There is a rebuttable presumption
that the beneficiary actually knew of all unpaid loan payments on the
obligation owed to the beneficiary and secured by the deed of trust
or mortgage subject to the notice of default. However, the failure
to include an actually known default shall not invalidate the notice
of sale and the beneficiary shall not be precluded from asserting a
claim to this omitted default or defaults in a separate notice of
default.
2924.3. (a) Except as provided in subdivisions (b) and (c), a
person who has undertaken as an agent of a mortgagee, beneficiary, or
owner of a promissory note secured directly or collaterally by a
mortgage or deed of trust on real property or an estate for years
therein, to make collections of payments from an obligor under the
note, shall mail the following notices, postage prepaid, to each
mortgagee, beneficiary or owner for whom the agent has agreed to make
collections from the obligor under the note:
(1) A copy of the notice of default filed in the office of the
county recorder pursuant to Section 2924 on account of a breach of
obligation under the promissory note on which the agent has agreed to
make collections of payments, within 15 days after recordation.
(2) Notice that a notice of default has been recorded pursuant to
Section 2924 on account of a breach of an obligation secured by a
mortgage or deed of trust against the same property or estate for
years therein having priority over the mortgage or deed of trust
securing the obligation described in paragraph (1), within 15 days
after recordation or within three business days after the agent
receives the information, whichever is later.
(3) Notice of the time and place scheduled for the sale of the
real property or estate for years therein pursuant to Section 2924f
under a power of sale in a mortgage or deed of trust securing an
obligation described in paragraphs (1) or (2), not less than 15 days
before the scheduled date of the sale or not later than the next
business day after the agent receives the information, whichever is
later.
(b) An agent who has undertaken to make collections on behalf of
mortgagees, beneficiaries or owners of promissory notes secured by
mortgages or deeds of trust on real property or an estate for years
therein shall not be required to comply with the provisions of
subdivision (a) with respect to a mortgagee, beneficiary or owner who
is entitled to receive notice pursuant to subdivision (c) of Section
2924b or for whom a request for notice has been recorded pursuant to
subdivision (b) of Section 2924b if the agent reasonably believes
that the address of the mortgagee, beneficiary, or owner described in
Section 2924b is the current business or residence address of that
person.
(c) An agent who has undertaken to make collections on behalf of
mortgagees, beneficiaries or owners of promissory notes secured by
mortgages or deeds of trust on real property or an estate for years
therein shall not be required to comply with the provisions of
paragraph (1) or (2) of subdivision (a) if the agent knows or
reasonably believes that the default has already been cured by or on
behalf of the obligor.
(d) Any failure to comply with the provisions of this section
shall not affect the validity of a sale in favor of a bona fide
purchaser or the rights of an encumbrancer for value and without
notice.
2924.5. No clause in any deed of trust or mortgage on property
containing four or fewer residential units or on which four or fewer
residential units are to be constructed or in any obligation secured
by any deed of trust or mortgage on property containing four or fewer
residential units or on which four or fewer residential units are to
be constructed that provides for the acceleration of the due date of
the obligation upon the sale, conveyance, alienation, lease,
succession, assignment or other transfer of the property subject to
the deed of trust or mortgage shall be valid unless the clause is set
forth, in its entirety in both the body of the deed of trust or
mortgage and the promissory note or other document evidencing the
secured obligation. This section shall apply to all such deeds of
trust, mortgages, and obligations secured thereby executed on or
after July 1, 1972.
2924.6. (a) An obligee may not accelerate the maturity date of the
principal and accrued interest on any loan secured by a mortgage or
deed of trust on residential real property solely by reason of any
one or more of the following transfers in the title to the real
property:
(1) A transfer resulting from the death of an obligor where the
transfer is to the spouse who is also an obligor.
(2) A transfer by an obligor where the spouse becomes a coowner of
the property.
(3) A transfer resulting from a decree of dissolution of the
marriage or legal separation or from a property settlement agreement
incidental to such a decree which requires the obligor to continue to
make the loan payments by which a spouse who is an obligor becomes
the sole owner of the property.
(4) A transfer by an obligor or obligors into an inter vivos trust
in which the obligor or obligors are beneficiaries.
(5) Such real property or any portion thereof is made subject to a
junior encumbrance or lien.
(b) Any waiver of the provisions of this section by an obligor is
void and unenforceable and is contrary to public policy.
(c) For the purposes of this section, "residential real property"
means any real property which contains at least one but not more than
four housing units.
(d) This act applies only to loans executed or refinanced on or
after January 1, 1976.
2924.7. (a) The provisions of any deed of trust or mortgage on real
property which authorize any beneficiary, trustee, mortgagee, or his
or her agent or successor in interest, to accelerate the maturity
date of the principal and interest on any loan secured thereby or to
exercise any power of sale or other remedy contained therein upon the
failure of the trustor or mortgagor to pay, at the times provided
for under the terms of the deed of trust or mortgage, any taxes,
rents, assessments, or insurance premiums with respect to the
property or the loan, or any advances made by the beneficiary,
mortgagee, or his or her agent or successor in interest shall be
enforceable whether or not impairment of the security interest in the
property has resulted from the failure of the trustor or mortgagor
to pay the taxes, rents, assessments, insurance premiums, or
advances.
(b) The provisions of any deed of trust or mortgage on real
property which authorize any beneficiary, trustee, mortgagee, or his
or her agent or successor in interest, to receive and control the
disbursement of the proceeds of any policy of fire, flood, or other
hazard insurance respecting the property shall be enforceable whether
or not impairment of the security interest in the property has
resulted from the event that caused the proceeds of the insurance
policy to become payable.
2924a. Where by the terms of any trust or deed of trust a power of
sale is conferred upon the trustee, the attorney for such trustee may
conduct the sale and act in such sale as the auctioneer for the
trustee.
2924b. (a) Any person desiring a copy of any notice of default and
of any notice of sale under any deed of trust or mortgage with power
of sale upon real property or an estate for years therein, as to
which deed of trust or mortgage the power of sale cannot be exercised
until these notices are given for the time and in the manner
provided in Section 2924 may, at any time subsequent to recordation
of the deed of trust or mortgage and prior to recordation of notice
of default thereunder, cause to be filed for record in the office of
the recorder of any county in which any part or parcel of the real
property is situated, a duly acknowledged request for a copy of the
notice of default and of sale. This request shall be signed and
acknowledged by the person making the request, specifying the name
and address of the person to whom the notice is to be mailed, shall
identify the deed of trust or mortgage by stating the names of the
parties thereto, the date of recordation thereof, and the book and
page where the deed of trust or mortgage is recorded or the recorder'
s number, and shall be in substantially the following form:
"In accordance with Section 2924b, Civil Code, request is
hereby
made that a copy of any notice of default and a copy of any
notice
of sale under the deed of trust (or mortgage) recorded ____,
19__,
in Book ____ page ____ records of ____ County, (or filed for
record
with recorder's serial number ______, ______ County) California,
executed by ____ as trustor (or mortgagor) in which ____, is
named
as beneficiary (or mortgagee) and ____ as trustee be mailed to
______________________________ at
_______________________________.
Name Address
NOTICE: A copy of any notice of default and of any notice of
sale
will be sent only to the address contained in this recorded
request.
If your address changes, a new request must be recorded.
Signature
________________________"
Upon the filing for record of the request, the recorder shall
index in the general index of grantors the names of the trustors (or
mortgagor) recited therein and the names of persons requesting
copies.
(b) The mortgagee, trustee, or other person authorized to record
the notice of default shall do each of the following:
(1) Within 10 business days following recordation of the notice of
default, deposit or cause to be deposited in the United States mail
an envelope, sent by registered or certified mail with postage
prepaid, containing a copy of the notice with the recording date
shown thereon, addressed to each person whose name and address are
set forth in a duly recorded request therefor, directed to the
address designated in the request and to each trustor or mortgagor at
his or her last known address if different than the address
specified in the deed of trust or mortgage with power of sale.
(2) At least 20 days before the date of sale, deposit or cause to
be deposited in the United States mail an envelope, sent by
registered or certified mail with postage prepaid, containing a copy
of the notice of the time and place of sale, addressed to each person
whose name and address are set forth in a duly recorded request
therefor, directed to the address designated in the request and to
each trustor or mortgagor at his or her last known address if
different than the address specified in the deed of trust or mortgage
with power of sale.
(3) As used in paragraphs (1) and (2), the "last known address" of
each trustor or mortgagor means the last business or residence
address actually known by the mortgagee, beneficiary, trustee, or
other person authorized to record the notice of default. The
beneficiary shall inform the trustee of the trustor's last address
actually known by the beneficiary. However, the trustee shall incur
no liability for failing to send any notice to the last address
unless the trustee has actual knowledge of it.
(c) The mortgagee, trustee, or other person authorized to record
the notice of default shall do the following:
(1) Within one month following recordation of the notice of
default, deposit or cause to be deposited in the United States mail
an envelope, sent by registered or certified mail with postage
prepaid, containing a copy of the notice with the recording date
shown thereon, addressed to each person set forth in paragraph (2),
provided that the estate or interest of any person entitled to
receive notice under this subdivision is acquired by an instrument
sufficient to impart constructive notice of the estate or interest in
the land or portion thereof which is subject to the deed of trust or
mortgage being foreclosed, and provided the instrument is recorded
in the office of the county recorder so as to impart that
constructive notice prior to the recording date of the notice of
default and provided the instrument as so recorded sets forth a
mailing address which the county recorder shall use, as instructed
within the instrument, for the return of the instrument after
recording, and which address shall be the address used for the
purposes of mailing notices herein.
(2) The persons to whom notice shall be mailed under this
subdivision are:
(A) The successor in interest, as of the recording date of the
notice of default, of the estate or interest or any portion thereof
of the trustor or mortgagor of the deed of trust or mortgage being
foreclosed.
(B) The beneficiary or mortgagee of any deed of trust or mortgage
recorded subsequent to the deed of trust or mortgage being
foreclosed, or recorded prior to or concurrently with the deed of
trust or mortgage being foreclosed but subject to a recorded
agreement or a recorded statement of subordination to the deed of
trust or mortgage being foreclosed.
(C) The assignee of any interest of the beneficiary or mortgagee
described in subparagraph (B), as of the recording date of the notice
of default.
(D) The vendee of any contract of sale, or the lessee of any
lease, of the estate or interest being foreclosed which is recorded
subsequent to the deed of trust or mortgage being foreclosed, or
recorded prior to or concurrently with the deed of trust or mortgage
being foreclosed but subject to a recorded agreement or statement of
subordination to the deed of trust or mortgage being foreclosed.
(E) The successor in interest to the vendee or lessee described in
subparagraph (D), as of the recording date of the notice of default.
(F) The Office of the Controller, Sacramento, California, where,
as of the recording date of the notice of default, a "Notice of Lien
for Postponed Property Taxes" has been recorded against the real
property to which the notice of default applies.
(3) At least 20 days before the date of sale, deposit or cause to
be deposited in the United States mail, an envelope, sent by
registered or certified mail with postage prepaid, containing a copy
of the notice of the time and place of sale addressed to each person
to whom a copy of the notice of default is to be mailed as provided
in paragraphs (1) and (2), and addressed to the office of any state
taxing agency, Sacramento, California, which has recorded a notice of
tax lien prior to the recording date of the notice of default
against the real property to which the notice of default applies.
(4) The mailing of notices in the manner set forth in paragraph
(1) shall not impose upon any licensed attorney, agent, or employee
of any person entitled to receive notices as herein set forth any
duty to communicate the notice to the entitled person from the fact
that the mailing address used by the county recorder is the address
of the attorney, agent, or employee.
(d) Any deed of trust or mortgage with power of sale hereafter
executed upon real property or an estate for years therein may
contain a request that a copy of any notice of default and a copy of
any notice of sale thereunder shall be mailed to any person or party
thereto at the address of the person given therein, and a copy of any
notice of default and of any notice of sale shall be mailed to each
of these at the same time and in the same manner required as though a
separate request therefor had been filed by each of these persons as
herein authorized. If any deed of trust or mortgage with power of
sale executed after September 19, 1939, except a deed of trust or
mortgage of any of the classes excepted from the provisions of
Section 2924, does not contain a request of the trustor or mortgagor
for special notice at the address of the person given therein or does
contain such a request but no address of the person is given therein
and if no request for special notice by the trustor or mortgagor in
substantially the form set forth in this section has subsequently
been recorded, a copy of the notice of default shall be published
once a week for at least four weeks in a newspaper of general
circulation in the county in which the property is situated, the
publication to commence within 10 business days after the filing of
the notice of default. In lieu of publication, a copy of the notice
of default may be delivered personally to the trustor or mortgagor
within the 10 business days or at any time before publication is
completed, or by posting the notice of default in a conspicuous place
on the property and mailing the notice to the last known address of
the trustor.
(e) Any person required to mail a copy of a notice of default or
notice of sale to each trustor or mortgagor pursuant to subdivision
(b) or (c) by registered or certified mail shall simultaneously cause
to be deposited in the United States mail, with postage prepaid and
mailed by first-class mail, an envelope containing an additional copy
of the required notice addressed to each trustor or mortgagor at the
same address to which the notice is sent by registered or certified
mail pursuant to subdivision (b) or (c). The person shall execute
and retain an affidavit identifying the notice mailed, showing the
name and residence or business address of that person, that he or she
is over the age of 18 years, the date of deposit in the mail, the
name and address of the trustor or mortgagor to whom sent, and that
the envelope was sealed and deposited in the mail with postage fully
prepaid. In the absence of fraud, the affidavit required by this
subdivision shall establish a conclusive presumption of mailing.
(f) No request for a copy of any notice filed for record pursuant
to this section, no statement or allegation in the request, and no
record thereof shall affect the title to real property or be deemed
notice to any person that any person requesting copies of notice has
or claims any right, title, or interest in, or lien or charge upon
the property described in the deed of trust or mortgage referred to
therein.
(g) "Business day," as used in this section, has the meaning
specified in Section 9.
2924c. (a) (1) Whenever all or a portion of the principal sum of
any obligation secured by deed of trust or mortgage on real property
or an estate for years therein hereafter executed has, prior to the
maturity date fixed in that obligation, become due or been declared
due by reason of default in payment of interest or of any installment
of principal, or by reason of failure of trustor or mortgagor to
pay, in accordance with the terms of that obligation or of the deed
of trust or mortgage, taxes, assessments, premiums for insurance, or
advances made by beneficiary or mortgagee in accordance with the
terms of that obligation or of the deed of trust or mortgage, the
trustor or mortgagor or his or her successor in interest in the
mortgaged or trust property or any part thereof, or any beneficiary
under a subordinate deed of trust or any other person having a
subordinate lien or encumbrance of record thereon, at any time within
the period specified in subdivision (e), if the power of sale
therein is to be exercised, or, otherwise at any time prior to entry
of the decree of foreclosure, may pay to the beneficiary or the
mortgagee or their successors in interest, respectively, the entire
amount due, at the time payment is tendered, with respect to (A) all
amounts of principal, interest, taxes, assessments, insurance
premiums, or advances actually known by the beneficiary to be, and
that are, in default and shown in the notice of default, under the
terms of the deed of trust or mortgage and the obligation secured
thereby, (B) all amounts in default on recurring obligations not
shown in the notice of default, and (C) all reasonable costs and
expenses, subject to subdivision (c), which are actually incurred in
enforcing the terms of the obligation, deed of trust, or mortgage,
and trustee's or attorney's fees, subject to subdivision (d), other
than the portion of principal as would not then be due had no default
occurred, and thereby cure the default theretofore existing, and
thereupon, all proceedings theretofore had or instituted shall be
dismissed or discontinued and the obligation and deed of trust or
mortgage shall be reinstated and shall be and remain in force and
effect, the same as if the acceleration had not occurred. This
section does not apply to bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations or made by a public utility subject to the Public
Utilities Code. For the purposes of this subdivision, the term
"recurring obligation" means all amounts of principal and interest on
the loan, or rents, subject to the deed of trust or mortgage in
default due after the notice of default is recorded; all amounts of
principal and interest or rents advanced on senior liens or
leaseholds which are advanced after the recordation of the notice of
default; and payments of taxes, assessments, and hazard insurance
advanced after recordation of the notice of default. Where the
beneficiary or mortgagee has made no advances on defaults which would
constitute recurring obligations, the beneficiary or mortgagee may
require the trustor or mortgagor to provide reliable written evidence
that the amounts have been paid prior to reinstatement.
