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P r e s e n t e d b yB r i t t a n y M c C o r m i c k & L e a h S i m o n - W e i s b e r g
o f t h e
HBOR COLLBORATIVEN A T I O N A L H O U S I N G L A W P R O J E C T
W E S T E R N C E N T E R O N L A W & P O V E R T Y
N A T I O N A L C O N S U M E R L A W C E N T E R
T E N A N T S T O G E T H E R
M a r c h 2 5 , 2 0 1 4
Representing Former Homeowners in the Post-
Foreclosure Eviction Process
Housekeeping
MCLE Credit: Evals and certificates will follow the webinar You must have registered to receive a certificate Please return evaluations to [email protected]
Materials & Recording: This webinar will be recorded and archived at our website,
calhbor.org All materials were emailed before the webinar and are also
available on our website
Questions [email protected], [email protected]
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Who We Are: The HBOR Collaborative
National Housing Law Project Western Center on Law & Poverty National Consumer Law Center Tenants Together
Objectives Funding: Grant from the Office of the CA Attorney
General under the National Mortgage Settlement Resources: calhbor.org
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What we will cover today
A. Nonjudicial foreclosure process1. Basic procedural & substantive requirements
B. The standard UD process1. Timeline2. Motions, Discovery, Trial
C. The post-foreclosure unlawful detainer process1. What makes it different than a standard UD2. What the UD plaintiff must prove3. Former homeowner and tenant defenses
D. The res judicata problem1. Recognizing the issue2. Strategies
E. Questions
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Nonjudicial Foreclosure: Basic Procedural & Substantive Requirements
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Judicial ForeclosureJudicial Foreclosure Nonjudicial ForeclosureNonjudicial Foreclosure
Bank must sue homeowner and the court transfers title
Not used very often
Almost administrative process
No court review until the unlawful detainer stage
Cheaper, quicker, easier, and wildly more popular
Foreclosure Process in California6
Nonjudicial FC Timeline7
Homeowner becomes
delinquent120 days
Notice of Default
Notice of Trustee’s
Sale90 days 20 days
Home sold at
Trustee’s Sale
Nonjudicial FC: Requirements
Statutory “scheme” codified at CC§2924 – 2924k If the foreclosing entity jumps through the specified procedural
hoops, then the foreclosure is presumed valid
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Substantive Requirement Procedural Requirements
CC§2924(a)(6), the “authority to foreclose” statute: only the
beneficiary under the DOT, the trustee, or the designated agent of
the beneficiary may record an NOD
everything else
“Everything Else:” Basic Procedural Requirements9
Code Section Coverage
2924Power of sale: who can exercise it and when; NOD (and some NTS and sale) recording and notice requirements
2924b NOD & NTS notice requirements
2924c Curing the default
2924f NTS notice, publication, and recording requirements
2924g Sale and postponement requirements
See chart in materials for breakdown of each section
Basic Procedural Requirements: Highlights
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NOD NTS Sale/PostponementsIdentifies the DOT; describes nature of borrower’s breach; identifies how much $ it would take to reinstate loan
Must state time/date/place of sale, describe property, name original trustor, provide name and contact info of trustee, and total unpaid balance of loan
If sale is postponed for 10 or more business days, a notice must be given to borrowers within 5 days of postponement, listing new date/time
Cannot be recorded until 30 days after servicer contacted (or diligently attempted to contact) borrower to discuss financial situation (HBOR)
Cannot be recorded until borrower is at least 120 days delinquent (CFBP rules)
Cannot be recorded until 3 months after NOD was recorded
Must be recorded at least 20 days before sale date
Must occur at date/time/place in NTS and be an auction
Postponements must be announced at time/date/place of the sale specified in NTS; announcement must include the new time/date
Copy of NOD must be mailed to borrowers within 10 business days of recording
Must be mailed to borrower, posted in a public place, published in a newspaper of general circulation, and posted at the property itself, all at least 20 days before scheduled sale
Sales postponed more than a year require a new NTS
Additional Procedural Requirements: HBOR
Procedural requirements with a private right of action under CC§2924.12: Pre-NOD outreach: 2924.55 Post-NOD outreach: 2924.9 Accuracy of recorded documents: 2924.17 More requirements kick in if borrower submits a complete first
lien loan modification application to their servicer: 2923.6, 2923.10, 2923.11
*small servicers have slightly different requirements and borrowers can enforce those requirements through CC§2924.19
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CC 2924: Substantive, “Authority to Foreclose” Requirement
Existed pre-HBOR, but HBOR codified it at CC§2924(a)(6): only these entities can foreclose–1. Holder of beneficial interest under DOT2. The original or substituted trustee under the DOT, acting
under beneficiary’s authority3. Designated agent of the holder of the beneficial interest,
acting under beneficiary’s authority
Nothing in 2924 requires those entities to prove they are what they say they are
HBOR did not list 2924 as a statute with a private right of action
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Litigating the “Authority to Foreclose” Element
Homeowners must have a specific factual basis to allege the foreclosing entity did not hold the beneficial interest
Basically, something in the chain of title went wrong and the purported beneficiary, their agent, or the trustee is not who they say they are: Improper assignment of the DOT Improper or unrecorded substitution of trustee
Glaski v. Bank of Am., N.A., 218 Cal. App. 4th 1079 (2013) Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497
(2013)
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Litigating the “Authority to Foreclose” Element
Affirmatively: Unavailable pre-sale and extremely difficult post-sale
Defensively, in a UD: Theoretically easier Servicer (foreclosing entity and UD plaintiff) must
prove proper authority Has its own challenges
What does the UD process look like?
