Secured Transactions in Real Property

729 Redemption Periods

0 Months: if the creditor in the JF sale wavies his right to a deficiency judgment then there is no right of redemption for the borrower, the sale is final, and title goes to the purchaser of the sale 3 Months: Borrower has a 3 month right of redemption anyway and the trustor has possession during that time (the buyer has to wait 3 months) 12 Months: Unless lender waives it before hand, there is at least a 3 month right of redemption. If deficiency judgment by the court then trustor has 1 year right of redemption

Schelling v. Thomas

1st to record has priority, however that priority can be assigned 1217 - an unrecorded instrument is valid as between the parties to the agreement who have notice of it 1214 - First in time rule: Every conveyance of real property is void as against any subsequent mortgage of the same property in GF & for a valuable consideration whose conveyance is first duly recorded. *a subsequent BFO wins over a prior grantee who fails to record. if you don't record then no priority

2819, 2845, 2847, 2848

2819: a surety is exonerated if by any act of the creditor without the consent of the surety the principle is altered in any respect. 2845: a guarantor can require the creditor go after the primary obligor first before coming after him 2847-2848: indemnity or subrogation sections

Pre-Sale Activity

2924. A trustee has a fiduciary duty to its principal. The duty to carry out the implementation of the statutes.

NJF Pre-Sale right of redemption.

5 days or less before sale lender must accept. Borrower can stop sale within 5 days of it but only if they bring loan current. Reinstatement: can do this anytime up until 5 days before sale = cure arrearages Redemption: occurs before the sale but after the right of reinstate has passed. Has to come up with the balance of the whole sale under acceleration clause. Last ditch effort to stop the sale. NO POST SALE REDEMPTION UNDER 580d

Anti-Deficiency Rules

580(a), 580(d), 580(b)

Heckes v. Sapp

580(d) anti-deficiency legislation is meant to protect the original borrower not the guarantor because a guarantor is voluntarily putting their neck on the line. Once guarantor pays off the debt, he can subrogate: step into the shoes of the creditor and then pursue the debtor the same way the creditor could have.

Gradsky Waiver CC 2856

A guarantor may waive all statutory and judicial rights the guarantor may have such as subrogation, indemnification, contribution etc.

Fraud

A lender may sue a 3rd party to a loan for fraud either for inducing the loan for inducing FCB. Lender must show prima facie case and show that this induced the FCB. Borrower who induces a loan or FCB can be sued and is not protected by 580bd or 726. (Guild Mortgage v. Heller) Fraud and conspirators are not protected by anti-deficiency statutes, not the policy behind the laws.

Power of Sale Provision

A provision in the contractual agreement between the borrower and the lender, that the lender can comply with the NJF statute to recover its money if the borrower defaults. Allows lender to sell in NJF. Loses deficiency judgment and borrower loses right of redemption. Acceleration clause: if the borrower is in breach, then whole balance becomes due.

Security First Prong

A secured creditor is required to proceed against the security first before going after other assets of the borrower. A borrower confronted w/ an action where a secured creditor is not pursuing the security first but suing on the underlying not has two options: 1. Borrower can raise 726(a) as an affirmative defense 2. Borrower can allow the action against debt then later raise 726(a) as a Sanction when the creditor tries to bring an action against the security. SPNB v. Wozab

Deed of Trust

A security instrument used as collateral for debt Primary security instrument in CA - A security instrument is only good if it has something to secure, if not then the trust deed will be invalid. There has to be an underlying debt obligation

Mortgage

A transfer of an interest in property made only as a security for an act or a loan - a K where property is hypothecated (pledged) for the performance of an act w/o a change of possession Practically identical to DoT

Types of Notice

Actual Constructive Inquiry

Bank of Mendocino v. Baker

Adverse possessor wins because owner was on inquiry notice of the other land owner. Fact that bank did not have record title does not end claim, P had notice of railroad which should have put him on inquiry notice that something was wrong.