(2) If the trustor, mortgagor, or other person authorized to cure
the default pursuant to this subdivision does cure the default, the
beneficiary or mortgagee or the agent for the beneficiary or
mortgagee shall, within 21 days following the reinstatement, execute
and deliver to the trustee a notice of rescission which rescinds the
declaration of default and demand for sale and advises the trustee of
the date of reinstatement. The trustee shall cause the notice of
rescission to be recorded within 30 days of receipt of the notice of
rescission and of all allowable fees and costs.
No charge, except for the recording fee, shall be made against the
trustor or mortgagor for the execution and recordation of the notice
which rescinds the declaration of default and demand for sale.
(b) (1) The notice, of any default described in this section,
recorded pursuant to Section 2924, and mailed to any person pursuant
to Section 2924b, shall begin with the following statement, printed
or typed thereon:
"IMPORTANT NOTICE (14-point boldface type if printed or in
capital letters if typed)
IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT ACTION, (14-point boldface
type if printed or in capital letters if typed) and you may have the
legal right to bring your account in good standing by paying all of
your past due payments plus permitted costs and expenses within the
time permitted by law for reinstatement of your account, which is
normally five business days prior to the date set for the sale of
your property. No sale date may be set until three months from the
date this notice of default may be recorded (which date of
recordation appears on this notice).
This amount is ___________________ as of ______________________
(Date)
and will increase until your account becomes current.
While your property is in foreclosure, you still must pay other
obligations (such as insurance and taxes) required by your note and
deed of trust or mortgage. If you fail to make future payments on
the loan, pay taxes on the property, provide insurance on the
property, or pay other obligations as required in the note and deed
of trust or mortgage, the beneficiary or mortgagee may insist that
you do so in order to reinstate your account in good standing. In
addition, the beneficiary or mortgagee may require as a condition to
reinstatement that you provide reliable written evidence that you
paid all senior liens, property taxes, and hazard insurance premiums.
Upon your written request, the beneficiary or mortgagee will give
you a written itemization of the entire amount you must pay. You may
not have to pay the entire unpaid portion of your account, even
though full payment was demanded, but you must pay all amounts in
default at the time payment is made. However, you and your
beneficiary or mortgagee may mutually agree in writing prior to the
time the notice of sale is posted (which may not be earlier than the
end of the three-month period stated above) to, among other things,
(1) provide additional time in which to cure the default by transfer
of the property or otherwise; or (2) establish a schedule of payments
in order to cure your default; or both (1) and (2).
Following the expiration of the time period referred to in the
first paragraph of this notice, unless the obligation being
foreclosed upon or a separate written agreement between you and your
creditor permits a longer period, you have only the legal right to
stop the sale of your property by paying the entire amount demanded
by your creditor.
To find out the amount you must pay, or to arrange for payment to
stop the foreclosure, or if your property is in foreclosure for any
other reason, contact:
______________________________________
(Name of beneficiary or mortgagee)
______________________________________
(Mailing address)
______________________________________
(Telephone)
If you have any questions, you should contact a lawyer or the
governmental agency which may have insured your loan.
Notwithstanding the fact that your property is in foreclosure, you
may offer your property for sale, provided the sale is concluded
prior to the conclusion of the foreclosure.
Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT
ACTION. (14-point boldface type if printed or in capital letters if
typed)"
Unless otherwise specified, the notice, if printed, shall appear
in at least 12-point boldface type.
If the obligation secured by the deed of trust or mortgage is a
contract or agreement described in paragraph (1) or (4) of
subdivision (a) of Section 1632, the notice required herein shall be
in Spanish if the trustor requested a Spanish language translation of
the contract or agreement pursuant to Section 1632. If the
obligation secured by the deed of trust or mortgage is contained in a
home improvement contract, as defined in Sections 7151.2 and 7159 of
the Business and Professions Code, which is subject to Title 2
(commencing with Section 1801), the seller shall specify on the
contract whether or not the contract was principally negotiated in
Spanish and if the contract was principally negotiated in Spanish,
the notice required herein shall be in Spanish. No assignee of the
contract or person authorized to record the notice of default shall
incur any obligation or liability for failing to mail a notice in
Spanish unless Spanish is specified in the contract or the assignee
or person has actual knowledge that the secured obligation was
principally negotiated in Spanish. Unless specified in writing to
the contrary, a copy of the notice required by subdivision (c) of
Section 2924b shall be in English.
(2) Any failure to comply with the provisions of this subdivision
shall not affect the validity of a sale in favor of a bona fide
purchaser or the rights of an encumbrancer for value and without
notice.
(c) Costs and expenses which may be charged pursuant to Sections
2924 to 2924i, inclusive, shall be limited to the costs incurred for
recording, mailing, including certified and express mail charges,
publishing, and posting notices required by Sections 2924 to 2924i,
inclusive, postponement pursuant to Section 2924g not to exceed fifty
dollars ($50) per postponement and a fee for a trustee's sale
guarantee or, in the event of judicial foreclosure, a litigation
guarantee. For purposes of this subdivision, a trustee or
beneficiary may purchase a trustee's sale guarantee at a rate meeting
the standards contained in Sections 12401.1 and 12401.3 of the
Insurance Code.
(d) Trustee's or attorney's fees which may be charged pursuant to
subdivision (a), or until the notice of sale is deposited in the mail
to the trustor as provided in Section 2924b, if the sale is by power
of sale contained in the deed of trust or mortgage, or, otherwise at
any time prior to the decree of foreclosure, are hereby authorized
to be in an amount which does not exceed two hundred forty dollars
($240) with respect to any portion of the unpaid principal sum
secured which is fifty thousand dollars ($50,000) or less, plus
one-half of 1 percent of the unpaid principal sum secured exceeding
fifty thousand dollars ($50,000) up to and including one hundred
fifty thousand dollars ($150,000), plus one-quarter of 1 percent of
any portion of the unpaid principal sum secured exceeding one hundred
fifty thousand dollars ($150,000) up to and including five hundred
thousand dollars ($500,000), plus one-eighth of 1 percent of any
portion of the unpaid principal sum secured exceeding five hundred
thousand dollars ($500,000). Any charge for trustee's or attorney's
fees authorized by this subdivision shall be conclusively presumed to
be lawful and valid where the charge does not exceed the amounts
authorized herein. For purposes of this subdivision, the unpaid
principal sum secured shall be determined as of the date the notice
of default is recorded.
(e) Reinstatement of a monetary default under the terms of an
obligation secured by a deed of trust, or mortgage may be made at any
time within the period commencing with the date of recordation of
the notice of default until five business days prior to the date of
sale set forth in the initial recorded notice of sale.
In the event the sale does not take place on the date set forth in
the initial recorded notice of sale or a subsequent recorded notice
of sale is required to be given, the right of reinstatement shall be
revived as of the date of recordation of the subsequent notice of
sale, and shall continue from that date until five business days
prior to the date of sale set forth in the subsequently recorded
notice of sale.
In the event the date of sale is postponed on the date of sale set
forth in either an initial or any subsequent notice of sale, or is
postponed on the date declared for sale at an immediately preceding
postponement of sale, and, the postponement is for a period which
exceeds five business days from the date set forth in the notice of
sale, or declared at the time of postponement, then the right of
reinstatement is revived as of the date of postponement and shall
continue from that date until five business days prior to the date of
sale declared at the time of the postponement.
Nothing contained herein shall give rise to a right of
reinstatement during the period of five business days prior to the
date of sale, whether the date of sale is noticed in a notice of sale
or declared at a postponement of sale.
Pursuant to the terms of this subdivision, no beneficiary,
trustee, mortgagee, or their agents or successors shall be liable in
any manner to a trustor, mortgagor, their agents or successors or any
beneficiary under a subordinate deed of trust or mortgage or any
other person having a subordinate lien or encumbrance of record
thereon for the failure to allow a reinstatement of the obligation
secured by a deed of trust or mortgage during the period of five
business days prior to the sale of the security property, and no such
right of reinstatement during this period is created by this
section. Any right of reinstatement created by this section is
terminated five business days prior to the date of sale set forth in
the initial date of sale, and is revived only as prescribed herein
and only as of the date set forth herein.
As used in this subdivision, the term "business day" has the same
meaning as specified in Section 9.
2924d. (a) Commencing with the date that the notice of sale is
deposited in the mail, as provided in Section 2924b, and until the
property is sold pursuant to the power of sale contained in the
mortgage or deed of trust, a beneficiary, trustee, mortgagee, or his
or her agent or successor in interest, may demand and receive from a
trustor, mortgagor, or his or her agent or successor in interest, or
any beneficiary under a subordinate deed of trust, or any other
person having a subordinate lien or encumbrance of record those
reasonable costs and expenses, to the extent allowed by subdivision
(c) of Section 2924c, which are actually incurred in enforcing the
terms of the obligation and trustee's or attorney's fees which are
hereby authorized to be in an amount which does not exceed three
hundred fifty dollars ($350) with respect to any portion of the
unpaid principal sum secured which is fifty thousand dollars
($50,000) or less, plus 1 percent of any portion of the unpaid
principal sum secured exceeding fifty thousand dollars ($50,000) up
to and including one hundred fifty thousand dollars ($150,000), plus
one-half of 1 percent of any portion of the unpaid principal sum
secured exceeding one hundred fifty thousand dollars ($150,000) up to
and including five hundred thousand dollars ($500,000), plus
one-quarter of 1 percent of any portion of the unpaid principal sum
secured exceeding five hundred thousand dollars ($500,000). For
purposes of this subdivision, the unpaid principal sum secured shall
be determined as of the date the notice of default is recorded. Any
charge for trustee's or attorney's fees authorized by this
subdivision shall be conclusively presumed to be lawful and valid
where that charge does not exceed the amounts authorized herein. Any
charge for trustee's or attorney's fees made pursuant to this
subdivision shall be in lieu of and not in addition to those charges
authorized by subdivision (d) of Section 2924c.
(b) Upon the sale of property pursuant to a power of sale, a
trustee, or his or her agent or successor in interest, may demand and
receive from a beneficiary, or his or her agent or successor in
interest, or may deduct from the proceeds of the sale, those
reasonable costs and expenses, to the extent allowed by subdivision
(c) of Section 2924c, which are actually incurred in enforcing the
terms of the obligation and trustee's or attorney's fees which are
hereby authorized to be in an amount which does not exceed three
hundred fifty dollars ($350) or one percent of the unpaid principal
sum secured, whichever is greater. For purposes of this subdivision,
the unpaid principal sum secured shall be determined as of the date
the notice of default is recorded. Any charge for trustee's or
attorney's fees authorized by this subdivision shall be conclusively
presumed to be lawful and valid where that charge does not exceed the
amount authorized herein. Any charges for trustee's or attorney's
fees made pursuant to this subdivision shall be in lieu of and not in
addition to those charges authorized by subdivision (a) of this
section and subdivision (d) of Section 2924c.
(c) (1) No person shall pay or offer to pay or collect any rebate
or kickback for the referral of business involving the performance of
any act required by this article.
(2) Any person who violates this subdivision shall be liable to
the trustor for three times the amount of any rebate or kickback,
plus reasonable attorney's fees and costs, in addition to any other
remedies provided by law.
(3) No violation of this subdivision shall affect the validity of
a sale in favor of a bona fide purchaser or the rights of an
encumbrancer for value without notice.
(d) It shall not be unlawful for a trustee to pay or offer to pay
a fee to an agent or subagent of the trustee for work performed by
the agent or subagent in discharging the trustee's obligations under
the terms of the deed of trust. Any payment of a fee by a trustee to
an agent or subagent of the trustee for work performed by the agent
or subagent in discharging the trustee's obligations under the terms
of the deed of trust shall be conclusively presumed to be lawful and
valid if the fee, when combined with other fees of the trustee, does
not exceed in the aggregate the trustee's fee authorized by
subdivision (d) of Section 2924c or subdivision (a) or (b) of this
section.
(e) When a court issues a decree of foreclosure, it shall have
discretion to award attorney's fees, costs, and expenses as are
reasonable, if provided for in the note, deed of trust, or mortgage,
pursuant to Section 580c of the Code of Civil Procedure.
2924e. (a) The beneficiary or mortgagee of any deed of trust or
mortgage on real property either containing one to four residential
units or given to secure an original obligation not to exceed three
hundred thousand dollars ($300,000) may, with the written consent of
the trustor or mortgagor that is either effected through a signed and
dated agreement which shall be separate from other loan and security
documents or disclosed to the trustor or mortgagor in at least
10-point type, submit a written request by certified mail to the
beneficiary or mortgagee of any lien which is senior to the lien of
the requester, for written notice of any or all delinquencies of four
months or more, in payments of principal or interest on any
obligation secured by that senior lien notwithstanding that the loan
secured by the lien of the requester is not then in default as to
payments of principal or interest.
The request shall be sent to the beneficiary or mortgagee, or
agent which it might designate for the purpose of receiving loan
payments, at the address specified for the receipt of these payments,
if known, or, if not known, at the address shown on the recorded
deed of trust or mortgage.
(b) The request for notice shall identify the ownership or
security interest of the requester, the date on which the interest of
the requester will terminate as evidenced by the maturity date of
the note of the trustor or mortgagor in favor of the requester, the
name of the trustor or mortgagor and the name of the current owner of
the security property if different from the trustor or mortgagor,
the street address or other description of the security property, the
loan number (if available to the requester) of the loan secured by
the senior lien, the name and address to which notice is to be sent,
and shall include or be accompanied by the signed written consent of
the trustor or mortgagor, and a fee of forty dollars ($40). For
obligations secured by residential properties, the request shall
remain valid until withdrawn in writing and shall be applicable to
all delinquencies as provided in this section, which occur prior to
the date on which the interest of the requester will terminate as
specified in the request or the expiration date, as appropriate. For
obligations secured by nonresidential properties, the request shall
remain valid until withdrawn in writing and shall be applicable to
all delinquencies as provided in this section, which occur prior to
the date on which the interest of the requester will terminate as
specified in the request or the expiration date, as appropriate. The
beneficiary or mortgagee of obligations secured by nonresidential
properties that have sent five or more notices prior to the
expiration of the effective period of the request may charge a fee up
to fifteen dollars ($15) for each subsequent notice. A request for
notice shall be effective for five years from the mailing of the
request or the recording of that request, whichever occurs later, and
may be renewed within six months prior to its expiration date by
sending the beneficiary or mortgagee, or agent, as the case may be,
at the address to which original requests for notice are to be sent,
a copy of the earlier request for notice together with a signed
statement that the request is renewed and a renewal fee of fifteen
dollars ($15). Upon timely submittal of a renewal request for
notice, the effectiveness of the original request is continued for
five years from the time when it would otherwise have lapsed.
Succeeding renewal requests may be submitted in the same manner. The
request for notice and renewals thereof shall be recorded in the
office of the county recorder of the county in which the security
real property is situated. The rights and obligations specified in
this section shall inure to the benefit of, or pass to, as the case
may be, successors in interest of parties specified in this section.
Any successor in interest of a party entitled to notice under this
section shall file a request for that notice with any beneficiary or
mortgagee of the senior lien and shall pay a processing fee of
fifteen dollars ($15). No new written consent shall be required from
the trustor or mortgagor.
(c) Unless the delinquency has been cured, within 15 days
following the end of four months from any delinquency in payments of
principal or interest on any obligation secured by the senior lien
which delinquency exists or occurs on or after 10 days from the
mailing of the request for notice or the recording of that request,
whichever occurs later, the beneficiary or mortgagee shall give
written notice to the requester of the fact of any delinquency and
the amount thereof.
The notice shall be given by personal service, or by deposit in
the mail, first-class postage paid. Following the recording of any
notice of default pursuant to Section 2924 with respect to the same
delinquency, no notice or further notice shall be required pursuant
to this section.
(d) If the beneficiary or mortgagee of any such senior lien fails
to give notice to the requester as required in subdivision (c), and a
subsequent foreclosure or trustee's sale of the security property
occurs, the beneficiary or mortgagee shall be liable to the requester
for any monetary damage due to the failure to provide notice within
the time period specified in subdivision (c) which the requester has
sustained from the date on which notice should have been given to the
earlier of the date on which the notice is given or the date of the
recording of the notice of default under Section 2924, and shall also
forfeit to the requester the sum of three hundred dollars ($300). A
showing by the beneficiary or mortgagee by a preponderance of the
evidence that the failure to provide timely notice as required by
subdivision (c) resulted from a bona fide error notwithstanding the
maintenance of procedures reasonably adapted to avoid any such error
shall be a defense to any liability for that failure.