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The Standard Unlawful Detainer Process
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Unlawful Detainer and Foreclosure
In California, when a foreclosure is completed, new ownership must avail itself of the unlawful detainer process in order to vacate the property.
In most judicial foreclosure states, a writ of execution is obtained during the foreclosure lawsuit.
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Unlawful Detainer:Forgotten Part of the Foreclosure Process
It is very important for attorneys who advocate for homeowners to understand this process.
However, the process is not easy to maneuver when in pro per. Most homeowners face the UD process without representation. This is concerning for all housing advocates.
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What is an Unlawful Detainer?
Summary proceeding created by statue in which court adjudicates right to possession of real property.
5 days to answer.
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Same as State Civil Matters
Same as any other state civil matter except: Expedited process: 5 days to respond to summons Trial date set within 20 days of at issue memo
No counterclaims Strict adherence to statutory procedure
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Written Notice Must Be Served
• There is a notice requirement for every unlawful detainer.
• Tenants must be served either in person or by posting and mailing.
• The landlord is also required to try and serve the tenant’s place of employment, but this is rarely enforced.
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Post-ForeclosureNotice to Vacate
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Summons23
Complaint
Can be a form Can be a pleading
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Answer/General Denial
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Responsive Pleadings27
Demurrer CCP 430.10 Where complaint fails to state a cause of action (use
this where defect appears on face of complaint and attachments). Alternative to Answer Set on regular motion schedule (~35 days) Defect must be “within four corners” of complaint
Responsive Pleadings28
Motion to Quash CCP 1167.4 & 418.10 Improper Service Delta Imports, Inc v. Mun. Ct (1983) 146 Cal.
App.3d 1033. Failure to state cause of action proper for
summary proceeding
Responsive Pleadings29
Motion to Strike CCP 435-437 No verification Improper request for damages Improper forfeiture
More Motions
Motions for Summary Judgment CCP 1170.7 In foreclosure context, very common response by plaintiff
evicting homeowner 5 days notice: Time frame shorter than regular civil case but standard the same Can respond orally at hearing
Need admissible evidence to support motion
Motion on the Pleadings
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Discovery
Full range of discovery is available in unlawful detainers, but on a 5 day timeline.
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Discovery
Depositions are useful because written requests may draw objections and vague formulaic responses. Person Most Qualified depositions are helpful for corporate entities. CCP 2025.230.
Requests for admission can be effective because if the other party fails to respond they will be deemed admitted.
Always be prepared with your motion to compel because you should expect not to get any responses or to get only objections to your requests.
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Jury Trial
Jury Trial Request for Jury Trials should be made at the time
you file responsive pleading Have all the same rights Seems to be a difference by jurisdiction whether
form is sufficient or pleading necessary Fee wavier covers jury trial
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Trial
Same evidence rules apply Often a more casual environment Important to object and be formal Generally no court reporters There is a real problem with a lack of respect for
unlawful detainers and tenants that homeowners inherit
Legal service agencies have lots of pro bono opportunities where you can help tenants and learn how do an unlawful detainer
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Trial
Trial brief is important Generally similar to any other civil matter except you
represent the defendant instead of plaintiff Plaintiff (landlord) has to prove up their case Important to not allow them to use hearsay or argument to
establish elements.