Sham Guarantee

Alter ego guarantees. Guarantor is asked to sign on the DoT w/ the borrower. Where the lender tries to make the principal obligor the guarantor when the facts show that he is really the principal obligor, it will be deemed a sham guaranty and the trustor will have anti-deficiency protections. Test: are the supposed guarantors nothing more than the principal obligors under another name?

Creditor Issues

Any one beneficiary may elect to foreclose the entire interest w/o consent of the others but then the proceeds must be distributed on a pro rata basis to each beneficiary.

CCP 2929

Any person who has an interest in real property that is subject to a DoT has a duty not to do any act that will substantially impair the lienor's security, or that would constitute waste.

Home Equity Sales Contracts

Applies to Investors and buyers. Applies only if a notice of default has been filed and the buyer does not intend to live in the residence. Requires a written K and large print bold font of 5 day right of cancellation. Rescission of sale w/in 2 years of the date the DoT from the property was recorded if P can prove unconscionability. 1695 - 2 year rescision 2945-2945.8 - formatting

Foreclosure Consultants

Applies to person assisting the seller. Once it is known that the debtor is in trouble, the debtor may be bullied by 3rd parties claiming to help them get out of foreclosure. If notice of default is filed and someone, not attorney or broker, does one of the below things he has to have a written K with big recital of 3 day cancellation: 1) financial counseling 2) acting as a recipient for money to pay off secured lenders 3) arranging K extensions by contacting lenders 4) assisting in preparing documents to be filed in the bankruptcy court. Remedy: actual damages, attorney's fees, equitable relief

SPNB v. Wozab

Bank Setoff. Guy took out a loan from the bank he had a 1m account. He defaulted and the bank took from his account. This was not an action since it was not a court proceeding so 726 one action prong does not apply HOWEVER, the bank was still liable under the security 1st prong of 726(a) b/c the beneficiary has taken and applied assets of the debtor w/o first exhausting the security. *if the bank does a setoff inadvertently w/o first exhausting the security but promptly puts the money back and sends Wozab a letter, then the bank may be able to avoid 726 sanctions so long as the borrower is not harmed.

CCP 580(b)

Bank can foreclose but CANNOT get a deficiency judgment against borrower in a purchase money loan or a seller carry back loan - lender ONLY has the right to get back what the property sells for 1. Deficiency: difference between what bank is owed and what is realized at sale 2. Purchase Money Loan: if a loan is used to purchase the property and it is residential 1-4 and borrower is going to live in the house then that loan can NEVER have a deficiency judgment against it 3. Seller Carry Back: seller extends the buyer credit --- buyer finances the purchase through the seller and the seller takes a DOT on the property. Can be any type of property as long as seller secures it with DOT 4. If there is a non-purchase money loan (buying land, refinancing) then after a judicial foreclosure, lender COULD get a deficiency judgment *a lender cannot get a deficiency judgment against a borrower where it is (1) a purchase money loand for a (2) owner occupied (3) residential 1-4 *refinancing voids 580(b)

River bank v. Diller

Bank had the party with deep pockets agree to be the guarantor and waive under 2856 so they could go after them and not be precluded by anti-deficiency laws.

Brock v. First South

Between a vendor's lien and a purchase money DoT, that arise out of single transaction, the PM DoT prevails

DoT Essentials

Borrower agrees to grant a security interest in the real estate Borrower makes promises to take care of the property The lender has the remedy to force sale to pay the debt. (Power of Sale must be included) - Must be signed by the borrower and notarized

Bauman v Castle

Borrower had a 580(b) loan - already immune from deficiency judgment so the creditor's election of a NJF did not prejudice the guarantor. In a 580b loan the borrower is immune from deficiency judgments at the the moment of signing. In a 580d loan the borrower is not immune UNLESS and UNTIL there is a NJF.

Title Insurance

Both the buyer and the lender generally take out title insurance policies on the property. No institutional lender would loan w/o TI. Malpractice to net telll the buyer to get TI. *TI contains an agreement by the insurer to indemnify the insured from loss that arises because of a condition that existed on the date the policy was issued.