(e) If any beneficiary or mortgagee, or agent which it had
designated for the purpose of receiving loan payments, has been
succeeded in interest by any other person, any request for notice
received pursuant to this section shall be transmitted promptly to
that person.
(f) Any failure to comply with the provisions of this section
shall not affect the validity of a sale in favor of a bona fide
purchaser or the rights of an encumbrancer for value and without
notice.
(g) Upon satisfaction of an obligation secured by a junior lien
with respect to which a notice request was made pursuant to this
section, the beneficiary or mortgagee that made the request shall
communicate that fact in writing to the senior lienholder to whom the
request was made. The communication shall specify that provision of
notice pursuant to the prior request under this section is no longer
required.
2924f. (a) As used in this section and Sections 2924g and 2924h,
"property" means real property or a leasehold estate therein, and
"calendar week" means Monday through Saturday, inclusive.
(b) (1) Except as provided in subdivision (c), before any sale of
property can be made under the power of sale contained in any deed of
trust or mortgage, or any resale resulting from a rescission for a
failure of consideration pursuant to subdivision (c) of Section
2924h, notice of the sale thereof shall be given by posting a written
notice of the time of sale and of the street address and the
specific place at the street address where the sale will be held, and
describing the property to be sold, at least 20 days before the date
of sale in one public place in the city where the property is to be
sold, if the property is to be sold in a city, or, if not, then in
one public place in the judicial district in which the property is to
be sold, and publishing a copy once a week for three consecutive
calendar weeks, the first publication to be at least 20 days before
the date of sale, in a newspaper of general circulation published in
the city in which the property or some part thereof is situated, if
any part thereof is situated in a city, if not, then in a newspaper
of general circulation published in the judicial district in which
the property or some part thereof is situated, or in case no
newspaper of general circulation is published in the city or judicial
district, as the case may be, in a newspaper of general circulation
published in the county in which the property or some part thereof is
situated, or in case no newspaper of general circulation is
published in the city or judicial district or county, as the case may
be, in a newspaper of general circulation published in the county in
this state that (A) is contiguous to the county in which the
property or some part thereof is situated and (B) has, by comparison
with all similarly contiguous counties, the highest population based
upon total county population as determined by the most recent federal
decennial census published by the Bureau of the Census. A copy of
the notice of sale shall also be posted in a conspicuous place on the
property to be sold at least 20 days before the date of sale, where
possible and where not restricted for any reason. If the property is
a single-family residence the posting shall be on a door of the
residence, but, if not possible or restricted, then the notice shall
be posted in a conspicuous place on the property; however, if access
is denied because a common entrance to the property is restricted by
a guard gate or similar impediment, the property may be posted at
that guard gate or similar impediment to any development community.
Additionally, the notice of sale shall conform to the minimum
requirements of Section 6043 of the Government Code and be recorded
with the county recorder of the county in which the property or some
part thereof is situated at least 14 days prior to the date of sale.
The notice of sale shall contain the name, street address in this
state, which may reflect an agent of the trustee, and either a
toll-free telephone number or telephone number in this state of the
trustee, and the name of the original trustor, and also shall contain
the statement required by paragraph (3) of subdivision (c). In
addition to any other description of the property, the notice shall
describe the property by giving its street address, if any, or other
common designation, if any, and a county assessor's parcel number;
but if the property has no street address or other common
designation, the notice shall contain a legal description of the
property, the name and address of the beneficiary at whose request
the sale is to be conducted, and a statement that directions may be
obtained pursuant to a written request submitted to the beneficiary
within 10 days from the first publication of the notice. Directions
shall be deemed reasonably sufficient to locate the property if
information as to the location of the property is given by reference
to the direction and approximate distance from the nearest
crossroads, frontage road, or access road. If a legal description or
a county assessor's parcel number and either a street address or
another common designation of the property is given, the validity of
the notice and the validity of the sale shall not be affected by the
fact that the street address, other common designation, name and
address of the beneficiary, or the directions obtained therefrom are
erroneous or that the street address, other common designation, name
and address of the beneficiary, or directions obtained therefrom are
omitted. The term "newspaper of general circulation," as used in
this section, has the same meaning as defined in Article 1
(commencing with Section 6000) of Chapter 1 of Division 7 of Title 1
of the Government Code.
The notice of sale shall contain a statement of the total amount
of the unpaid balance of the obligation secured by the property to be
sold and reasonably estimated costs, expenses, advances at the time
of the initial publication of the notice of sale, and, if republished
pursuant to a cancellation of a cash equivalent pursuant to
subdivision (d) of Section 2924h, a reference of that fact; provided,
that the trustee shall incur no liability for any good faith error
in stating the proper amount, including any amount provided in good
faith by or on behalf of the beneficiary. An inaccurate statement of
this amount shall not affect the validity of any sale to a bona fide
purchaser for value, nor shall the failure to post the notice of
sale on a door as provided by this subdivision affect the validity of
any sale to a bona fide purchaser for value.
(2) If the sale of the property is to be a unified sale as
provided in subparagraph (ii) of paragraph (a) of subdivision (4) of
Section 9501 of the Commercial Code, the notice of sale shall also
contain a description of the personal property or fixtures to be
sold. In the case where it is contemplated that all of the personal
property or fixtures are to be sold, the description in the notice of
the personal property or fixtures shall be sufficient if it is the
same as the description of the personal property or fixtures
contained in the agreement creating the security interest in or
encumbrance on the personal property or fixtures or the filed
financing statement relating to the personal property or fixtures.
In all other cases, the description in the notice shall be sufficient
if it would be a sufficient description of the personal property or
fixtures under Section 9110 of the Commercial Code. Inclusion of a
reference to or a description of personal property or fixtures in a
notice of sale hereunder shall not constitute an election by the
secured party to conduct a unified sale pursuant to subparagraph (ii)
of paragraph (a) of subdivision (4) of Section 9501 of the
Commercial Code, shall not obligate the secured party to conduct a
unified sale pursuant to subparagraph (ii) of paragraph (a) of
subdivision (4) of Section 9501 of the Commercial Code, and in no way
shall render defective or noncomplying either that notice or a sale
pursuant to that notice by reason of the fact that the sale includes
none or less than all of the personal property or fixtures referred
to or described in the notice. This paragraph shall not otherwise
affect the obligations or duties of a secured party under the
Commercial Code.
(c) (1) This subdivision applies only to deeds of trust or
mortgages which contain a power of sale and which are secured by real
property containing a single-family, owner-occupied residence, where
the obligation secured by the deed of trust or mortgage is contained
in a contract for goods or services subject to the provisions of the
Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of
Part 4 of Division 3).
(2) Except as otherwise expressly set forth in this subdivision,
all other provisions of law relating to the exercise of a power of
sale shall govern the exercise of a power of sale contained in a deed
of trust or mortgage described in paragraph (1).
(3) If any default of the obligation secured by a deed of trust or
mortgage described in paragraph (1) has not been cured within 30
days after the recordation of the notice of default, the trustee or
mortgagee shall mail to the trustor or mortgagor, at his or her last
known address, a copy of the following statement:
YOU ARE IN DEFAULT UNDER A
___________________________________________________,
(Deed of trust or mortgage)
DATED ______. UNLESS YOU TAKE ACTION TO PROTECT
YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE.
IF YOU NEED AN EXPLANATION OF THE NATURE OF THE
PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWYER.
(4) All sales of real property pursuant to a power of sale
contained in any deed of trust or mortgage described in paragraph (1)
shall be held in the county where the residence is located and shall
be made to the person making the highest offer. The trustee may
receive offers during the 10-day period immediately prior to the date
of sale and if any offer is accepted in writing by both the trustor
or mortgagor and the beneficiary or mortgagee prior to the time set
for sale, the sale shall be postponed to a date certain and prior to
which the property may be conveyed by the trustor to the person
making the offer according to its terms. The offer is revocable
until accepted. The performance of the offer, following acceptance,
according to its terms, by a conveyance of the property to the
offeror, shall operate to terminate any further proceeding under the
notice of sale and it shall be deemed revoked.
(5) In addition to the trustee fee pursuant to Section 2924c, the
trustee or mortgagee pursuant to a deed of trust or mortgage subject
to this subdivision shall be entitled to charge an additional fee of
fifty dollars ($50).
(6) This subdivision applies only to property on which notices of
default were filed on or after the effective date of this
subdivision.
2924f. (a) As used in this section and Sections 2924g and 2924h,
"property" means real property or a leasehold estate therein, and
"calendar week" means Monday through Saturday, inclusive.
(b) (1) Except as provided in subdivision (c), before any sale of
property can be made under the power of sale contained in any deed of
trust or mortgage, or any resale resulting from a rescission for a
failure of consideration pursuant to subdivision (c) of Section
2924h, notice of the sale thereof shall be given by posting a written
notice of the time of sale and of the street address and the
specific place at the street address where the sale will be held, and
describing the property to be sold, at least 20 days before the date
of sale in one public place in the city where the property is to be
sold, if the property is to be sold in a city, or, if not, then in
one public place in the judicial district in which the property is to
be sold, and publishing a copy once a week for three consecutive
calendar weeks, the first publication to be at least 20 days before
the date of sale, in a newspaper of general circulation published in
the city in which the property or some part thereof is situated, if
any part thereof is situated in a city, if not, then in a newspaper
of general circulation published in the judicial district in which
the property or some part thereof is situated, or in case no
newspaper of general circulation is published in the city or judicial
district, as the case may be, in a newspaper of general circulation
published in the county in which the property or some part thereof is
situated, or in case no newspaper of general circulation is
published in the city or judicial district or county, as the case may
be, in a newspaper of general circulation published in the county in
this state that (A) is contiguous to the county in which the
property or some part thereof is situated and (B) has, by comparison
with all similarly contiguous counties, the highest population based
upon total county population as determined by the most recent federal
decennial census published by the Bureau of the Census. A copy of
the notice of sale shall also be posted in a conspicuous place on the
property to be sold at least 20 days before the date of sale, where
possible and where not restricted for any reason. If the property is
a single-family residence the posting shall be on a door of the
residence, but, if not possible or restricted, then the notice shall
be posted in a conspicuous place on the property; however, if access
is denied because a common entrance to the property is restricted by
a guard gate or similar impediment, the property may be posted at
that guard gate or similar impediment to any development community.
Additionally, the notice of sale shall conform to the minimum
requirements of Section 6043 of the Government Code and be recorded
with the county recorder of the county in which the property or some
part thereof is situated at least 14 days prior to the date of sale.
The notice of sale shall contain the name, street address in this
state, which may reflect an agent of the trustee, and either a
toll-free telephone number or telephone number in this state of the
trustee, and the name of the original trustor, and also shall contain
the statement required by paragraph (3) of subdivision (c). In
addition to any other description of the property, the notice shall
describe the property by giving its street address, if any, or other
common designation, if any, and a county assessor's parcel number;
but if the property has no street address or other common
designation, the notice shall contain a legal description of the
property, the name and address of the beneficiary at whose request
the sale is to be conducted, and a statement that directions may be
obtained pursuant to a written request submitted to the beneficiary
within 10 days from the first publication of the notice. Directions
shall be deemed reasonably sufficient to locate the property if
information as to the location of the property is given by reference
to the direction and approximate distance from the nearest
crossroads, frontage road, or access road. If a legal description or
a county assessor's parcel number and either a street address or
another common designation of the property is given, the validity of
the notice and the validity of the sale shall not be affected by the
fact that the street address, other common designation, name and
address of the beneficiary, or the directions obtained therefrom are
erroneous or that the street address, other common designation, name
and address of the beneficiary, or directions obtained therefrom are
omitted. The term "newspaper of general circulation," as used in
this section, has the same meaning as defined in Article 1
(commencing with Section 6000) of Chapter 1 of Division 7 of Title 1
of the Government Code.
The notice of sale shall contain a statement of the total amount
of the unpaid balance of the obligation secured by the property to be
sold and reasonably estimated costs, expenses, advances at the time
of the initial publication of the notice of sale, and, if republished
pursuant to a cancellation of a cash equivalent pursuant to
subdivision (d) of Section 2924h, a reference of that fact; provided,
that the trustee shall incur no liability for any good faith error
in stating the proper amount, including any amount provided in good
faith by or on behalf of the beneficiary. An inaccurate statement of
this amount shall not affect the validity of any sale to a bona fide
purchaser for value, nor shall the failure to post the notice of
sale on a door as provided by this subdivision affect the validity of
any sale to a bona fide purchaser for value.
(2) If the sale of the property is to be a unified sale as
provided in subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code, the notice of sale shall also
contain a description of the personal property or fixtures to be
sold. In the case where it is contemplated that all of the personal
property or fixtures are to be sold, the description in the notice of
the personal property or fixtures shall be sufficient if it is the
same as the description of the personal property or fixtures
contained in the agreement creating the security interest in or
encumbrance on the personal property or fixtures or the filed
financing statement relating to the personal property or fixtures.
In all other cases, the description in the notice shall be sufficient
if it would be a sufficient description of the personal property or
fixtures under Section 9108 of the Commercial Code. Inclusion of a
reference to or a description of personal property or fixtures in a
notice of sale hereunder shall not constitute an election by the
secured party to conduct a unified sale pursuant to subparagraph (B)
of paragraph (1) of subdivision (a) of Section 9604 of the Commercial
Code, shall not obligate the secured party to conduct a unified sale
pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code, and in no way shall render
defective or noncomplying either that notice or a sale pursuant to
that notice by reason of the fact that the sale includes none or less
than all of the personal property or fixtures referred to or
described in the notice. This paragraph shall not otherwise affect
the obligations or duties of a secured party under the Commercial
Code.
(c) (1) This subdivision applies only to deeds of trust or
mortgages which contain a power of sale and which are secured by real
property containing a single-family, owner-occupied residence, where
the obligation secured by the deed of trust or mortgage is contained
in a contract for goods or services subject to the provisions of the
Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of
Part 4 of Division 3).
(2) Except as otherwise expressly set forth in this subdivision,
all other provisions of law relating to the exercise of a power of
sale shall govern the exercise of a power of sale contained in a deed
of trust or mortgage described in paragraph (1).
(3) If any default of the obligation secured by a deed of trust or
mortgage described in paragraph (1) has not been cured within 30
days after the recordation of the notice of default, the trustee or
mortgagee shall mail to the trustor or mortgagor, at his or her last
known address, a copy of the following statement:
YOU ARE IN DEFAULT UNDER A
___________________________________________________,
(Deed of trust or mortgage)
DATED ______. UNLESS YOU TAKE ACTION TO PROTECT
YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE.
IF YOU NEED AN EXPLANATION OF THE NATURE OF THE
PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWYER.
(4) All sales of real property pursuant to a power of sale
contained in any deed of trust or mortgage described in paragraph (1)
shall be held in the county where the residence is located and shall
be made to the person making the highest offer. The trustee may
receive offers during the 10-day period immediately prior to the date
of sale and if any offer is accepted in writing by both the trustor
or mortgagor and the beneficiary or mortgagee prior to the time set
for sale, the sale shall be postponed to a date certain and prior to
which the property may be conveyed by the trustor to the person
making the offer according to its terms. The offer is revocable
until accepted. The performance of the offer, following acceptance,
according to its terms, by a conveyance of the property to the
offeror, shall operate to terminate any further proceeding under the
notice of sale and it shall be deemed revoked.
(5) In addition to the trustee fee pursuant to Section 2924c, the
trustee or mortgagee pursuant to a deed of trust or mortgage subject
to this subdivision shall be entitled to charge an additional fee of
fifty dollars ($50).
(6) This subdivision applies only to property on which notices of
default were filed on or after the effective date of this
subdivision.
2924g. (a) All sales of property under the power of sale contained
in any deed of trust or mortgage shall be held in the county where
the property or some part thereof is situated, and shall be made at
auction, to the highest bidder, between the hours of 9 a.m. and 5
p.m. on any business day, Monday through Friday.
The sale shall commence at the time and location specified in the
notice of sale. Any postponement shall be announced at the time and
location specified in the notice of sale for commencement of the sale
or pursuant to paragraph (1) of subdivision (c).
If the sale of more than one parcel of real property has been
scheduled for the same time and location by the same trustee, (1) any
postponement of any of the sales shall be announced at the time
published in the notice of sale, (2) the first sale shall commence at
the time published in the notice of sale or immediately after the
announcement of any postponement, and (3) each subsequent sale shall
take place as soon as possible after the preceding sale has been
completed.