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Settlement
Can happen at any stage.
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Notice to Vacate38
Post-Judgment Motions
1. Claim to Right of Possession HBOR changes not available to homeowners
2. Temporary Stay of Execution CCP 9183. Motion to Set Aside Default CCP 473
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Appeals
File notice of appeal to preserve rights, but it does not stay hearing
Evaluate your case – bad facts make bad law Contact the HBOR collaborative for help
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The Post-Foreclosure Unlawful Detainer Process
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Nonjudicial FC Process42
Homeowner becomes
delinquent120 days
Notice of Default
Notice of Trustee’s
Sale90 days 20 days
Home sold at
Trustee’s Sale
Tenant & Former Homeowner: UD Similarities
In most respects, the eviction process is the same Both require notice
Methods of serving that notice are the same (CCP§1162) Both require summons and complaint
Method of serving S&C are the same Both entitled to file an Answer Basic timelines are the same
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Tenant & Former Homeowner: UD Differences44
3 day or 3/60/90
day notice
UD summons & complaint
Home sold at trustee’s
sale
Answer No Answer
Settlement Conference (if applicable) New owner obtains default judgment
Settle to move out Go to trial Sheriff posts Notice to Vacate
Move out
Hold over Lose Win Lock out
Sheriff posts Notice to Vacate
New owner refiles UD
5 days
10-14 days
2-5 daysApprox. 1 week
5 days
Adapted from a chart prepared by Community Legal Services in
East Palo Alto
3/60/90-Day Notice to Quit
Who uses it and why? Banks, corporate entities who purchase property at FC sale To cover their bases with former homeowners and tenants
Former homeowners: NOT considered “tenants” under federal, state, or local law Only entitled to a 3-day notice to quit, CCP§1161a(b)
Existing tenants: Entitled to 90-day notice under Protecting Tenants at
Foreclosure Act and CCP§1161b; longer if they have a fixed-term lease or live in a just cause jurisdiction
Cover sheet requirements, CCP§1161c
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Tenant & Former Homeowner: UD Differences46
UD summons & complaint
Home sold at trustee’s
sale
Answer No Answer
Settlement Conference (if applicable) New owner obtains default judgment
Settle to move out Go to trial Sheriff posts Notice to Vacate
Move out
Hold over Lose Win Lock out
Sheriff posts Notice to Vacate
New owner refiles UD
5 days
10-14 days
2-5 daysApprox. 1 week
5 days
Adapted from a chart prepared by Community Legal Services in
East Palo Alto
3 day or 3/90 day notice
Summons & Complaint
New owner must file a S&C to move forward with eviction process
Owner “self-help:” basis for forcible entry and detainer, trespass, and wrongful eviction claims No lock outs, no “trash outs” Makreas v. First Nat’l Bank of N. Cal., 2013 WL 2436589 (N.D. Cal.
June 4, 2013); Karp v. Margolis, 159 Cal. App. 2d 69 (1958)
Once S&C is served, homeowner can have as little as 3 weeks before sheriff locks them out
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Tenant & Former Homeowner: UD Differences48
UD summons & complaint
Home sold at trustee’s
sale
Answer No Answer
Settlement Conference (if applicable) New owner obtains default judgment
Settle to move out Go to trial Sheriff posts Notice to Vacate
Move out
Hold over Lose Win Lock out
Sheriff posts Notice to Vacate
New owner refiles UD
5 days
10-14 days
2-5 daysApprox. 1 week
5 days
Adapted from a chart prepared by Community Legal Services in
East Palo Alto
3 day or 3/90 day notice
“Cash for Keys”
Can be offered throughout the UD process Former homeowners agree to move out (fairly
quickly) in exchange for cash Former homeowners should not agree to anything
without putting it in writing and having it reviewed by an attorney
Make sure bank representative also signs agmt Bank needs to dismiss UD that has been filed and to
keep the eviction record masked
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Tenant & Former Homeowner: UD Differences50
UD summons & complaint
Home sold at trustee’s
sale
Answer No Answer
Settlement Conference (if applicable) New owner obtains default judgment
Settle to move out Go to trial Sheriff posts Notice to Vacate
Move out
Hold over Lose Win Lock out
Sheriff posts Notice to Vacate
New owner refiles UD
5 days
10-14 days
2-5 daysApprox. 1 week
5 days
Adapted from a chart prepared by Community Legal Services in
East Palo Alto
3 day or 3/90 day notice
The Masking Rule