Goodenow v. Ewer

CA is not a title state. CA follows the lien theory of mortgages: the DoT does not give the beneficiary title to the property and it is not a true deed. Rather, the beneficiary receives a lien that will kick in on default to and give the lender the right to sell the property to satisfy indebtedness. Failure to give proper notice to the trustor voids a sale entirely as to a JF or NJF. Failure to give notice to a party OTHER than the trustor does not affect that party's interest. Judgment not effective towards him even though sale proceeds.

Recording Acts in CA

CC 1213 CC 1214 CC 1217

Big 3 Statutes

CCP 726 CCP 580(b) CCP 580 (d)

Election of Remedies. NJF v JF

Can do both at the same time and need to choose at judgment. Most are NJF: faster, easier, no redemption, final.

Bad faith waste

Caused by reckless, intentional, or malicious injury to the property and the damages are measured by the diminution of value to the property caused by the waste to the extent that the remaining value is less than the unpaid balance of the debt. Waste is measured by the difference between the bid and the amount of indebtedness.

Judicial Foreclosure

Common law foreclosure. In CA only done in 3 to 5 percent of all cases Point - if borrower defaults, the lender can take the security agreement to court and adjudicate the matter. If the lender wins, then the court orders the sale of the security to relieve the lender of the debt owed & make the lender whole Downside - lawsuit brought in superior court can take 2-5 years and cost a lot of money, 50-300k ONLY ADVANTAGE - for a non-purchase money loan the lender can get a deficiency judgment *defaulting borrower has right of redemption

One Action Prong

Creditor can only take one action, not multiple. An action is a court proceeding, an attachment lien is enough. There can be but one action for recovery of any debt or the enforcement of any right secured by a mortgage or DoT. *creditor must include ALL security for single obligation in one action *trustees sale not an action but does subject lender to 580(d) anti-deficiency legislation *passed to protect a defaulting borrower from being subject to a multiplicity of actions being filed against him and to consolidate actions Walker v. Community Bank NOT ACTIONS: NJF, Trustee Sale, power of sale forclosure,

Garfinkle v. Superior Court

Ct refuses to find that NJF are states actions - NOT subject to due process. Power of sale is a result of contract not statute. Lender only has to send notice of the sale to the "last known address" to satisfy notice requirement. CA and Fed NJF statutes do not constitute state action and are immune from state and fed procedure.

Promissory Note

Debt instrument - K by which the borrower promises to repay the lender - only allow to sign one, can be sold, sets forth in detail the payment obligation

De Berard

Debtor may not waive 580(b) as part of a later work out arrangement with the creditor. Guy signs a loan and defaults. Lenders says they will give more money in consideration for guy waiving 580b right.

CCP 580(b)

Deficiency judgments are prohibited after the foreclosure sale of real property that is secured by: 1) purchase money loan used to pay all or party of the purchase price of, and are secured by, 2) a dwelling of 4 units or less 3) occupied at least in part by the purchaser Two prong test: no DJ if (a) vendor or seller carry-back financing for any kind of property, if purchase money OR (b) purchase money on residential 1 to 4 owner occupied.

CC 3343 Out of Pocket Rule

Difference between K price and the value of what you receive. Use this rule when not suing a fiduciary. Proved up by putting on an appraiser who tells the judge what the property is worth w/ defects. Take K price paid and subtract by FMV w/ defects.

Guarantor Sample Exam Question

Discuss factors under Gradsky and assume that 2856 does not apply. State that the bank would have 3 options 1. JF 2. NJF 3. Go after guarantor first Then discuss.

Purchase money loan

Either (1) credit extended to the buyer by the seller to finance the purchase of real property (2) funds lent to buyer by a 3rd party.