(b) When the property consists of several known lots or parcels
they shall be sold separately unless the deed of trust or mortgage
provides otherwise. When a portion of the property is claimed by a
third person, who requires it to be sold separately, the portion
subject to the claim may be thus sold. The trustor, if present at
the sale, may also, unless the deed of trust or mortgage otherwise
provides, direct the order in which property shall be sold, when the
property consists of several known lots or parcels which may be sold
to advantage separately, and the trustee shall follow that direction.
After sufficient property has been sold to satisfy the indebtedness
no more can be sold.
If the property under power of sale is in two or more counties the
public auction sale of all of the property under the power of sale
may take place in any one of the counties where the property or a
portion thereof is located.
(c) (1) There may be a postponement of the sale proceedings at any
time prior to the completion of the sale at the discretion of the
trustee, or upon instruction by the beneficiary to the trustee that
the sale proceedings be postponed.
There may be a maximum of three postponements of the sale
proceedings pursuant to this subdivision. In the event that the sale
proceedings are postponed more than three times, the scheduling of
any further sale proceedings shall be preceded by the giving of a new
notice of sale in the manner prescribed by Section 2924f.
(2) The trustee shall postpone the sale upon the order of any
court of competent jurisdiction, or where stayed by operation of law,
or by the mutual agreement, whether oral or in writing, of any
trustor and any beneficiary or any mortgagor and any mortgagee. Any
postponement pursuant to this paragraph shall not be a postponement
for purposes of determining the maximum number of postponements
permitted pursuant to this subdivision nor shall a postponement
resulting from the prohibition upon a sale within seven days from the
expiration of an injunction, restraining order, or stay as provided
in subdivision (d) be deemed a postponement for purposes of this
subdivision. In addition, one postponement by the trustee based upon
a reasonable belief that a petition for bankruptcy has been filed
shall not be a postponement for purposes of determining the maximum
number of postponements permitted pursuant to this subdivision.
(d) The notice of each postponement and the reason therefor shall
be given by public declaration by the trustee at the time and place
last appointed for sale. A public declaration of postponement shall
also set forth the new date, time, and place of sale and the place of
sale shall be the same place as originally fixed by the trustee for
the sale. No other notice of postponement need be given. However,
the sale shall be conducted no sooner than on the seventh day after
the earlier of (1) dismissal of the action or (2) expiration or
termination of the injunction, restraining order, or stay (which
required postponement of the sale), whether by entry of an order by a
court of competent jurisdiction, operation of law, or otherwise,
unless the injunction, restraining order, or subsequent order
expressly directs the conduct of the sale within that seven-day
period. For purposes of this subdivision, the seven-day period shall
not include the day on which the action is dismissed, or the day on
which the injunction, restraining order, or stay expires or is
terminated. If the sale had been scheduled to occur, but this
subdivision precludes its conduct during that seven-day period, a new
notice of postponement shall be given if the sale had been scheduled
to occur during that seven-day period. The trustee shall maintain
records of each postponement and the reason therefor.
(e) Notwithstanding the time periods established under subdivision
(d), if postponement of a sale is based on a stay granted under
Title 11 of the United States Code (Bankruptcy), the sale shall be
conducted no sooner than the expiration of the stay granted under
that title.
2924h. (a) Each and every bid made by a bidder at a trustee's sale
under a power of sale contained in a deed of trust or mortgage shall
be deemed to be an irrevocable offer by that bidder to purchase the
property being sold by the trustee under the power of sale for the
amount of the bid. Any second or subsequent bid by the same bidder
or any other bidder for a higher amount shall be a cancellation of
the prior bid.
(b) At the trustee's sale the trustee shall have the right (1) to
require every bidder to show evidence of the bidder's ability to
deposit with the trustee the full amount of his or her final bid in
cash, a cashier's check drawn on a state or national bank, a check
drawn by a state or federal credit union, or a check drawn by a state
or federal savings and loan association, savings association, or
savings bank specified in Section 5102 of the Financial Code and
authorized to do business in this state, or a cash equivalent which
has been designated in the notice of sale as acceptable to the
trustee prior to, and as a condition to, the recognizing of the bid,
and to conditionally accept and hold these amounts for the duration
of the sale, and (2) to require the last and highest bidder to
deposit, if not deposited previously, the full amount of the bidder's
final bid in cash, a cashier's check drawn on a state or national
bank, a check drawn by a state or federal credit union, or a check
drawn by a state or federal savings and loan association, savings
association, or savings bank specified in Section 5102 of the
Financial Code and authorized to do business in this state, or a cash
equivalent which has been designated in the notice of sale as
acceptable to the trustee, immediately prior to the completion of the
sale, the completion of the sale being so announced by the fall of
the hammer or in another customary manner. The present beneficiary
of the deed of trust under foreclosure shall have the right to offset
his or her bid(s) only to the extent of the total amount due the
beneficiary including the trustee's fees and expenses.
(c) In the event the trustee accepts a check drawn by a credit
union or a savings and loan association pursuant to this subdivision
or a cash equivalent designated in the notice of sale, the trustee
may withhold the issuance of the trustee's deed to the successful
bidder submitting the check drawn by a state or federal credit union
or savings and loan association or the cash equivalent until funds
become available to the payee or endorsee as a matter of right.
For the purposes of this subdivision, the trustee's sale shall be
deemed final upon the acceptance of the last and highest bid, and
shall be deemed perfected as of 8 a.m. on the actual date of sale if
the trustee's deed is recorded within 15 calendar days after the
sale, or the next business day following the 15th day if the county
recorder in which the property is located is closed on the 15th day.
However, the sale is subject to an automatic rescission for a
failure of consideration in the event the funds are not "available
for withdrawal" as defined in Section 12413.1 of the Insurance Code.
The trustee shall send a notice of rescission for a failure of
consideration to the last and highest bidder submitting the check or
alternative instrument, if the address of the last and highest bidder
is known to the trustee.
If a sale results in an automatic right of rescission for failure
of consideration pursuant to this subdivision, the interest of any
lienholder shall be reinstated in the same priority as if the
previous sale had not occurred.
(d) If the trustee has not required the last and highest bidder to
deposit the cash, a cashier's check drawn on a state or national
bank, a check drawn by a state or federal credit union, or a check
drawn by a state or federal savings and loan association, savings
association, or savings bank specified in Section 5102 of the
Financial Code and authorized to do business in this state, or a cash
equivalent which has been designated in the notice of sale as
acceptable to the trustee in the manner set forth in paragraph (2) of
subdivision (b), the trustee shall complete the sale. If the last
and highest bidder then fails to deliver to the trustee, when
demanded, the amount of his or her final bid in cash, a cashier's
check drawn on a state or national bank, a check drawn by a state or
federal credit union, or a check drawn by a state or federal savings
and loan association, savings association, or savings bank specified
in Section 5102 of the Financial Code and authorized to do business
in this state, or a cash equivalent which has been designated in the
notice of sale as acceptable to the trustee, that bidder shall be
liable to the trustee for all damages which the trustee may sustain
by the refusal to deliver to the trustee the amount of the final bid,
including any court costs and reasonable attorneys' fees.
If the last and highest bidder willfully fails to deliver to the
trustee the amount of his or her final bid in cash, a cashier's check
drawn on a state or national bank, a check drawn by a state or
federal credit union, or a check drawn by a state or federal savings
and loan association, savings association, or savings bank specified
in Section 5102 of the Financial Code and authorized to do business
in this state, or a cash equivalent which has been designated in the
notice of sale as acceptable to the trustee, or if the last and
highest bidder cancels a cashiers check drawn on a state or national
bank, a check drawn by a state or federal credit union, or a check
drawn by a state or federal savings and loan association, savings
association, or savings bank specified in Section 5102 of the
Financial Code and authorized to do business in this state, or a cash
equivalent that has been designated in the notice of sale as
acceptable to the trustee, that bidder shall be guilty of a
misdemeanor punishable by a fine of not more than two thousand five
hundred dollars ($2,500).
In the event the last and highest bidder cancels an instrument
submitted to the trustee as a cash equivalent, the trustee shall
provide a new notice of sale in the manner set forth in Section 2924f
and shall be entitled to recover the costs of the new notice of sale
as provided in Section 2924c.
(e) Any postponement or discontinuance of the sale proceedings
shall be a cancellation of the last bid.
(f) In the event that this section conflicts with any other
statute, then this section shall prevail.
(g) It shall be unlawful for any person, acting alone or in
concert with others, (1) to offer to accept or accept from another,
any consideration of any type not to bid, or (2) to fix or restrain
bidding in any manner, at a sale of property conducted pursuant to a
power of sale in a deed of trust or mortgage. However, it shall not
be unlawful for any person, including a trustee, to state that a
property subject to a recorded notice of default or subject to a sale
conducted pursuant to this chapter is being sold in an "as-is"
condition.
In addition to any other remedies, any person committing any act
declared unlawful by this subdivision or any act which would operate
as a fraud or deceit upon any beneficiary, trustor, or junior lienor
shall, upon conviction, be fined not more than ten thousand dollars
($10,000) or imprisoned in the county jail for not more than one
year, or be punished by both that fine and imprisonment.
2924i. (a) This section applies to loans secured by a deed of trust
or mortgage on real property containing one to four residential
units at least one of which at the time the loan is made is or is to
be occupied by the borrower if the loan is for a period in excess of
one year and is a balloon payment loan.
(b) This section shall not apply to (1) open end credit as defined
in Regulation Z, whether or not the transaction is otherwise subject
to Regulation Z, (2) transactions subject to Section 2956, or (3)
loans made for the principal purpose of financing the construction of
one or more residential units.
(c) At least 90 days but not more than 150 days prior to the due
date of the final payment on a loan that is subject to this section,
the holder of the loan shall deliver or mail by first-class mail,
with a certificate of mailing obtained from the United States Postal
Service, to the trustor, or his or her successor in interest, at the
last known address of that person, a written notice which shall
include all of the following:
(1) A statement of the name and address of the person to whom the
final payment is required to be paid.
(2) The date on or before which the final payment is required to
be paid.
(3) The amount of the final payment, or if the exact amount is
unknown, a good faith estimate of the amount thereof, including
unpaid principal, interest and any other charges, such amount to be
determined assuming timely payment in full of all scheduled
installments coming due between the date the notice is prepared and
the date when the final payment is due.
(4) If the borrower has a contractual right to refinance the final
payment, a statement to that effect.
If the due date of the final payment of a loan subject to this
section is extended prior to the time notice is otherwise required
under this subdivision, this notice requirement shall apply only to
the due date as extended (or as subsequently extended).
(d) For purposes of this section:
(1) A "balloon payment loan" is a loan which provides for a final
payment as originally scheduled which is more than twice the amount
of any of the immediately preceding six regularly scheduled payments
or which contains a call provision; provided, however, that if the
call provision is not exercised by the holder of the loan, the
existence of the unexercised call provision shall not cause the loan
to be deemed to be a balloon payment loan.
(2) "Call provision" means a loan contract term that provides the
holder of the loan with the right to call the loan due and payable
either after a specified period has elapsed following closing or
after a specified date.
(3) "Regulation Z" means any rule, regulation, or interpretation
promulgated by the Board of Governors of the Federal Reserve System
under the Federal Truth in Lending Act, as amended (15 U.S.C. Sec.
1601 et seq.), and any interpretation or approval thereof issued by
an official or employee of the Federal Reserve System duly authorized
by the board under the Truth in Lending Act, as amended, to issue
such interpretations or approvals.
(e) Failure to provide notice as required by subdivision (a) does
not extinguish any obligation of payment by the borrower, except that
the due date for any balloon payment shall be the date specified in
the balloon payment note, or 90 days from the date of delivery or
mailing of the notice required by subdivision (a), or the due date
specified in the notice required by subdivision (a), whichever date
is later. If the operation of this section acts to extend the term
of any note, interest shall continue to accrue for the extended term
at the contract rate and payments shall continue to be due at any
periodic interval and on any payment schedule specified in the note
and shall be credited to principal or interest under the terms of the
note. Default in any extended periodic payment shall be considered
a default under terms of the note or security instrument.
(f) (1) The validity of any credit document or of any security
document subject to the provisions of this section shall not be
invalidated solely because of the failure of any person to comply
with this section. However, any person who willfully violates any
provision of this section shall be liable in the amount of actual
damages suffered by the debtor as the proximate result of the
violation, and, if the debtor prevails in any suit to recover that
amount, for reasonable attorney's fees.
(2) No person may be held liable in any action under this section
if it is shown by a preponderance of the evidence that the violation
was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adopted to
avoid any such error.
(g) The provisions of this section shall apply to any note
executed on or after January 1, 1984.
2924j. (a) Unless an interpleader action has been filed, within 30
days of the execution of the trustee's deed resulting from a sale in
which there are proceeds remaining after payment of the amounts
required by paragraphs (1) and (2) of subdivision (a) of Section
2924k, the trustee shall send written notice to all persons with
recorded interests in the real property as of the date immediately
prior to the trustee's sale who would be entitled to notice pursuant
to subdivisions (b) and (c) of Section 2924b. The notice shall be
sent by first-class mail in the manner provided in paragraph (1) of
subdivision (c) of Section 2924b and inform each entitled person of
each of the following:
(1) That there has been a trustee's sale of the described real
property.
(2) That the noticed person may have a claim to all or a portion
of the sale proceeds remaining after payment of the amounts required
by paragraphs (1) and (2) of subdivision (a) of Section 2924k.
(3) The noticed person may contact the trustee at the address
provided in the notice to pursue any potential claim.
(4) That before the trustee can act, the noticed person may be
required to present proof that the person holds the beneficial
interest in the obligation and the security interest therefor. In
the case of a promissory note secured by a deed of trust, proof that
the person holds the beneficial interest may include the original
promissory note and assignment of beneficial interests related
thereto. The noticed person shall also submit a written claim to the
trustee, executed under penalty of perjury, stating the following:
(A) The amount of the claim to the date of trustee's sale.
(B) An itemized statement of the principal, interest, and other
charges.
(C) That claims must be received by the trustee at the address
stated in the notice no later than 30 days after the date the trustee
sends notice to the potential claimant.
(b) The trustee shall exercise due diligence to determine the
priority of the written claims received by the trustee to the trustee'
s sale surplus proceeds from those persons to whom notice was sent
pursuant to subdivision (a). In the event there is no dispute as to
the priority of the written claims submitted to the trustee, proceeds
shall be paid within 30 days after the conclusion of the notice
period. If the trustee has failed to determine the priority of
written claims within 90 days following the 30-day notice period,
then within 10 days thereafter the trustee shall deposit the funds
with the clerk of the court pursuant to subdivision (c) or file an
interpleader action pursuant to subdivision (e). Nothing in this
section shall preclude any person from pursuing other remedies or
claims as to surplus proceeds.
(c) If, after due diligence, the trustee is unable to determine
the priority of the written claims received by the trustee to the
trustee's sale surplus of multiple persons or if the trustee
determines there is a conflict between potential claimants, the
trustee may file a declaration of the unresolved claims and deposit
with the clerk of the superior or municipal court, as applicable, of
the county in which the sale occurred, that portion of the sales
proceeds that cannot be distributed, less any fees charged by the
clerk pursuant to this subdivision. The declaration shall specify
the date of the trustee's sale, a description of the property, the
names and addresses of all persons sent notice pursuant to
subdivision (a), a statement that the trustee exercised due diligence
pursuant to subdivision (b), that the trustee provided written
notice as required by subdivisions (a) and (d) and the amount of the
sales proceeds deposited by the trustee with the superior or
municipal court. Further, the trustee shall submit a copy of the
trustee's sales guarantee and any information relevant to the
identity, location, and priority of the potential claimants with the
superior or municipal court and shall file proof of service of the
notice required by subdivision (d) on all persons described in
subdivision (a).
The clerk shall deposit the amount with the county treasurer
subject to order of the superior or municipal court upon the
application of any interested party. The clerk may charge a
reasonable fee for the performance of activities pursuant to this
subdivision equal to the fee for filing an interpleader action
pursuant to Article 2 (commencing with Section 26820) of Division 2
of Title 3 of the Government Code. Upon deposit of that portion of
the sale proceeds that cannot be distributed by due diligence, the
trustee shall be discharged of further responsibility for the
disbursement of sale proceeds. A deposit with the clerk of the
superior or municipal court pursuant to this subdivision may be
either for the total proceeds of the trustee's sale, less any fees
charged by the clerk, if a conflict or conflicts exist with respect
to the total proceeds, or that portion that cannot be distributed
after due diligence, less any fees charged by the clerk.