General masking rule: CCP§ 1161.2(a)(5) Only masks UD documents for 60 days post-filing File becomes public unless UD defendant prevails in 60 days
Post-foreclosure UD masking rule: CCP§1161.2(a)(6) UD documents are masked for 60 days post filing Permanently masked unless:
plaintiff prevails within those 60 days against all defendants after a trial
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CCP 1161a(b): UD Plaintiffs Must Show
Post-foreclosure UD plaintiffs bear the burden of showing:1) Proper service of a valid notice to quit2) Former homeowner is holding over3) Compliance with FC procedures, CC§29244) Compliance with FC substantive requirements: duly
perfected title & “authority to foreclose” aspect of CC§2924(a)(6)
The new owner must prove each of these elements (CAL. EVID. CODE § 500)
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Disclaimer: Status of the Law
Not a lot of UD cases Cal. Rule of Ct. 8.1115 Court of Appeal or superior court appellate division cases that
are not certified for publication or ordered published are NOT citable
Exception: When opinion is relevant under doctrines of law of the case, res
judicata, or collateral estoppel
A lot of the cases used today are not citable, but can be helpful in forming arguments
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Simple Post-Foreclosure UD Defenses
1. Proper 3-day notice to quito All service requirements that apply to tenants apply to former
homeowners and can be used as defenses (CCP § 1162)o Bank of N.Y. Mellon v. Preciado, _ Cal. App. 4th Supp. _,
(publication order Mar. 19, 2014) (improper notice, tenants and former homeowners)
o US Bank v. Cantartzoglou, 2013 WL 443771 (Cal. App. Div. Super. Ct. Feb. 1, 2013) (same, former homeowners)
2. Holdover
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Complicated Post-Foreclosure UD Defenses
1. Compliance with FC procedures (CC§2924)
2. Compliance with FC substantive requirements: duly perfected title, “authority to foreclose” (CC 2924(a)(6))
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Defense: Non-compliance with FC Procedures
UD plaintiff just needs to show that a trustee’s deed upon sale has been recorded Rebuttable presumption that all notice and recording requirements
in CC 2924 were complied with (CC 2924(c))
Difficult to overcome this presumption without specific evidence of non-compliance Wells Fargo v. Detelder-Collins, 2012 WL 4482587, at *6-7 (Cal.
App. Div. Super. Ct. Mar. 28, 2012) (finding former homeowner’s allegations that they never received foreclosure notices not credible)
Presumption becomes conclusive for BFPs Biancalana v. TD Serv. Co., 56 Cal. 4th 807 (2013)
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Defense: Non-compliance with FC Procedures
Tenants should also be able to allege improper foreclosure procedures to defend a UD
Still difficult to prove without specific evidence of non-compliance
CCP 1161a: post-foreclosure eviction process CCP 1161b: “Notwithstanding 1161a . . .” tenants get
right to a 90-day notice, etc.
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Defense: Non-compliance with Substantive, “Authority to Foreclose” Requirement
Pre-HBOR: General rule: authority to foreclose (title) issues cannot be
litigated in a UD (Cheney v. Trauzettel, 9 Cal. 2d 158 (1937)) Exceptions - serious defects or questions going towards the
authority to foreclose, like an improper assignment or substitution of trustee Aurora Loan Servs. LLC v. Brown, 2012 WL 6213737 (Cal. App.
Div. Super. Ct. July 31, 2012) Wells Fargo v. Detelder-Collins, 2012 WL 4482587 (Cal. App. Div.
Super. Ct. Mar. 28, 2012) US Bank v. Espero, 2011 WL 9370474 (Cal. App. Div. Super. Ct.
Dec. 27, 2011)
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Defense: Non-compliance with Substantive, “Authority to Foreclose” Requirement
HBOR: codified the “authority to foreclose:” CC§2924(a)(6) No presumptions, but: Nothing in statute requires foreclosing entity to prove they are
the beneficiary, trustee, or designated agent
Affirmative wrongful foreclosure cases and UD defenses that invoke authority to foreclose arguments require a specific factual basis
So far, no UD cases where former homeowner used non-compliance with CC 2924(a)(6) as a defense
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Defense: Non-compliance with Substantive, “Duly Perfected Title” Requirement
Can be attacked even if there is no “authority to FC” issue
“Duly perfected” title encompasses all aspects of purchasing the property, not just recorded title Bank of N.Y. Mellon v. Preciado, _ Cal. App. 4th Supp. _,
(publication order Mar. 19, 2014) Dang v. Superior Court, No. 30-2013-684596 (Cal. App. Div.