CCP 580(a)

Fair value limitation: as between the FMV of the property and the foreclosure sale price, the deficiency is determined by the FMV. Deficiency judgment = loan outstanding - FMV. Does not apply to purchase money loans. Only occurs in commercial loans. Only kicks in if there is a JF and the lender is seeking a deficiency judgment. FMV only relevant in a JF. The court looks at the FMV, highest bid, and what is owed. The deficiency judgment is the difference between what is owed subtracted by the higher of either the FMV or the highest bid.

Notice of Default

First step in the NJF process. CC 2924 notice requirements. First record the notice of default and then send by registered or certified mail within 10 business days to the trustor at the trustor's LAST KNOWN ADDRESS, also anyone else entitled to receive notice (junior) or has requested notice MUST ALSO send a copy first class mail - no requirement to send notice to easement holder unless recorded special request for it

JF Post-Sale right of redemption

If a deficiency judgment is granted the borrower has one year to come up with the deficiency. Come with everything owed. More likely to file bankruptcy. CCP 729: a JF sale creates in the judgment debtor a statutory right of redemption whenever the right to a deficiency judgment is not waived or prohibited. Unlike NJF, this statutory right of redemption is asserted not against the secured creditor but against the purchaser at the F sale

Notice of Sale

If in 90 days the borrower hasn't cured the default, the lender can file a notice of sale. two steps. Borrower is warned that in 21 days the sale will occur unless they cure up to 5 days before sale. If not cured sale takes place. Must be recorded at least 14 days before sale at the county recorder, at least 20 days before the sale the NoS must be mailed by registered or certified. Must public notice of sale in newspaper of general circulation once a week for three consecutive weeks. Must post notice on property in a conspicuous place and in a public place in the appropriate city.

Contaminated Property 726.5

If lender can prove that property was environmentally impaired lender can waive security and sue directly on the note. This is like BFW. Must be commercial or more than 15 units. Must have caused impairment after loan made. Lender must prove prima facie case for contamination. Allows borrower to be personally liable.

Constructive Notice

If something is properly recorded it gives notice to the world b/c a title search would turn up the info

Alliance Bank

If the lender relies on fraudulent information when making a FCB then the lender will not be barred from maintaining a fraud action against third party non-borrowers. Lender may recover in damages the difference between the bid and the property value, and if there was a fiduciary relationship, what the P reasonably expected the value would be. Lenders lawsuit against fiduciary for fraudulent inducement is separate from a suit for impairment of its security. Must show damages after doing FCB. Negligence by a fiduciary = constructive fraud.

Sold-Out Junior Lien

If the senior lien forecloses, the security is wiped out. Now the junior lien can sue the borrower directly on the note for breach of K b/c there is no security left.

Foreclosure

If the trustor defaults, the beneficiary may enforce its security agreement by foreclosing on the secured property. In some instances the lenders only remedy upon default is to foreclose. Judicial Foreclosure Non-Judicial Foreclosure

Federal Rules

If you borrow from a federal lender there may be an issue of preemption & the CA deficiency protection may have to give way to federal law

Inquiry Notice

If you drove by the property you should have seen it

Cornelison vs. Alliance cases

In Cornelison if BF and lender makes FCB it's out of luck. Under Alliance, even if lender does a FCB, if there is fraud or constructive fraud by an agent, lender can go after the agent. This is to deter fraud and negligence by fiduciaries.

Environmental Indemnity

In a separate DOT provision borrower promises not to contaminate property. If they do they waive all rights but cannot waive 580bd or726. 736: lender can bring an action for breach of K and it will NOT violate one action rule of 726. Original principal of loan secured must be more than 200k.

Easements

JF: ALWAYS NOTIFY. if the bank is JF and there is a recorded easement which is recorded AFTER the loan, bank must give notice and serve the easement holder with the lawsuit, easement holder has a right to have a lawyer and argue - if bank omits the easement holder from JF the easement survives the foreclosure notice NJF: Foreclosing lender does not have to notify easement holder and the easement is STILL wiped out. Code does NOT require notice so easement rights are lost in NJF even w/o notice *Request for notice of delinquency: if easement holder records this they are protected because then the statute requires that foreclosing entity send notice to easement holder

Purchase money loan

Lender who provides money to a borrower and the borrower uses the money to purchase the property Test: was the loan that the lender is now seeking to foreclose on used to buy the property the borrower lives in?