(d) Before the trustee deposits the funds with the clerk of the
court pursuant to subdivision (c), the trustee shall send written
notice by first-class mail, postage prepaid, to all persons described
in subdivision (a) informing them that the trustee intends to
deposit the funds with the clerk of the superior or municipal court,
as applicable, and that a claim for the funds must be filed with the
court within 30 days from the date of the notice, providing the
address of the court in which the funds were deposited, and a phone
number for obtaining further information.
Within 90 days after deposit with the clerk, the court shall
consider all claims filed at least 15 days before the date on which
the hearing is scheduled by the court, the clerk shall serve written
notice of the hearing by first-class mail on all claimants identified
in the trustees' declaration at the addresses specified therein.
The court shall distribute the deposited funds to any and all
claimants entitled thereto.
(e) Nothing in this section restricts the ability of a trustee to
file an interpleader action in order to resolve a dispute about the
proceeds of a trustee's sale. Once an interpleader action has been
filed, thereafter the provisions of this section shall not apply.
(f) "Due diligence," for the purposes of this section means that
the trustee researched the written claims submitted or other evidence
of conflicts and determined that a conflict of priorities exists
between two or more claimants which the trustee is unable to resolve.
(g) To the extent required by the Unclaimed Property Law, a
trustee in possession of surplus proceeds not required to be
deposited with the court pursuant to subdivision (b) shall comply
with the Unclaimed Property Law (Chapter 7 (commencing with Section
1500) of Title 10 of Part 3 of the Code of Civil Procedure).
(h) Prior to July 1, 2000, the Judicial Council shall adopt a form
to accomplish the filing authorized by this section.
2924k. (a) The trustee, or the clerk of the court upon order to the
clerk pursuant to subdivision (d) of Section 2924j, shall distribute
the proceeds, or a portion of the proceeds, as the case may be, of
the trustee's sale conducted pursuant to Section 2924h in the
following order of priority:
(1) To the costs and expenses of exercising the power of sale and
of sale, including the payment of the trustee's fees and attorney's
fees permitted pursuant to subdivision (b) of Section 2924d and
subdivision (b) of this section.
(2) To the payment of the obligations secured by the deed of trust
or mortgage which is the subject of the trustee's sale.
(3) To satisfy the outstanding balance of obligations secured by
any junior liens or encumbrances in the order of their priority.
(4) To the trustor or the trustor's successor in interest. In the
event the property is sold or transferred to another, to the vested
owner of record at the time of the trustee's sale.
(b) A trustee may charge costs and expenses incurred for such
items as mailing and a reasonable fee for services rendered in
connection with the distribution of the proceeds from a trustee's
sale, including, but not limited to, the investigation of priority
and validity of claims and the disbursement of funds. If the fee
charged for services rendered pursuant to this subdivision does not
exceed one hundred dollars ($100), or one hundred twenty-five dollars
($125) where there are obligations specified in paragraph (3) of
subdivision (a), the fee is conclusively presumed to be reasonable.
2924l. (a) In the event that a trustee under a deed of trust is
named in an action or proceeding in which that deed of trust is the
subject, and in the event that the trustee maintains a reasonable
belief that it has been named in the action or proceeding solely in
its capacity as trustee, and not arising out of any wrongful acts or
omissions on its part in the performance of its duties as trustee,
then, at any time, the trustee may file a declaration of nonmonetary
status. The declaration shall be served on the parties in the manner
set forth in Chapter 5 (commencing with Section 1010) of Title 14 of
the Code of Civil Procedure.
(b) The declaration of nonmonetary status shall set forth the
status of the trustee as trustee under the deed of trust that is the
subject of the action or proceeding, that the trustee knows or
maintains a reasonable belief that it has been named as a defendant
in the proceeding solely in its capacity as a trustee under the deed
of trust, its reasonable belief that it has not been named as a
defendant due to any acts or omissions on its part in the performance
of its duties as trustee, the basis for that knowledge or reasonable
belief, and that it agrees to be bound by whatever order or judgment
is issued by the court regarding the subject deed of trust.
(c) The parties who have appeared in the action or proceeding
shall have 15 days from the service of the declaration by the trustee
in which to object to the nonmonetary judgment status of the
trustee. Any objection shall set forth the factual basis on which
the objection is based and shall be served on the trustee.
(d) In the event that no objection is served within the 15-day
objection period, then the trustee shall not be required to
participate any further in the action or proceeding, shall not be
subject to any monetary awards as and for damages, attorneys fees or
costs, shall be required to respond to any discovery requests as a
nonparty, and shall be bound by any court order relating to the
subject deed of trust that is the subject of the action or
proceeding.
(e) In the event of a timely objection to the declaration of
nonmonetary status, the trustee shall thereafter be required to
participate in the action or proceeding.
Additionally, in the event that the parties elect not to, or fail
to, timely object to the declaration of nonmonetary status, but later
through discovery, or otherwise, determine that the trustee should
participate in the action because of the performance of its duties as
a trustee, the parties may file and serve on all parties and the
trustee a motion pursuant to Section 473 of the Code of Civil
Procedure that specifies the factual basis for the demand. Upon the
court's granting of the motion, the trustee shall thereafter be
required to participate in the action or proceeding.
(f) Upon the filing of the declaration of nonmonetary status, the
time within which the trustee is required to file an answer or other
responsive pleading shall be tolled for the period of time within
which the opposing parties may respond to the declaration. Upon the
timely service of an objection to the declaration on nonmonetary
status, the trustee shall have 30 days from the date of service
within which to file an answer or other responsive pleading to the
complaint or cross-complaint.
(g) For purposes of this section, "trustee" includes any agent or
employee of the trustee who performs some or all of the duties of a
trustee under this article.
2925. The fact that a transfer was made subject to defeasance on a
condition, may, for the purpose of showing such transfer to be a
mortgage, be proved (except as against a subsequent purchaser or
incumbrancer for value and without notice), though the fact does not
appear by the terms of the instrument.
2926. A mortgage is a lien upon everything that would pass by a
grant of the property.
2927. A mortgage does not entitle the mortgagee to the possession
of the property, unless authorized by the express terms of the
mortgage; but after the execution of the mortgage the mortgagor may
agree to such change of possession without a new consideration.
2928. A mortgage does not bind the mortgagor personally to perform
the act for the performance of which it is a security, unless there
is an express covenant therein to that effect.
2929. No person whose interest is subject to the lien of a mortgage
may do any act which will substantially impair the mortgagee's
security.
2929.5. (a) A secured lender may enter and inspect the real
property security for the purpose of determining the existence,
location, nature, and magnitude of any past or present release or
threatened release of any hazardous substance into, onto, beneath, or
from the real property security on either of the following:
(1) Upon reasonable belief of the existence of a past or present
release or threatened release of any hazardous substance into, onto,
beneath, or from the real property security not previously disclosed
in writing to the secured lender in conjunction with the making,
renewal, or modification of a loan, extension of credit, guaranty, or
other obligation involving the borrower.
(2) After the commencement of nonjudicial or judicial foreclosure
proceedings against the real property security.
(b) The secured lender shall not abuse the right of entry and
inspection or use it to harass the borrower or tenant of the
property. Except in case of an emergency, when the borrower or
tenant of the property has abandoned the premises, or if it is
impracticable to do so, the secured lender shall give the borrower or
tenant of the property reasonable notice of the secured lender's
intent to enter, and enter only during the borrower's or tenant's
normal business hours. Twenty-four hours' notice shall be presumed
to be reasonable notice in the absence of evidence to the contrary.
(c) The secured lender shall reimburse the borrower for the cost
of repair of any physical injury to the real property security caused
by the entry and inspection.
(d) If a secured lender is refused the right of entry and
inspection by the borrower or tenant of the property, or is otherwise
unable to enter and inspect the property without a breach of the
peace, the secured lender may, upon petition, obtain an order from a
court of competent jurisdiction to exercise the secured lender's
rights under subdivision (a), and that action shall not constitute an
action within the meaning of subdivision (a) of Section 726 of the
Code of Civil Procedure.
(e) For purposes of this section:
(1) "Borrower" means the trustor under a deed of trust, or a
mortgagor under a mortgage, where the deed of trust or mortgage
encumbers real property security and secures the performance of the
trustor or mortgagor under a loan, extension of credit, guaranty, or
other obligation. The term includes any successor-in-interest of the
trustor or mortgagor to the real property security before the deed
of trust or mortgage has been discharged, reconveyed, or foreclosed
upon.
(2) "Hazardous substance" means (A) any "hazardous substance" as
defined in subdivision (f) of Section 25281 of the Health and Safety
Code as effective on January 1, 1991, or as subsequently amended, (B)
any "waste" as defined in subdivision (d) of Section 13050 of the
Water Code as effective on January 1, 1991, or as subsequently
amended, or (C) petroleum, including crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel, or any mixture thereof.
(3) "Real property security" means any real property and
improvements, other than a separate interest and any related interest
in the common area of a residential common interest development, as
the terms "separate interest," "common area," and "common interest
development" are defined in Section 1351, or real property consisting
of one acre or less which contains 1 to 15 dwelling units.
(4) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment, including continuing
migration, of hazardous substances into, onto, or through soil,
surface water, or groundwater.
(5) "Secured lender" means the beneficiary under a deed of trust
against the real property security, or the mortgagee under a mortgage
against the real property security, and any successor-in-interest of
the beneficiary or mortgagee to the deed of trust or mortgage.
(2930.) Section Twenty-nine Hundred and Thirty. Title acquired by
the mortgagor subsequent to the execution of the mortgage, inures to
the mortgagee as security for the debt in like manner as if acquired
before the execution.
2931. A mortgagee may foreclose the right of redemption of the
mortgagor in the manner prescribed by the CODE OF CIVIL PROCEDURE.
2931a. In any action brought to determine conflicting claims to
real property, or for partition of real property or an estate for
years therein, or to foreclose a deed of trust, mortgage, or other
lien upon real property, or in all eminent domain proceedings under
Section 1250.110 et seq., of the Code of Civil Procedure against real
property upon which exists a lien to secure the payment of taxes or
other obligations to an agency of the State of California, other than
ad valorem taxes upon the real property, the state agency charged
with the collection of the tax obligation may be made a party. In
such an action, the court shall have jurisdiction to determine the
priority and effect of the liens described in the complaint in or
upon the real property or estate for years therein, but the
jurisdiction of the court in the action shall not include a
determination of the validity of the tax giving rise to the lien or
claim of lien. The complaint or petition in the action shall contain
a description of the lien sufficient to enable the tax or other
obligation, payment of which it secures, to be identified with
certainty, and shall include the name and address of the person owing
the tax or other obligation, the name of the state agency that
recorded the lien, and the date and place where the lien was
recorded. Services of process in the action shall be made upon the
agency, officer, board, commission, department, division, or other
body charged with the collection of the tax or obligation. It shall
be the duty of the Attorney General to represent the state agency in
the action.
2931b. In all actions in which the State of California is named a
party pursuant to the provisions of Section 2931a and in which real
property or an estate for years therein is sought to be sold, the
Attorney General may, with the consent of the Department of Finance,
bid upon and purchase that real property or estate for years.
2931c. The Attorney General may bring an action in the courts of
this or any other state or of the United States to enforce any lien
to secure the payment of taxes or other obligations to the State of
California under the Unemployment Insurance Code, the Revenue and
Taxation Code, or Chapter 6 (commencing with Section 16180) of Part 1
of Division 4 of Title 2 of the Government Code or to subject to
payment of the liability giving rise to the lien any property in
which the debtor has any right, title, or interest. In any action
brought under this section the court shall have jurisdiction to
determine the priority and effect of the lien in or upon the
property, but the jurisdiction of the court in such action shall not
extend to a determination of the validity of the liability giving
rise to the lien.
2932. A power of sale may be conferred by a mortgage upon the
mortgagee or any other person, to be exercised after a breach of the
obligation for which the mortgage is a security.
2932.5. 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.
2932.6. (a) Notwithstanding any other provision of law, a financial
institution may undertake to repair any property acquired through
foreclosure under a mortgage or deed of trust.
(b) As used in this section, the term "financial institution"
includes, but is not limited to, banks, savings associations, credit
unions, and industrial loan companies.
(c) The rights granted to a financial institution by this section
are in addition to, and not in derogation of, the rights of a
financial institution which otherwise exist.
2933. A power of attorney to execute a mortgage must be in writing,
subscribed, acknowledged, or proved, certified, and recorded in like
manner as powers of attorney for grants of real property.
2934. Any assignment of a mortgage and any assignment of the
beneficial interest under a deed of trust may be recorded, and from
the time the same is filed for record operates as constructive notice
of the contents thereof to all persons; and any instrument by which
any mortgage or deed of trust of, lien upon or interest in real
property, (or by which any mortgage of, lien upon or interest in
personal property a document evidencing or creating which is required
or permitted by law to be recorded), is subordinated or waived as to
priority may be recorded, and from the time the same is filed for
record operates as constructive notice of the contents thereof, to
all persons.
2934a. (a) (1) The trustee under a trust deed upon real property or
an estate for years therein given to secure an obligation to pay
money and conferring no other duties upon the trustee than those
which are incidental to the exercise of the power of sale therein
conferred, may be substituted by the recording in the county in which
the property is located of a substitution executed and acknowledged
by: (A) all of the beneficiaries under the trust deed, or their
successors in interest, and the substitution shall be effective
notwithstanding any contrary provision in any trust deed executed on
or after January 1, 1968; or (B) the holders of more than 50 percent
of the record beneficial interest of a series of notes secured by the
same real property or of undivided interests in a note secured by
real property equivalent to a series transaction, exclusive of any
notes or interests of a licensed real estate broker that is the
issuer or servicer of the notes or interests or of any affiliate of
that licensed real estate broker.
(2) A substitution executed pursuant to subparagraph (B) of
paragraph (1) is not effective unless all the parties signing the
substitution sign, under penalty of perjury, a separate written
document stating the following:
(A) The substitution has been signed pursuant to subparagraph (B)
of paragraph (1).
(B) None of the undersigned is a licensed real estate broker or an
affiliate of the broker that is the issuer or servicer of the
obligation secured by the deed of trust.
(C) The undersigned together hold more than 50 percent of the
record beneficial interest of a series of notes secured by the same
real property or of undivided interests in a note secured by real
property equivalent to a series transaction.
(D) Notice of the substitution was sent by certified mail, postage
prepaid, with return receipt requested to each holder of an interest
in the obligation secured by the deed of trust who has not joined in
the execution of the substitution or the separate document.
The separate document shall be attached to the substitution and be
recorded in the office of the county recorder of each county in
which the real property described in the deed of trust is located.
Once the document required by this paragraph is recorded, it shall
constitute conclusive evidence of compliance with the requirements of
this paragraph in favor of substituted trustees acting pursuant to
this section, subsequent assignees of the obligation secured by the
deed of trust, and subsequent bona fide purchasers or encumbrancers
for value of the real property described therein.
(3) For purposes of this section, "affiliate of the licensed real
estate broker" includes any person as defined in Section 25013 of the
Corporations Code that is controlled by, or is under common control
with, or who controls, a licensed real estate broker. "Control"
means the possession, direct or indirect, of the power to direct or
cause the direction of management and policies.
(4) The substitution shall contain the date of recordation of the
trust deed, the name of the trustor, the book and page or instrument
number where the trust deed is recorded, and the name of the new
trustee. From the time the substitution is filed for record, the new
trustee shall succeed to all the powers, duties, authority, and
title granted and delegated to the trustee named in the deed of
trust. A substitution may be accomplished, with respect to multiple
deeds of trust which are recorded in the same county in which the
substitution is being recorded and which all have the same trustee
and beneficiary or beneficiaries, by recording a single document,
complying with the requirements of this section, substituting
trustees for all those deeds of trust.
(b) If the substitution is effected after a notice of default has
been recorded but prior to the recording of the notice of sale, the
beneficiary or beneficiaries shall cause a copy of the substitution
to be mailed, prior to the recording thereof, in the manner provided
in Section 2924b, to the trustee then of record and to all persons to
whom a copy of the notice of default would be required to be mailed
by the provisions of Section 2924b. An affidavit shall be attached
to the substitution that notice has been given to those persons and
in the manner required by this subdivision.
