Title, Mortgage & Foreclosure

A large body of law, both statutory and case law, governs the subjects of the title, use, and possession of real property and the foreclosure of mortgages and deeds of trust to enforce liens secured by an interest in the real property. An owner of real property who has secured an obligation, such as a loan, with a deed of trust recorded against his interest in the real property could be subject to a judicial foreclosure or non-judicial foreclosure by the lender to enforce the debt.

The purchaser of real property at a foreclosure sale may seek to evict a tenant who is occupying the foreclosed property and an issue may arise as to whether the lease remains in effect or whether the lease was subordinate to the foreclosed deed of trust. Generally, a purchaser at a foreclosure sale may proceed to enforce his right to possession under California Civil Code of Procedure (CCP) §1161(a) governing summary evictions.

A lease is generally subordinate (of lower priority) to a prior recorded trust deed, and a foreclosure generally terminates subordinate liens, including leases. However a lease that is senior to the mortgage may be unaffected by a foreclosure if the tenant is not in default. (R-Ranch Markets No. 2, Inc. vs. Old Stone Bank (1993) 16 CA4th 1323)

A property owner might challenge the right of possession of a purchaser after a foreclosure sale by asserting an equitable defense or by asserting fraud or defects in the foreclosure process. For example, the property owner might claim that a forbearance agreement was in effect when the foreclosure sale took place. (MCA, Inc. vs. Universal Diversified Enters, Corp. (1972) 27 CA3d 170)

Judicial foreclosure is a process by which the lender brings a lawsuit seeking to foreclose the interest of the property owner in order to cause the property to be sold and the proceeds to be applied towards the payment of the debt. If certain requirements are met, the lender may obtain a deficiency judgment against the borrower. A deficiency judgment is a money judgment for the difference between the total indebtedness owed by the borrower, less the value of the property at the time of foreclosure. The deficiency judgment could be enforced against other assets, including future earnings of the borrower.

Non-judicial foreclosure is a procedure by which the lender avoids filing any action in court, and rather causes a notice of default to be recorded with the county recorder and to be sent to the borrower stating that a breach of the obligation has occurred. If the breach is not cured within three months of the filing of the notice of default, the lender may then record a notice of sale and cause the property to be sold at public auction by the trustee named in the deed of trust. The procedure is set forth at Civil Code (CC) §2924. A property owner who objects to the foreclosure can file a lawsuit seeking to enjoin or restrain the foreclosure sale.

Disputes in real estate cases can involve disputes between multiple concurrent owners, such as persons who are tenants in common, joint tenants, or parties to a co-ownership agreement or non-partition agreement. Such disputes may concern rights regarding the use, occupancy, ownership, sale of the real property or a fractional interest in the property, partition of the property, or obligations to pay common expenses, such as property taxes, insurance, maintenance, and repairs.

A lawsuit for partition seeks an order from the court that real property held by multiple owners be sold and the proceeds divided according to the respective interests of the owners. In the case of uncertainty as to the true owner of an interest in real property, an interested party may file an action for quiet title, which asks the court to determine the nature of the interest of each person in the real property.

Disputes can involve adjacent landowners, such as disagreements concerning boundary lines, the use of common access roads or easements, prescriptive easements derived from a lengthy period of use of another person’s land, and the issue of sharing the costs for the maintenance of a common road or easement.

Real estate law is technical and complex. Please contact our office if you have questions concerning your particular matter.