Subordination

Lender who would be 1st agrees to be a 2nd for some consideration 2 part inquiry: - does the sale vary from the standard 580(b) transaction in some way? -- if yes go to 2 b/c it may not be covered by 580b and the lender may be able to sue ont he note -- if no, it is standard and 580b applies - Even if it does vary from the standard, will applying 580(b) further the purposes of the statute? -- if yes, the lender is likely barred from suing on the note -- if no, the seller can likely sue on the note

Non-Recourse Loan

Loan in which borrower has NO personal liability

Union Bank v. Gradsky

Max guaranteed Gradsky's loan. At the same time he waived a bunch of his rights. Borrower defaults. Bank did NJF. They did not get enough and went after Max for the deficiency. B/c the bank destroyed Max's recovery the bank could not then later go against Max for the deficiency. The bank tried to get a deficiency judgment from the guarantor after a NJF but was estopped by the court b/c it had destroyed the guarantor's subrogation rights. Here bank has 3 options 1. brought an action for JF joining Max and Bess 2. sued directly on the his guarantee for the full amount of unpaid balance 3. realized its security by NJF, this is option chosen - problem with this is that once bank did NJF it created Max's problem by exhausting security and gave Bess 580(d) protection. Under Max's right to subrogate.

Reinstatement

Means to cure the loan, pay arrearages, late fees, trustee fees. If this is done 5 days or more before the sale the lender MUST accept. If within 5 days don't have to accept.

Hidden Guarantee

Most commonly arise when a lender does not recognize that one or more of the putative borrowers is as a matter of law a guarantor.

CCP 580(d)

No judgment shall be rendered for ANY deficiency upon a note secured by a DoT upon real property, in which the real property has been sold by the trustor under Power of Sale Clause. CAN NEVER HAVE DEFICIENCY JUDGMENT.

CCP 580(d)

Non-judicial foreclosure = NO deficiency judgment In non-judicial foreclosure, the borrower is NEVER personally liable to the 580(d) lender *if the lender, after the borrower defaults, chooses to foreclose by NJF the lender cannot then sue the borrower for a deficiency judgment

Wild Deed

Occurs when grantee records BEFORE they become record owner - deed gets recorded outside chain of title, thus the DOT must be re-recorded when grantee actually gets title

Guarantors

One who promises to answer for the debt, default, or miscarriage of another, or hypothecates property as security therefore voluntarily. Same as surety. Enforceable without consideration. Guarantee has to be in writing and signed by the party to be charged, cannot be oral. They have many protections but can all be waived. 2819, 2845, 2847, 2848. Waives all rights while borrower can't. Cannot guaranty your own debts. Heckes v. Sapp Union Bank v. Gradsky Bauman v. Castle

Race-Notice

Only a subsequent BFP (1) w/o notice of the prior claim and who (2) records first before prior grantee = wins This is the rule in California

One Action Rule CCP 726(a)

Only applicable for secured loans. Only implicated when their is an action, if it is a NJF then it is NOT implicated. Once the lender makes the decision to secure the loan with a DoT they must go after the deed and NOT the borrower. If bank or lender violates the rule, they lose the security. Security First Prong One Action Prong

Short Sale

Owner does not want to go through foreclosure, list and sell house for market price if bank agrees to accept the lower price and take the loss. Seller owes more money than the property is worth and the bank agrees to take less.

CERCLA

Owner or operator of a contaminated property is responsible for the cost of decontaminating it. Lender likely not liable if they did not participate in management and they sought to sell as quickly as possible for reasonable terms.

Brown v. Jensen

P sold property to Ds who executed a note secured by a DoT and a 2nd in favor of P (carry back). The 1st forecloses leave the 2nd a sold-out junior. You can sue directly on the note as sold out junior except where the note was a standard purchase money transaction. It's okay to a be a sold out junior unless 580(b) applies. If seller carry back or purchase money, 1-4, owner occupied, you can't be a sold out junior. The purchase money character of a loan attaches at the time the loan is made.