Super. Ct. Jan. 31, 2014)
No default as a defense defeating duly perfected title Barroso v. Ocwen Loan Servicing, LLC, 208 Cal. App. 4th
1001 (2012)
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The Res Judicata Problem
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The Basic Dilemma
Res Judicata: what is it?
Common fact pattern: Foreclosing bank purchases property at FC sale Foreclosing bank files and wins a UD judgment against former
homeowners Former homeowners bring an affirmative wrongful foreclosure suit Court dismisses affirmative case based on res judicata with UD Example: Campos-Riedel v. JP Morgan Chase, 2013 WL 6070432
(E.D. Cal. Nov. 13, 2013) (post-FC case based on improper notice of NTS barred by res judicata with previous UD)
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The Problem with Recognizing the Problem
Unsettled area of law and courts are telling litigants two different things: UD court: we cannot decide title here Non-UD court: title was settled by the UD
Pro per former homeowners If represented, often by two different attorneys Res judicata can apply even if former homeowner did not
allege improper title in the UD, but could have Hopkins v. Wells Fargo Bank, 2013 WL 2253837 (E.D. Cal. May 22,
2013); Malkoskie v. Option One Mortg., 188 Cal. App. 4th 968 (2010)
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Is Title Supposed to be Decided in a UD?
Not in a standard UD UD courts are supposed to be summary proceedings that decide possession only
In a post-foreclosure CCP§1161a UD? Depends on the court Yes: Kartheiser v. Superior Court, 174 Cal. App. 2d 617 (1959) On limited basis: Malkoskie v. Option One Mortg., 188 Cal. App. 4th 968 (2010) No: Martin-Bragg v. Moore, 219 Cal. App. 4th 367 (2013)
When invalid title is asserted as a defense, courts become concerned about balancing rights:
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UD Plaintiff’s Rights UD Defendant’s Rights
Procedural: right to a quick, summary proceeding on possession
Litigating a complex issue like title will infringe on these rights
Constitutional right to due process: right to a full trial of the title issue
Refusing to litigate title will infringe on these rights
Martin-Bragg v. Moore, 219 Cal. App. 4th 367 (2013)
A “standard UD” is not built to accommodate a title issue
Due process rights trump procedural rights “The fact that [defendant] pleaded his title . . . as an
affirmative defense to the [UD] action did not constitute his consent to have his claim heard under the summary unlawful detainer procedures.”
UD court abused its discretion by attempting to litigate title in a UD instead of granting defendant’s motion to consolidate with a pending quiet title action
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Strategies
With a pending wrongful foreclosure or quiet title action: Motion to consolidate (Martin-Bragg)
calhbor.org brief bank: Brown v. Regional Serv. Corp. Motion to stay the UD
calhbor.org brief bank: US Bank v. Barroso
Without a pending wrongful foreclosure or quiet title action: File one and move to stay the UD or consolidate Try to litigate title in the UD
calhbor.org brief bank: JP Morgan Chase v. Allison If there is basis for appeal, appeal the UD: must be within 30 days of
date clerk mailed or other party served notice of entry of judgment Request access to pleadings at calhbor.org
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Questions?
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HBOR Collaborative’s Resources
For consumer attorneys representing homeowners and tenants facing foreclosure: Live trainings and webinars including this one Brief banks Technical assistance to individual attorneys Publications:
Monthly foreclosure newsletter Practice Guides Articles
Limited litigation support
All our resources are free and posted at calhbor.org
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Questions?
Homeowner Issues:Brittany McCormick, National Housing Law [email protected] (415) 546-7000Kent Qian, National Housing Law [email protected] 415-546-7000
Tenant Issues:Leah Simon Weisberg, Tenants [email protected] 415-495-8100Madeline Howard, Western Center on Law & [email protected] (213) 235-2628
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This project was made possible by a grant from the Office of the Attorney General of
California, from the National Mortgage Fraud Settlement, to assist California consumers.