(c) Notwithstanding any provision of this section or any provision
in any deed of trust, unless a new notice of sale containing the
name, street address, and telephone number of the substituted trustee
is given pursuant to Section 2924f, any sale conducted by the
substituted trustee shall be void.
(d) This section shall remain in effect only until January 1,
1998, and shall have no force or effect after that date, unless a
later enacted statute, which is enacted before January 1, 1998,
deletes or extends that date.
2934a. (a) (1) The trustee under a trust deed upon real property or
an estate for years therein given to secure an obligation to pay
money and conferring no other duties upon the trustee than those
which are incidental to the exercise of the power of sale therein
conferred, may be substituted by the recording in the county in which
the property is located of a substitution executed and acknowledged
by: (A) all of the beneficiaries under the trust deed, or their
successors in interest, and the substitution shall be effective
notwithstanding any contrary provision in any trust deed executed on
or after January 1, 1968; or (B) the holders of more than 50 percent
of the record beneficial interest of a series of notes secured by the
same real property or of undivided interests in a note secured by
real property equivalent to a series transaction, exclusive of any
notes or interests of a licensed real estate broker that is the
issuer or servicer of the notes or interests or of any affiliate of
that licensed real estate broker.
(2) A substitution executed pursuant to subparagraph (B) of
paragraph (1) is not effective unless all the parties signing the
substitution sign, under penalty of perjury, a separate written
document stating the following:
(A) The substitution has been signed pursuant to subparagraph (B)
of paragraph (1).
(B) None of the undersigned is a licensed real estate broker or an
affiliate of the broker that is the issuer or servicer of the
obligation secured by the deed of trust.
(C) The undersigned together hold more than 50 percent of the
record beneficial interest of a series of notes secured by the same
real property or of undivided interests in a note secured by real
property equivalent to a series transaction.
(D) Notice of the substitution was sent by certified mail, postage
prepaid, with return receipt requested to each holder of an interest
in the obligation secured by the deed of trust who has not joined in
the execution of the substitution or the separate document.
The separate document shall be attached to the substitution and be
recorded in the office of the county recorder of each county in
which the real property described in the deed of trust is located.
Once the document required by this paragraph is recorded, it shall
constitute conclusive evidence of compliance with the requirements of
this paragraph in favor of substituted trustees acting pursuant to
this section, subsequent assignees of the obligation secured by the
deed of trust and subsequent bona fide purchasers or encumbrancers
for value of the real property described therein.
(3) For purposes of this section, "affiliate of the licensed real
estate broker" includes any person as defined in Section 25013 of the
Corporations Code that is controlled by, or is under common control
with, or who controls, a licensed real estate broker. "Control"
means the possession, direct or indirect, of the power to direct or
cause the direction of management and policies.
(4) The substitution shall contain the date of recordation of the
trust deed, the name of the trustor, the book and page or instrument
number where the trust deed is recorded, and the name of the new
trustee. From the time the substitution is filed for record, the new
trustee shall succeed to all the powers, duties, authority, and
title granted and delegated to the trustee named in the deed of
trust. A substitution may be accomplished, with respect to multiple
deeds of trust which are recorded in the same county in which the
substitution is being recorded and which all have the same trustee
and beneficiary or beneficiaries, by recording a single document,
complying with the requirements of this section, substituting
trustees for all those deeds of trust.
(b) If the substitution is effected after a notice of default has
been recorded but prior to the recording of the notice of sale, the
beneficiary or beneficiaries or their authorized agents shall cause a
copy of the substitution to be mailed, prior to the recording
thereof, in the manner provided in Section 2924b, to the trustee then
of record and to all persons to whom a copy of the notice of default
would be required to be mailed by the provisions of Section 2924b.
An affidavit shall be attached to the substitution that notice has
been given to those persons and in the manner required by this
subdivision.
(c) Notwithstanding any provision of this section or any provision
in any deed of trust, unless a new notice of sale containing the
name, street address, and telephone number of the substituted trustee
is given pursuant to Section 2924f, any sale conducted by the
substituted trustee shall be void.
(d) This section shall become operative on January 1, 1998.
2934b. Sections 15643 and 18102 of the Probate Code apply to
trustees under deeds of trust given to secure obligations.
2935. When a mortgage or deed of trust is executed as security for
money due or to become due, on a promissory note, bond, or other
instrument, designated in the mortgage or deed of trust, the record
of the assignment of the mortgage or of the assignment of the
beneficial interest under the deed of trust, is not of itself notice
to the debtor, his heirs, or personal representatives, so as to
invalidate any payment made by them, or any of them, to the person
holding such note, bond, or other instrument.
2936. The assignment of a debt secured by mortgage carries with it
the security.
2937. (a) The Legislature hereby finds and declares that borrowers
or subsequent obligors have the right to know when a person holding a
promissory note, bond, or other instrument transfers servicing of
the indebtedness secured by a mortgage or deed of trust on real
property containing one to four residential units located in this
state. The Legislature also finds that notification to the borrower
or subsequent obligor of the transfer may protect the borrower or
subsequent obligor from fraudulent business practices and may ensure
timely payments.
It is the intent of the Legislature in enacting this section to
mandate that a borrower or subsequent obligor be given written notice
when a person transfers the servicing of the indebtedness on notes,
bonds, or other instruments secured by a mortgage or deed of trust on
real property containing one to four residential units and located
in this state.
(b) Any person transferring the servicing of indebtedness as
provided in subdivision (a) to a different servicing agent and any
person assuming from another responsibility for servicing the
instrument evidencing indebtedness, shall give written notice to the
borrower or subsequent obligor before the borrower or subsequent
obligor becomes obligated to make payments to a new servicing agent.
(c) In the event a notice of default has been recorded or a
judicial foreclosure proceeding has been commenced, the person
transferring the servicing of the indebtedness and the person
assuming from another the duty of servicing the indebtedness shall
give written notice to the trustee or attorney named in the notice of
default or judicial foreclosure of the transfer. A notice of
default, notice of sale, or judicial foreclosure shall not be
invalidated solely because the servicing agent is changed during the
foreclosure process.
(d) The notices required by subdivision (b) shall be sent by
first-class mail, postage prepaid, to the borrower's or subsequent
obligor's address designated for loan payment billings, or if escrow
is pending, as provided in the escrow, and shall contain each of the
following:
(1) The name and address of the person to which the transfer of
the servicing of the indebtedness is made.
(2) The date the transfer was or will be completed.
(3) The address where all payments pursuant to the transfer are to
be made.
(e) Any person assuming from another responsibility for servicing
the instrument evidencing indebtedness shall include in the notice
required by subdivision (b) a statement of the due date of the next
payment.
(f) The borrower or subsequent obligor shall not be liable to the
holder of the note, bond, or other instrument or to any servicing
agent for payments made to the previous servicing agent or for late
charges if these payments were made prior to the borrower or
subsequent obligor receiving written notice of the transfer as
provided by subdivision (d) and the payments were otherwise on time.
(g) For purposes of this section, the term servicing agent shall
not include a trustee exercising a power of sale pursuant to a deed
of trust.
2937.7. In any action affecting the interest of any trustor or
beneficiary under a deed of trust or mortgage, service of process to
the trustee does not constitute service to the trustor or beneficiary
and does not impose any obligation on the trustee to notify the
trustor or beneficiary of the action.
2938. (a) A written assignment of an interest in leases, rents,
issues, or profits of real property made in connection with an
obligation secured by real property, irrespective of whether the
assignment is denoted as absolute, absolute conditioned upon default,
additional security for an obligation, or otherwise, shall, upon
execution and delivery by the assignor, be effective to create a
present security interest in existing and future leases, rents,
issues, or profits of that real property. As used in this section,
"leases, rents, issues, and profits of real property" include the
cash proceeds thereof. The term "cash proceeds" means cash, checks,
deposit accounts, and the like.
(b) An assignment of an interest in leases, rents, issues, or
profits of real property may be recorded in the records of the county
recorder in which the underlying real property is located in the
same manner as any other conveyance of an interest in real property,
whether the assignment is in a separate document or part of a
mortgage or deed of trust, and when so duly recorded in accordance
with the methods, procedures, and requirements for recordation of
conveyances of other interests in real property, (1) the assignment
shall be deemed to give constructive notice of the content of the
assignment with the same force and effect as any other duly recorded
conveyance of an interest in real property and (2) the interest
granted by the assignment shall be deemed fully perfected as of the
time of recordation with the same force and effect as any other duly
recorded conveyance of an interest in real property, notwithstanding
any provision of the assignment or any provision of law that would
otherwise preclude or defer enforcement of the rights granted the
assignee under the assignment until the occurrence of a subsequent
event, including, but not limited to, a subsequent default of the
assignor, or the assignee's obtaining possession of the real property
or the appointment of a receiver.
(c) Upon default of the assignor under the obligation secured by
the assignment of leases, rents, issues, and profits, the assignee
shall be entitled to enforce the assignment in accordance with this
section. On and after the date the assignee takes one or more of the
enforcement steps described in this subdivision, the assignee shall
be entitled to collect and receive all rents, issues, and profits
that have accrued but remain unpaid and uncollected by the assignor
or its agent or for the assignor's benefit on that date, and all
rents, issues, and profits that accrue on or after the date. The
assignment shall be enforced by one or more of the following:
(1) The appointment of a receiver.
(2) Obtaining possession of the rents, issues, or profits.
(3) Delivery to any one or more of the tenants of a written demand
for turnover of rents, issues, and profits in the form specified in
subdivision (j), a copy of which demand shall also be delivered to
the assignor; and a copy of which shall be mailed to all other
assignees of record of the leases, rents, issues, and profits of the
real property at the address for notices provided in the assignment
or, if none, to the address to which the recorded assignment was to
be mailed after recording.
(4) Delivery to the assignor of a written demand for the rents,
issues, or profits, a copy of which shall be mailed to all other
assignees of record of the leases, rents, issues, and profits of the
real property at the address for notices provided in the assignment
or, if none, to the address to which the recorded assignment was to
be mailed after recording.
Moneys received by the assignee pursuant to this subdivision, net
of amounts paid pursuant to subdivision (g), if any, shall be applied
by the assignee to the debt or otherwise in accordance with the
assignment or the promissory note, deed of trust, or other instrument
evidencing the obligation; provided, however, that neither the
application nor the failure to so apply the rents, issues, or profits
shall result in a loss of any lien or security interest which the
assignee may have in the underlying real property or any other
collateral, render the obligation unenforceable, constitute a
violation of Section 726 of the Code of Civil Procedure, or otherwise
limit any right available to the assignee with respect to its
security.
(d) If an assignee elects to take the action provided for under
paragraph (3) of subdivision (c), the demand provided for therein
shall be signed under penalty of perjury by the assignee or an
authorized agent of the assignee and shall be effective as against
the tenant when actually received by the tenant at the address for
notices provided under the lease or other contractual agreement under
which the tenant occupies the property or, if no address for notices
is so provided, at the property. Upon receipt of this demand, the
tenant shall be obligated to pay to the assignee all rents, issues,
and profits that are past due and payable on the date of receipt of
the demand, and all rents, issues, and profits coming due under the
lease following the date of receipt of the demand, unless either of
the following occurs:
(1) The tenant has previously received a demand which is valid on
its face from another assignee of the leases, issues, rents, and
profits sent by the other assignee in accordance with this
subdivision and subdivision (c).
(2) The tenant, in good faith and in a manner which is not
inconsistent with the lease, has previously paid, or within 10 days
following receipt of the demand notice pays, the rent to the
assignor.
Payment of rent to an assignee following a demand under an
assignment of leases, rents, issues, and profits shall satisfy the
tenant's obligation to pay the amounts under the lease. If a tenant
pays rent to the assignor after receipt of a demand other than under
the circumstances described in this subdivision, the tenant shall not
be discharged of the obligation to pay rent to the assignee, unless
the tenant occupies the property for residential purposes. The
obligation of a tenant to pay rent pursuant to this subdivision and
subdivision (c) shall continue until receipt by the tenant of a
written notice from a court directing the tenant to pay the rent in a
different manner or receipt by the tenant of a written notice from
the assignee from whom the demand was received canceling the demand,
whichever occurs first. Nothing in this subdivision shall affect the
entitlement to rents, issues, or profits as between assignees as set
forth in subdivision (h).
(e) No enforcement action of the type authorized by subdivision
(c), and no collection, distribution, or application of rents,
issues, or profits by the assignee following an enforcement action of
the type authorized by subdivision (c), shall do any of the
following:
(1) Make the assignee a mortgagee in possession of the property,
except if the assignee obtains actual possession of the real
property, or an agent of the assignor.
(2) Constitute an action, render the obligation unenforceable,
violate Section 726 of the Code of Civil Procedure or, other than
with respect to marshaling requirements, otherwise limit any rights
available to the assignee with respect to its security.
(3) Be deemed to create any bar to a deficiency judgment pursuant
to any provision of law governing or relating to deficiency judgments
following the enforcement of any encumbrance, lien, or security
interest, notwithstanding that the action, collection, distribution,
or application may reduce the indebtedness secured by the assignment
or by any deed of trust or other security instrument.
The application of rents, issues, or profits to the secured
obligation shall satisfy the secured obligation to the extent of
those rents, issues, or profits, and, notwithstanding any provisions
of the assignment or other loan documents to the contrary, shall be
credited against any amounts necessary to cure any monetary default
for purposes of reinstatement under Section 2924c.
(f) If cash proceeds of rents, issues or profits to which the
assignee is entitled following enforcement as set forth in
subdivision (c) are received by the assignor or its agent for
collection or by any other person who has collected such rents,
issues, or profits for the assignor's benefit, or for the benefit of
any subsequent assignee under the circumstances described in
subdivision (h), following the taking by the assignee of either of
the enforcement actions authorized in paragraph (3) or (4) of
subdivision (c), and the assignee has not authorized the assignor's
disposition of the cash proceeds in a writing signed by the assignee,
the rights to the cash proceeds and to the recovery of the cash
proceeds shall be determined by the following:
(1) The assignee shall be entitled to an immediate turnover of the
cash proceeds received by the assignor or its agent for collection
or any other person who has collected the rents, issues, or profits
for the assignor's benefit, or for the benefit of any subsequent
assignee under the circumstances described in subdivision (h), and
the assignor or other described party in possession of such cash
proceeds shall turn over the full amount of cash proceeds to the
assignee, less any amount representing payment of expenses authorized
by the assignee in writing. The assignee shall have a right to
bring an action for recovery of the cash proceeds, and to recover the
cash proceeds, without the necessity of bringing an action to
foreclose any security interest which it may have in the real
property. This action shall not violate Section 726 of the Code of
Civil Procedure or otherwise limit any right available to the
assignee with respect to its security.
(2) As between an assignee with an interest in cash proceeds
perfected in the manner set forth in subdivision (b) and enforced in
accordance with paragraph (3) or (4) of subdivision (c) and any other
person claiming an interest in the cash proceeds, other than the
assignor or its agent for collection or one collecting rents, issues,
and profits for the benefit of the assignor, and subject to
subdivision (h), the assignee shall have a continuously perfected
security interest in the cash proceeds to the extent that the cash
proceeds are identifiable. For purposes hereof, cash proceeds are
identifiable if they are either (A) segregated or (B) if commingled
with other funds of the assignor or its agent or one acting on its
behalf, can be traced using the lowest intermediate balance
principle, unless the assignor or other party claiming an interest in
proceeds shows that some other method of tracing would better serve
the interests of justice and equity under the circumstances of the
case. The provisions of this paragraph are subject to any generally
applicable law with respect to payments made in the operation of the
assignor's business.
(g) (1) If the assignee enforces the assignment under subdivision
(c) by any means other than the appointment of a receiver and
receives rents, issues, or profits pursuant to this enforcement, the
assignor or any other assignee of the affected real property may make
written demand upon the assignee to pay the reasonable costs of
protecting and preserving the property, including payment of taxes
and insurance and compliance with building and housing codes, if any.
(2) On and after the date of receipt of the demand, the assignee
shall pay for the reasonable costs of protecting and preserving the
real property to the extent of any rents, issues, or profits actually
received by the assignee; provided, however, that no such acts by
the assignee shall cause the assignee to become a mortgagee in
possession and the assignee's duties under this subdivision, upon
receipt of a demand from the assignor or any other assignee of the
leases, rents, issues, and profits pursuant to paragraph (1), shall
not be construed to require the assignee to operate or manage the
property, which obligation shall remain that of the assignor.