Cornelison

P suing the successor owner. Guy did a NJF and FCB and got trustee's deed. If a lender full credit bids at a foreclosure sale then they cannot bring a COA for wast. Lesson of this case is that if you are a lender don't full credit bid. R: a lender may bring an action for waste after foreclosing if - borrower commits bad faith waste & - the lender does not acquire the property through a FCB Damages are limited to difference between bid and owed.

Fixtures

Piece of personal property that becomes intertwined and affixed to the real property it becomes a part of the real property. CC 9334 - preference goes to personal property lender IF within 20 days of making loan, they record a security interest in the fixture at the county recorder and secretary of state in the capital - relation back - 20 day grace period to record and have recording relat back to the date of the loan

Non-Judicial Foreclosure

Power of sale foreclosure - trustee's sale Point - B/C borrower signed a power of sale clause in his DoT, the lender does not have to do a JF. Rather, the bank can sell the security w/o going to court Note - However, CC2924 limits the rights of beneficiaries & trustees & makes them look into all the details if they are going to do a NJF *takes only 4 months *much cheaper - 2-3k *can't get a deficiency judgment *defaulting borrower has no right of redemption

Priorities

Priority of recordings

Trust Deed Provisions

Promissory Note: debt agreement - based in K law Power of Sale Provisions: in case of default, borrower agrees to put the property up to be sold w/o court supervision to satisfy remaining debt.

Far West Savins v. McLaughlin

Proper recordation is imperative: a wild deed does not give priority even if it was recorded first R: a wild deed does not give priority b/c a wild deed cannot be found by conducting a search of the grantor grantee index, thus a BFP is not put on CN.

Waste 2929

Property has fallen into disrepair. No person whose interest is subject to the lien of a mortgage may do any act which will substantially impair the mortgagee's security. Bad faith waste - needed to bring action for waste. Requires some kind of intentional and malicious act by borrower. Can't do FCB and bring BFW action.

Senior and Junior Liens

Rule: 1st in time = 1st in right, generally whoever records first generally takes the senior lien & has the senior claim Senior Lien: lien which was recorded prior to a junior lien or a lien which has been given subordination (senior liens have better chance of getting paid) Junior Lien: A lien which does not have priority against a senior lien *Junior lien holder can cure the first lien holder's debt and step into their shoes and foreclose to get paid

DMC v. Downey

Rule: New purchase money lender can super jump in front of all other liens. The junior lienor filed a complaint for declaratory relief and JF for declaration that its 2nd DoT attached to the property reacquired by the original owner arguing it's DoT was superior to owner's new PML. Remained junior lien.

Secured vs Unsecured Transactions

Secured - comprised of a promissory note & DOT -- PN is a debt instrument -- DOT is a security instrument Unsecured - borrower signs the debt instrument but debt if NOT secured by any thing (real property) -- cannot go after borrower if files for bankruptcy -- having an unsecured loan can be beneficial if the value of the property falls below the value of the loan

Spangler v. Memel

Seller carries back, subordinates so she becomes a 2nd so buyer can get a construction loan. Borrower defaults. 1st forecloses and seller becomes a sold out junior. Seller sues on the note. Borrower defends that she is a seller caryy back and is barred by 580(b). Rule: a seller who takes back a subordinated junior deed of trust on property sold when the senior lien secured a construction rather than an acquisition lien is not engaging in a standard transaction b/c they contemplate use resulting from construction makes the present value of the security unreliable as an indicator of future security value.

DoT vs. Mortgage

Similarities: - both are security for the payment of debt - both go away once the borrower pays off the debt Differences: - DOT has 3 parties -- Trustor - borrower -- Trustee - a neutral third party w no power -- Beneficiary- lender - Mortgage has 2 parties -- Mortgagor - borrower -- Mortgagee - Lender Lien vs. Title - Lien state = DOT (CA is Lien state so is DOT) - Title states = mortgage

Statute of Limitations

SoL for breach of contract is 4 years. Even if you have a SoL on the promissory note, there is no real SoL requiring the DoT to be removed in a quiet title action. Court will not remove the DoT in a quiet title action. Here SoL defense stops legal action but you are not allowed to use the equitable defense of quieting title b/c is would not be fair.

CCP 2898

Special priority for purchase money lenders, used to purchase SPECIFIC property. - a purchase money loan - mortgage or DOT - given for the price of real property, at the time of conveyance, has priority over all other liens against the purchaser, subject to the operation of the recording laws - a DoT give for the price of real property at the time of its conveyance has priority over all other liens created against the purchaser - judgment liens attach to real property the moment they are recorded - recording acts do not apply because want the liens to be paid off in escrow to get clear title for purchases BEFORE land goes to purchaser

CCP 726

Tells lender if they secure promissory note with a DOT you must foreclose, CANNOT sue on the note - must go after what is secured FIRST - AKA One Action Rule - REMEMBER - non-judicial foreclosure does NOT qualify as an action under part (a) (if a lender takes a security, the lender must foreclose the security first before going after the promissory note)

Walker v. Community Bank

The creditor has to bring all the security in one suit to avoid violating the one action rule. DEI borrowed 150k from the bank and gave a promissory note secured by assets and an additional note for 40k secured by real property. DEI defaults, bank forecloses on the 150k note w/o mention of the real property. DEI then sold the property to Walker and the bank tried to foreclose on it. This violated the 1AR b/c the bank was trying to go after the personal property and the real property in separate suits.

Deficiency Judgment

The difference between the amount the lender receives from the borrower or foreclosure and the amount the lender is owed The law allowing a creditor to reduce its deficiency to judgment against a debtor

Into to Foreclosure

The foreclosure of a junior lien has no effect on a senior lien.

Right to redeem

The judgment debtor and his successor in interest are permitted to redeem the property. A junior easement holder who was not named in the JF has a right of redemption b/c his easement potentially effects the entire property. If no notice can redeem.

Walker v. Community Bank

The promissory not was secured by personal and real property - when borrower defaults the bank foreclosed on the personal property NOT real property - this caused a problem and violated the One Action Rule If they had closed on personal property FIRST no issue because UCC has no provision like the one action rule

Unrecorded Liens

Unrecorded DoT will win IF it is made BEFORE the judgment lien - a judgment creditor is not a BFP so they can't avail themselves of CC 1214 - CC 2897: other things being equal, different liens on the same property have priority on the property based on time of creation

CC 3333 Benefit of the Bargain Rule

Use this rule when suing a fiduciary. Take FMV of house as represented by seller and subtract by what appraiser says it's worth with defects.

Leases and Foreclosure

What matters is what is first in time. If foreclosing DoT is first in time it terminates the lease, if the execution of the lease is first in time it is NOT terminated

Reverse alter ego

When borrower and guarantor are the same person helping the borrower because they get anti-deficiency statute protections.

Full Credit Bid

When lender bids EVERYTHING they are owed. They can't later collect damages by alleging bad faith waste.

Short Sales

When seller sells his property and the FMV is less than what is owed.

Actual Notice

When you actually know something

Inquiry Notice

a lender who has actual knowledge of circumstances that would put a prudent person upon inquiry as to a particular fact has constructive notice of those facts that the lender might have learned by a reasonable investigation. Except for mechanic liens, the concepts of inquiry notice is not utilized in the lending industry, lenders almost exclusively check the recording and rely on 1214

Vendor's Lien

a type of sellers lien, seller extending credit as part of the purchase price - seller does not secure the loan with a DoT - equitable lien

CC 1213

every conveyance of real property acknowledged or proved and certified and recorded as prescribed by law from the time it is filed with the recorded for records is constructive notice of the contents thereof to subsequent purchases and mortgages