(3) The obligation of the assignee hereunder shall continue until
the earlier of (A) the date on which the assignee obtains the
appointment of a receiver for the real property pursuant to
application to a court of competent jurisdiction, or (B) the date on
which the assignee ceases to enforce the assignment.
(4) Nothing in this subdivision shall be construed to supersede or
diminish the right of the assignee to the appointment of a receiver.
(h) The lien priorities, rights, and interests among creditors
concerning rents, issues, or profits collected before the enforcement
by the assignee shall be governed by subdivisions (a) and (b).
Without limiting the generality of the foregoing, if an assignee who
has recorded its interest in leases, rents, issues, and profits prior
to the recordation of such interest by a subsequent assignee seeks
to enforce its interest in those rents, issues, or profits in
accordance with this section after any enforcement action has been
taken by a subsequent assignee, the prior assignee shall be entitled
only to the rents, issues, and profits that are accrued and unpaid as
of the date of its enforcement action and unpaid rents, issues, and
profits accruing thereafter. The prior assignee shall have no right
to rents, issues, or profits paid prior to the date of the
enforcement action, whether in the hands of the assignor or any
subsequent assignee. Upon receipt of notice that the prior assignee
has enforced its interest in the rents, issues, and profits, the
subsequent assignee shall immediately send a notice to any tenant to
whom it has given notice under subdivision (c). The notice shall
inform the tenant that the subsequent assignee cancels its demand
that the tenant pay rent to the subsequent assignee.
(i) This section shall apply to contracts entered into on or after
January 1, 1997.
Sections 2938 and 2938.1, as these sections were in effect prior
to January 1, 1997, shall govern contracts entered into prior to
January 1, 1997, and shall govern actions and proceedings initiated
on the basis of these contracts.
(j) "Real property," as used in this section, shall mean real
property or any estate or interest therein.
(k) The demand required by paragraph (3) of subdivision (c) shall
be in the following form:
DEMAND TO PAY RENT TO
PARTY OTHER THAN LANDLORD
(SECTION 2938 OF THE CIVIL CODE)
Tenant: (Name of Tenant)
Property Occupied by Tenant: (Address)
Landlord: (Name of Landlord)
Secured Party: (Name of Secured Party)
Address: (Address for Payment of Rent to Secured Party and for
Further Information):
The secured party named above is the assignee of leases, rents,
issues, and profits under (name of document) dated ______, and
recorded at (recording information) in the official records of
___________ County, California. You may request a copy of such
assignment from the secured party at ____ (address).
THIS NOTICE AFFECTS YOUR LEASE OR RENTAL AGREEMENT RIGHTS AND
OBLIGATIONS. YOU ARE THEREFORE ADVISED TO CONSULT AN ATTORNEY
CONCERNING THOSE RIGHTS AND OBLIGATIONS IF YOU HAVE ANY QUESTIONS
REGARDING YOUR RIGHTS AND OBLIGATIONS UNDER THIS NOTICE.
IN ACCORDANCE WITH SUBDIVISION (C) OF SECTION 2938 OF THE CIVIL
CODE, YOU ARE HEREBY DIRECTED TO PAY TO THE SECURED PARTY, ____
(NAME OF SECURED PARTY) AT ____ (ADDRESS), ALL RENTS UNDER YOUR LEASE
OR OTHER RENTAL AGREEMENT WITH THE LANDLORD OR PREDECESSOR IN
INTEREST OF LANDLORD, FOR THE OCCUPANCY OF THE PROPERTY AT ____
(ADDRESS OF RENTAL PREMISES) WHICH ARE PAST DUE AND PAYABLE ON THE
DATE YOU RECEIVE THIS DEMAND, AND ALL RENTS COMING DUE UNDER THE
LEASE OR OTHER RENTAL AGREEMENT FOLLOWING THE DATE YOU RECEIVE THIS
DEMAND UNLESS YOU HAVE ALREADY PAID THIS RENT TO THE LANDLORD IN GOOD
FAITH AND IN A MANNER NOT INCONSISTENT WITH THE AGREEMENT BETWEEN
YOU AND THE LANDLORD. IN THIS CASE, THIS DEMAND NOTICE SHALL REQUIRE
YOU TO PAY TO THE SECURED PARTY ____, (NAME OF THE SECURED PARTY),
ALL RENTS THAT COME DUE FOLLOWING THE DATE OF THE PAYMENT TO THE
LANDLORD.
IF YOU PAY THE RENT TO THE UNDERSIGNED SECURED PARTY, ____
(NAME OF SECURED PARTY), IN ACCORDANCE WITH THIS NOTICE, YOU DO NOT
HAVE TO PAY THE RENT TO THE LANDLORD. YOU WILL NOT BE SUBJECT TO
DAMAGES OR OBLIGATED TO PAY RENT TO THE SECURED PARTY IF YOU HAVE
PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT SECURED
PARTY.
(For other than residential tenants). IF YOU PAY ANY RENT TO
THE LANDLORD THAT BY THE TERMS OF THIS DEMAND YOU ARE REQUIRED TO PAY
TO THE SECURED PARTY, YOU MAY BE SUBJECT TO DAMAGES INCURRED BY THE
SECURED PARTY BY REASON OF YOUR FAILURE TO COMPLY WITH THIS DEMAND,
AND YOU MAY NOT BE DISCHARGED FROM YOUR OBLIGATION TO PAY SUCH RENT
TO THE SECURED PARTY. YOU WILL NOT BE SUBJECT TO SUCH DAMAGES OR
OBLIGATED TO PAY SUCH RENT TO THE SECURED PARTY IF YOU HAVE
PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT ASSIGNEE.
Your obligation to pay rent under this demand shall continue
until you receive either (1) a written notice from a court directing
you to pay the rent in a manner provided therein, or (2) a written
notice from the secured party named above canceling this demand.
The undersigned hereby certifies, under penalty of perjury,
that the undersigned is an authorized officer or agent of the secured
party and that the secured party is the assignee, or the current
successor to the assignee, under an assignment of leases, rents,
issues, or profits executed by the landlord, or a predecessor in
interest, that is being enforced pursuant to and in accordance with
Section 2938 of the Civil Code.
Executed at _________, California, this ____ day of _________,
_____.
(Secured Party)
Name: _____________________________
Title: ____________________________
2939. A recorded mortgage must be discharged by a certificate
signed by the mortgagee, his personal representatives or assigns,
acknowledged or proved and certified as prescribed by the chapter on
"recording transfers," stating that the mortgage has been paid,
satisfied, or discharged. Reference shall be made in said
certificate to the book and page where the mortgage is recorded.
2939.5. Foreign executors, administrators and guardians may satisfy
mortgages upon the records of any county in this state, upon
producing and recording in the office of the county recorder of the
county in which such mortgage is recorded, a duly certified and
authenticated copy of their letters testamentary, or of
administration or of guardianship, and which certificate or
authentication shall also recite that said letters have not been
revoked. For the purposes of this section, "guardian" includes a
foreign conservator, committee, or comparable fiduciary.
2940. A certificate of the discharge of a mortgage, and the proof
or acknowledgment thereof, must be recorded in the office of the
county recorder in which the mortgage is recorded.
2941. (a) Within 30 days after any mortgage has been satisfied, the
mortgagee or the assignee of the mortgagee shall execute a
certificate of the discharge thereof, as provided in Section 2939,
and shall record or cause to be recorded, except as provided in
subdivision (c), in the office of the county recorder in which the
mortgage is recorded. The mortgagee shall then deliver, upon the
written request of the mortgagor or the mortgagor's heirs,
successors, or assignees, as the case may be, the original note and
mortgage to the person making the request.
(b) (1) When the obligation secured by any deed of trust has been
satisfied, the beneficiary or the assignee of the beneficiary shall
execute and deliver to the trustee the original note, deed of trust,
request for a full reconveyance, and other documents as may be
necessary to reconvey, or cause to be reconveyed, the deed of trust.
(A) The trustee shall execute the full reconveyance and shall
record or cause it to be recorded, except as provided in subdivision
(c), in the office of the county recorder in which the deed of trust
is recorded within 21 calendar days after receipt by the trustee of
the original note, deed of trust, request for a full reconveyance,
the fee that may be charged pursuant to subdivision (e), recorder's
fees, and other documents as may be necessary to reconvey, or cause
to be reconveyed, the deed of trust.
(B) The trustee shall deliver a copy of the reconveyance to the
beneficiary, its successor in interest, or its servicing agent, if
known.
(C) Following execution and recordation of the full reconveyance,
upon receipt of a written request by the trustor or the trustor's
heirs, successors, or assignees, the trustee shall then deliver the
original note and deed of trust to the person making that request.
(2) If the trustee has failed to execute and record, or cause to
be recorded, the full reconveyance within 60 calendar days of
satisfaction of the obligation, the beneficiary, upon receipt of a
written request by the trustor or trustor's heirs, successor in
interest, agent, or assignee, shall execute and acknowledge a
document pursuant to Section 2934a substituting itself or another as
trustee and issue a full reconveyance.
(3) If a full reconveyance has not been executed and recorded
pursuant to either paragraph (1) or paragraph (2) within 75 calendar
days of satisfaction of the obligation, then a title insurance
company may prepare and record a release of the obligation. However,
at least 10 days prior to the issuance and recording of a full
release pursuant to this paragraph, the title insurance company shall
mail by first-class mail with postage prepaid, the intention to
release the obligation to the trustee, trustor, and beneficiary of
record, or their successor in interest of record, at the last known
address.
(A) The release shall set forth:
(i) The name of the beneficiary.
(ii) The name of the trustor.
(iii) The recording reference to the deed of trust.
(iv) A recital that the obligation secured by the deed of trust
has been paid in full.
(v) The date and amount of payment.
(B) The release issued pursuant to this subdivision shall be
entitled to recordation and, when recorded, shall be deemed to be the
equivalent of a reconveyance of a deed of trust.
(4) Where an obligation secured by a deed of trust was paid in
full prior to July 1, 1989, and no reconveyance has been issued and
recorded by October 1, 1989, then a release of obligation as provided
for in paragraph (3) may be issued.
(5) Paragraphs (2) and (3) do not excuse the beneficiary or the
trustee from compliance with paragraph (1). Paragraph (3) does not
excuse the beneficiary from compliance with paragraph (2).
(6) In addition to any other remedy provided by law, a title
insurance company preparing or recording the release of the
obligation shall be liable to any party for damages, including
attorneys' fees, which any person may sustain by reason of the
issuance and recording of the release, pursuant to paragraphs (3) and
(4).
(c) The mortgagee or trustee shall not record or cause the
certificate of discharge or full reconveyance to be recorded when any
of the following circumstances exists:
(1) The mortgagee or trustee has received written instructions to
the contrary from the mortgagor or trustor, or the owner of the land,
as the case may be, or from the owner of the obligation secured by
the deed of trust or his or her agent, or escrow.
(2) The certificate of discharge or full reconveyance is to be
delivered to the mortgagor or trustor, or the owner of the land, as
the case may be, through an escrow to which the mortgagor, trustor,
or owner is a party.
(3) When the personal delivery is not for the purpose of causing
recordation and when the certificate of discharge or full
reconveyance is to be personally delivered with receipt acknowledged
by the mortgagor or trustor or owner of the land, as the case may be,
or their agent if authorized by mortgagor or trustor or owner of the
land.
(d) For the purposes of this section, the phrases "cause to be
recorded" and "cause it to be recorded" include, but are not limited
to, sending by certified mail with the United States Postal Service
or by an independent courier service using its tracking service that
provides documentation of receipt and delivery, including the
signature of the recipient, the full reconveyance or certificate of
discharge in a recordable form, together with payment for all
required fees, in an envelope addressed to the county recorder's
office of the county in which the deed of trust or mortgage is
recorded. Within two business days from the day of receipt, if
received in recordable form together with all required fees, the
county recorder shall stamp and record the full reconveyance or
certificate of discharge. Compliance with this subdivision shall
entitle the trustee to the benefit of the presumption found in
Section 641 of the Evidence Code.
(e) The violation of this section shall make the violator liable
to the person affected by the violation for all damages which that
person may sustain by reason of the violation, and shall require that
the violator forfeit to that person the sum of three hundred dollars
($300). However, a trustee acting in accordance with subdivision
(c) shall not be deemed a violator for purposes of this subdivision.
(f) (1) The trustee, beneficiary, or mortgagee may charge a
reasonable fee to the trustor or mortgagor, or the owner of the land,
as the case may be, for all services involved in the preparation,
execution, and recordation of the full reconveyance, including, but
not limited to, document preparation and forwarding services rendered
to effect the full reconveyance, and, in addition, may collect
official fees. This fee may be made payable no earlier than the
opening of a bona fide escrow or no more than 60 days prior to the
full satisfaction of the obligation secured by the deed of trust or
mortgage.
(2) If the fee charged pursuant to this subdivision does not
exceed sixty-five dollars ($65), the fee is conclusively presumed to
be reasonable.
(g) For purposes of this section, "original" may include an
optically imaged reproduction when the following requirements are
met:
(1) The trustee receiving the request for reconveyance and
executing the reconveyance as provided in subdivision (b) is an
affiliate or subsidiary of the beneficiary or an affiliate or
subsidiary of the assignee of the beneficiary, respectively.
(2) The optical image storage media used to store the document
shall be nonerasable write once, read many (WORM) optical image media
that does not allow changes to the stored document.
(3) The optical image reproduction shall be made consistent with
the minimum standards of quality approved by either the National
Institute of Standards and Technology or the Association for
Information and Image Management.
(4) Written authentication identifying the optical image
reproduction as an unaltered copy of the note, deed of trust, or
mortgage shall be stamped or printed on the optical image
reproduction.
(h) The amendments to this section enacted at the 1999-2000
Regular Session shall apply only to a mortgage or an obligation
secured by a deed of trust that is satisfied on or after January 1,
2001.
2941.5. Every person who willfully violates Section 2941 is guilty
of a misdemeanor punishable by fine of not less than fifty dollars
($50) nor more than four hundred dollars ($400), or by imprisonment
in the county jail for not to exceed six months, or by both such fine
and imprisonment.
For purposes of this section, "willfully" means simply a purpose
or willingness to commit the act, or make the omission referred to.
It does not require an intent to violate the law, to injure another,
or to acquire any advantage.
2941.7. Whenever the obligation secured by a mortgage or deed of
trust has been fully satisfied and the present mortgagee or
beneficiary of record cannot be located after diligent search, or
refuses to execute and deliver a proper certificate of discharge or
request for reconveyance, or whenever a specified balance, including
principal and interest, remains due and the mortgagor or trustor or
the mortgagor's or trustor's successor in interest cannot, after
diligent search, locate the then mortgagee or beneficiary of record,
the lien of any mortgage or deed of trust shall be released when the
mortgagor or trustor or the mortgagor's or trustor's successor in
interest records or causes to be recorded, in the office of the
county recorder of the county in which the encumbered property is
located, a corporate bond accompanied by a declaration, as specified
in subdivision (b), and with respect to a deed of trust, a
reconveyance as hereinafter provided.
(a) The bond shall be acceptable to the trustee and shall be
issued by a corporation lawfully authorized to issue surety bonds in
the State of California in a sum equal to the greater of either (1)
two times the amount of the original obligation secured by the
mortgage or deed of trust and any additional principal amounts,
including advances, shown in any recorded amendment thereto, or (2)
one-half of the total amount computed pursuant to (1) and any accrued
interest on such amount, and shall be conditioned for payment of any
sum which the mortgagee or beneficiary may recover in an action on
the obligation secured by the mortgage or deed of trust, with costs
of suit and reasonable attorneys' fees. The obligees under the bond
shall be the mortgagee or mortgagee's successor in interest or the
trustee who executes a reconveyance under this section and the
beneficiary or beneficiary's successor in interest.
The bond recorded by the mortgagor or trustor or mortgagor's or
trustor's successor in interest shall contain the following
information describing the mortgage or deed of trust:
(1) Recording date and instrument number or book and page number
of the recorded instrument.
(2) Names of original mortgagor and mortgagee or trustor and
beneficiary.
(3) Amount shown as original principal sum secured thereby.
(4) The recording information and new principal amount shown in
any recorded amendment thereto.
(b) The declaration accompanying the corporate bond recorded by
the mortgagor or trustor or the mortgagor's or trustor's successor in
interest shall state:
(1) That it is recorded pursuant to this section.
(2) The name of the original mortgagor or trustor and mortgagee or
beneficiary.
(3) The name and address of the person making the declaration.
(4) That either the obligation secured by the mortgage or deed of
trust has been fully satisfied and the present mortgagee or
beneficiary of record cannot be located after diligent search, or
refuses to execute and deliver a proper certificate of discharge or
request for reconveyance as required under Section 2941; or that a
specified balance, including principal and interest, remains due and
the mortgagor or trustor or mortgagor's or trustor's successor in
interest cannot, after diligent search, locate the then mortgagee or
beneficiary.
(5) That the declarant has mailed by certified mail, return
receipt requested, to the last address of the person to whom payments
under the mortgage or deed of trust were made and to the last
mortgagee or beneficiary of record at the address for such mortgagee
or beneficiary shown on the instrument creating, assigning, or
conveying the interest, a notice of recording a declaration and bond
under this section and informing the recipient of the name and
address of the mortgagor or trustee, if any, and of the right to
record a written objection with respect to the release of the lien of
the mortgage or, with respect to a deed of trust, notify the trustee
in writing of any objection to the reconveyance of the deed of
trust. The declaration shall state the date any notices were mailed
pursuant to this section and the names and addresses of all persons
to whom mailed.
The declaration provided for in this section shall be signed by
the mortgagor or trustor under penalty of perjury.
(c) With respect to a deed of trust, after the expiration of 30
days following the recording of the corporate bond and accompanying
declaration provided in subdivisions (a) and (b), and delivery to the
trustee of the usual reconveyance fees plus costs and a demand for
reconveyance under this section, the trustee shall execute and
record, or otherwise deliver as provided in Section 2941, a
reconveyance in the same form as if the beneficiary had delivered to
the trustee a proper request for reconveyance, provided that the
trustee has not received a written objection to the reconveyance from
the beneficiary of record. No trustee shall have any liability to
any person by reason of its execution of a reconveyance in reliance
upon a trustor's or trustor's successor's in interest substantial
compliance with this section. The sole remedy of any person damaged
by reason of the reconveyance shall be against the trustor, the
affiant, or the bond. With respect to a mortgage, a mortgage shall
be satisfied of record when 30 days have expired following
recordation of the corporate bond and accompanying declaration,
provided no objection to satisfaction has been recorded by the
mortgagee within that period. A bona fide purchaser or encumbrancer
for value shall take the interest conveyed free of such mortgage,
provided there has been compliance with subdivisions (a) and (b) and
the deed to the purchaser recites that no objections by the mortgagee
have been recorded.
Upon recording of a reconveyance under this section, or, in the
case of a mortgage the expiration of 30 days following recordation of
the corporate bond and accompanying declaration without objection
thereto having been recorded, interest shall no longer accrue as to
any balance remaining due to the extent the balance due has been
alleged in the declaration recorded under subdivision (b).
The sum of any specified balance, including principal and
interest, which remains due and which is remitted to any issuer of a
corporate bond in conjunction with the issuance of a bond pursuant to
this section shall, if unclaimed, escheat to the state after three
years pursuant to the Unclaimed Property Law. From the date of
escheat the issuer of the bond shall be relieved of any liability to
pay to the beneficiary or his or her heirs or other successors in
interest the escheated funds and the sole remedy shall be a claim for
property paid or delivered to the Controller pursuant to the
Unclaimed Property Law.
(d) The term "diligent search," as used in this section, shall
mean all of the following:
(1) The mailing of notices as provided in paragraph (5) of
subdivision (b), and to any other address that the declarant has used
to correspond with or contact the mortgagee or beneficiary.
(2) A check of the telephone directory in the city where the
mortgagee or beneficiary maintained the mortgagee's or beneficiary's
last known address or place of business.
(3) In the event the mortgagee or beneficiary or the mortgagee's
or beneficiary's successor in interest is a corporation, a check of
the records of the California Secretary of State and the secretary of
state in the state of incorporation, if known.
(4) In the event the mortgagee or beneficiary is a state or
national bank or a state or federal savings and loan association, an
inquiry of the regulatory authority of such bank or savings and loan
association.
(e) This section shall not be deemed to create an exclusive
procedure for the issuance of reconveyances and the issuance of bonds
and declarations to release the lien of a mortgage and shall not
affect any other procedures, whether or not such procedures are set
forth in statute, for the issuance of reconveyances and the issuance
of bonds and declarations to release the lien of a mortgage.
(f) For purposes of this section, the trustor or trustor's
successor in interest may substitute the present trustee of record
without conferring any duties upon the trustee other than those that
are incidental to the execution of a reconveyance pursuant to this
section if all of the following requirements are met:
(1) The present trustee of record and the present mortgagee or
beneficiary of record cannot be located after diligent search.
(2) The declaration filed pursuant to subdivision (b) shall state
in addition that it is filed pursuant to this subdivision, and shall,
in lieu of the provisions of paragraph (4) of subdivision (b), state
that the obligation secured by the mortgage or deed of trust has
been fully satisfied and the present trustee of record and present
mortgagee or beneficiary of record cannot be located after diligent
search.
(3) The substitute trustee is a title insurance company that
agrees to accept the substitution. This subdivision shall not impose
a duty upon a title insurance company to accept the substitution.
(4) The corporate bond required in subdivision (a) is for a period
of five or more years.
2941.9. (a) The purpose of this section is to establish a process
through which all of the beneficiaries under a trust deed may agree
to be governed by beneficiaries holding more than 50 percent of the
record beneficial interest of a series of notes secured by the same
real property or of undivided interests in a note secured by real
property equivalent to a series transaction, exclusive of any notes
or interests of a licensed real estate broker that is the issuer or
servicer of the notes or interests or any affiliate of that licensed
real estate broker.
(b) All holders of notes secured by the same real property or a
series of undivided interests in notes secured by real property
equivalent to a series transaction may agree in writing to be
governed by the desires of the holders of more than 50 percent of the
record beneficial interest of those notes or interests, exclusive of
any notes or interests of a licensed real estate broker that is the
issuer or servicer of the notes or interests of any affiliate of the
licensed real estate broker, with respect to actions to be taken on
behalf of all holders in the event of default or foreclosure for
matters that require direction or approval of the holders, including
designation of the broker, servicing agent, or other person acting on
their behalf, and the sale, encumbrance, or lease of real property
owned by the holders resulting from foreclosure or receipt of a deed
in lieu of foreclosure.
(c) A description of the agreement authorized in subdivision (b)
of this section shall be disclosed pursuant to Section 10232.5 of the
Business and Professions Code and shall be included in a recorded
document such as the deed of trust or the assignment of interests.
(d) Any action taken pursuant to the authority granted in this
section is not effective unless all the parties agreeing to the
action sign, under penalty of perjury, a separate written document
entitled "Majority Action Affidavit" stating the following:
(1) The action has been authorized pursuant to this section.
(2) None of the undersigned is a licensed real estate broker or an
affiliate of the broker that is the issuer or servicer of the
obligation secured by the deed of trust.
(3) The undersigned together hold more than 50 percent of the
record beneficial interest of a series of notes secured by the same
real property or of undivided interests in a note secured by real
property equivalent to a series transaction.
(4) Notice of the action was sent by certified mail, postage
prepaid, with return receipt requested, to each holder of an interest
in the obligation secured by the deed of trust who has not joined in
the execution of the substitution or this document.
This document shall be recorded in the office of the county
recorder of each county in which the real property described in the
deed of trust is located. Once the document in this subdivision is
recorded, it shall constitute conclusive evidence of compliance with
the requirements of this subdivision in favor of trustees acting
pursuant to this section, substituted trustees acting pursuant to
Section 2934a, subsequent assignees of the obligation secured by the
deed of trust, and subsequent bona fide purchasers or encumbrancers
for value of the real property described therein.
(e) For purposes of this section, "affiliate of the licensed real
estate broker" includes any person as defined in Section 25013 of the
Corporations Code who is controlled by, or is under common control
with, or who controls, a licensed real estate broker. "Control"
means the possession, direct or indirect, of the power to direct or
cause the direction of management and policies.
2942. Contracts of bottomry or respondentia, although in the nature
of mortgages, are not affected by any of the provisions of this
Chapter.
2943. (a) As used in this section:
(1) "Beneficiary" means a mortgagee or beneficiary of a mortgage
or deed of trust, or his or her assignees.
(2) "Beneficiary statement" means a written statement showing:
(A) The amount of the unpaid balance of the obligation secured by
the mortgage or deed of trust and the interest rate, together with
the total amounts, if any, of all overdue installments of either
principal or interest, or both.
(B) The amounts of periodic payments, if any.
(C) The date on which the obligation is due in whole or in part.
(D) The date to which real estate taxes and special assessments
have been paid to the extent the information is known to the
beneficiary.
(E) The amount of hazard insurance in effect and the term and
premium of that insurance to the extent the information is known to
the beneficiary.
(F) The amount in an account, if any, maintained for the
accumulation of funds with which to pay taxes and insurance premiums.
(G) The nature and, if known, the amount of any additional
charges, costs, or expenses paid or incurred by the beneficiary which
have become a lien on the real property involved.
(H) Whether the obligation secured by the mortgage or deed of
trust can or may be transferred to a new borrower.
(3) "Delivery" means depositing or causing to be deposited in the
United States mail an envelope with postage prepaid, containing a
copy of the document to be delivered, addressed to the person whose
name and address is set forth in the demand therefor. The document
may also be transmitted by facsimile machine to the person whose name
and address is set forth in the demand therefor.
(4) "Entitled person" means the trustor or mortgagor of, or his or
her successor in interest in, the mortgaged or trust property or any
part thereof, any beneficiary under a deed of trust, any person
having a subordinate lien or encumbrance of record thereon, the
escrowholder licensed as an agent pursuant to Division 6 (commencing
with Section 17000) of the Financial Code, or the party exempt by
virtue of Section 17006 of the Financial Code who is acting as the
escrowholder.
(5) "Payoff demand statement" means a written statement, prepared
in response to a written demand made by an entitled person or
authorized agent, setting forth the amounts required as of the date
of preparation by the beneficiary, to fully satisfy all obligations
secured by the loan that is the subject of the payoff demand
statement. The written statement shall include information
reasonably necessary to calculate the payoff amount on a per diem
basis for the period of time, not to exceed 30 days, during which the
per diem amount is not changed by the terms of the note.
(b) (1) A beneficiary, or his or her authorized agent, shall,
within 21 days of the receipt of a written demand by an entitled
person or his or her authorized agent, prepare and deliver to the
person demanding it a true, correct, and complete copy of the note or
other evidence of indebtedness with any modification thereto, and a
beneficiary statement.
(2) A request pursuant to this subdivision may be made by an
entitled person or his or her authorized agent at any time before, or
within two months after, the recording of a notice of default under
a mortgage or deed of trust, or may otherwise be made more than 30
days prior to the entry of the decree of foreclosure.
(c) A beneficiary, or his or her authorized agent, shall, on the
written demand of an entitled person, or his or her authorized agent,
prepare and deliver a payoff demand statement to the person
demanding it within 21 days of the receipt of the demand. However,
if the loan is subject to a recorded notice of default or a filed
complaint commencing a judicial foreclosure, the beneficiary shall
have no obligation to prepare and deliver this statement as
prescribed unless the written demand is received prior to the first
publication of a notice of sale or the notice of the first date of
sale established by a court.
(d) (1) A beneficiary statement or payoff demand statement may be
relied upon by the entitled person or his or her authorized agent in
accordance with its terms, including with respect to the payoff
demand statement reliance for the purpose of establishing the amount
necessary to pay the obligation in full. If the beneficiary notifies
the entitled person or his or her authorized agent of any amendment
to the statement, then the amended statement may be relied upon by
the entitled person or his or her authorized agent as provided in
this subdivision.
(2) If notification of any amendment to the statement is not given
in writing, then a written amendment to the statement shall be
delivered to the entitled person or his or her authorized agent no
later than the next business day after notification.
(3) Upon the dates specified in subparagraphs (A) and (B) any sums
that were due and for any reason not included in the statement or
amended statement shall continue to be recoverable by the beneficiary
as an unsecured obligation of the obligor pursuant to the terms of
the note and existing provisions of law.
(A) If the transaction is voluntary, the entitled party or his or
her authorized agent may rely upon the statement or amended statement
upon the earlier of (i) the close of escrow, (ii) transfer of title,
or (iii) recordation of a lien.
(B) If the loan is subject to a recorded notice of default or a
filed complaint commencing a judicial foreclosure, the entitled party
or his or her authorized agent may rely upon the statement or
amended statement upon the acceptance of the last and highest bid at
a trustee's sale or a court supervised sale.
(e) The following provisions apply to a demand for either a
beneficiary statement or a payoff demand statement:
(1) If an entitled person or his or her authorized agent requests
a statement pursuant to this section and does not specify a
beneficiary statement or a payoff demand statement the beneficiary
shall treat the request as a request for a payoff demand statement.
(2) If the entitled person or the entitled person's authorized
agent includes in the written demand a specific request for a copy of
the deed of trust or mortgage, it shall be furnished with the
written statement at no additional charge.
(3) The beneficiary may, before delivering a statement, require
reasonable proof that the person making the demand is, in fact, an
entitled person or an authorized agent of an entitled person, in
which event the beneficiary shall not be subject to the penalties of
this section until 21 days after receipt of the proof herein provided
for. A statement in writing signed by the entitled person
appointing an authorized agent when delivered personally to the
beneficiary or delivered by registered return receipt mail shall
constitute reasonable proof as to the identity of an agent. Similar
delivery of a policy of title insurance, preliminary report issued by
a title company, original or photographic copy of a grant deed or
certified copy of letters testamentary, guardianship, or
conservatorship shall constitute reasonable proof as to the identity
of a successor in interest, provided the person demanding a statement
is named as successor in interest in the document.
(4) If a beneficiary for a period of 21 days after receipt of the
written demand willfully fails to prepare and deliver the statement,
he or she is liable to the entitled person for all damages which he
or she may sustain by reason of the refusal and, whether or not
actual damages are sustained, he or she shall forfeit to the entitled
person the sum of three hundred dollars ($300). Each failure to
prepare and deliver the statement, occurring at a time when, pursuant
to this section, the beneficiary is required to prepare and deliver
the statement, creates a separate cause of action, but a judgment
awarding an entitled person a forfeiture, or damages and forfeiture,
for any failure to prepare and deliver a statement bars recovery of
damages and forfeiture for any other failure to prepare and deliver a
statement, with respect to the same obligation, in compliance with a
demand therefor made within six months before or after the demand as
to which the award was made. For the purposes of this subdivision,
"willfully" means an intentional failure to comply with the
requirements of this section without just cause or excuse.
(5) If the beneficiary has more than one branch, office, or other
place of business, then the demand shall be made to the branch or
office address set forth in the payment billing notice or payment
book, and the statement, unless it specifies otherwise, shall be
deemed to apply only to the unpaid balance of the single obligation
named in the request and secured by the mortgage or deed of trust
which is payable at the branch or office whose address appears on the
aforesaid billing notice or payment book.
(6) The beneficiary may make a charge not to exceed sixty dollars
($60) for furnishing each required statement. The provisions of this
paragraph shall not apply to mortgages or deeds of trust insured by
the Federal Housing Administrator or guaranteed by the Administrator
of Veterans Affairs.
(f) The preparation and delivery of a beneficiary statement or a
payoff demand statement pursuant to this section shall not change a
date of sale established pursuant to Section 2924g.
2944. None of the provisions of this chapter applies to any
transaction or security interest governed by the Commercial Code,
except to the extent made applicable by reason of an election made by
the secured party pursuant to subparagraph (ii) of paragraph (a) of
subdivision (4) of Section 9501 of the Commercial Code.
2944. None of the provisions of this chapter applies to any
transaction or security interest governed by the Commercial Code,
except to the extent made applicable by reason of an election made by
the secured party pursuant to subparagraph (B) of paragraph (1) of
subdivision (a) of Section 9604 of the Commercial Code.
2944.5. No lender, mortgagee, or any third party having an interest
in real or personal property shall refuse to accept a policy issued
by an admitted insurer solely because the policy is issued for a
continuous period without a fixed expiration date even though the
policy premium is due and payable every six months, provided the
lender, mortgagee, or third party is entitled to receive (a) notice
of renewal from the insurer within 15 days of receipt of payment on
the policy by the insured or (b) notice of cancellation or nonrenewal
under the terms and conditions set forth in Sections 678 and 2074.8
of the Insurance Code, whichever is applicable.
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