Representing California Tenants & Former Homeowners in
Post-Foreclosure Evictions (Updated March 2014)
Unlawful detainer (UD) actions are typically associated with
landlord-tenant law. Former borrowers, though, often defend eviction
after foreclosure.1 They face different timelines and challenges, but
both tenants and former borrowers continue to struggle against
unlawful detainer actions as lenders and investors buy up foreclosed
properties2 and attempt to evict residents soon after purchase. Various
affirmative defenses arise from improper foreclosure procedures, so
these types of UDs are intimately related to foreclosure law. This
article reviews federal, California, and local measures that govern
post-foreclosure UD actions and provides practice tips for defending
UDs on behalf of both tenants and former borrowers.
Overview
Foreclosure purchasers seeking to remove tenants or former
borrowers must comply with both UD notice requirements and with
statutory foreclosure procedures. Specifically, plaintiffs bear the
burden of establishing:3 1) proper service of a valid notice to quit; 2)
1 The bona fide purchaser (BFP) of a foreclosed home must serve the previous
homeowner with a 3-day notice to quit. If the former homeowner continues to occupy
the property after this notice expires, or “holdover,” the BFP must bring a judicial
unlawful detainer action to evict. CAL. CIV. PROC. CODE § 1161a(b)(3) (2013). 2 See, e.g., Darwin Bond Graham, The Rise of the New Land Lords, EAST BAY
EXPRESS, Feb. 12, 2014, http://www.eastbayexpress.com/oakland/the-rise-of-the-new-
land-lords/Content?oid=3836329 (detailing the recent Oakland-based foreclosure
acquisitions of the “global real estate empire called Colony Capital”); Nathaniel
Popper, Behind the Rise in House Prices, Wall Street Buyers, N.Y. TIMES, June 4,
2013, at A1 (describing the rise or Real Estate Owned (REO) properties in depressed
housing markets). 3 See CAL. EVID. CODE § 500 (2011) (“[A] party has the burden of proof as to each fact
the existence or nonexistence of which is essential to the claim for relief or defense
that he is asserting.”); Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587,
2
compliance with the foreclosure notice and recording requirements of
CC § 2924;4 3) duly perfected title (which includes the authority to
foreclose aspect of CC § 2924);5 and 4) that the tenant or former
borrower is holding over.6
I. UD Notice Requirements and Local Protections
Prior to 2009, tenants renting in states without post-foreclosure
protections were at the mercy of their new landlords once the property
sold at foreclosure.7 All tenants are now protected by federal notice
requirements, but California has added stricter state protections, and
California “just cause” localities often give the greatest amount of
protection.
A. Tenants
1. Federal protections
To address widespread tenant displacement brought on by the
housing crisis, Congress enacted the Protecting Tenants at Foreclosure
Act of 2009.8 Under the PTFA, a successor in interest must provide
bona fide tenants with a 90-day notice to vacate before beginning the
at *7 (Cal. App. Div. Super. Ct. Mar. 28, 2012) (citing § 500 and putting the
evidentiary burden on the UD plaintiff). Please refer to Cal. Rule of Ct. 8.1115 before
citing unpublished decisions. 4 See CAL. CIV. CODE § 2924(a)(1)-(5) for the full list of requirements. 5 See CAL. CIV. CODE § 2924(a)(6) (2013). 6 CAL. CIV. PROC. CODE § 1161a(b)(3) (2013); see also Vella v. Hudgins, 20 Cal. 3d 251,
255 (1977) (requiring UD plaintiffs to show that the foreclosure sale was proper and
demonstrate duly perfected title); Aurora Loan Servs., LLC v. Brown, 2012 WL
6213737, at *7 (Cal. App. Div. Super. Ct. July 31, 2012) (listing plaintiff’s affirmative
burdens). 7 NHLP, The Protecting Tenants at Foreclosure Act: Three Years Later, 42 HOUS. L.
BULL. 181, 181 (Sept. 2012); NAT’L LOW INCOME HOUS. COAL., RENTERS IN
FORECLOSURE: A FRESH LOOK AT AN ONGOING PROBLEM, 1 (Sept. 2012), available at
http://nlihc.org/sites/default/files/Renters_in_Foreclosure_2012.pdf (“[The PTFA]
provides the first national protection for renters.”). 8 The Protecting Tenants at Foreclosure Act of 2009, Pub. L. No. 111- 22, div. A, tit.
VII, §§ 701-704, 123 Stat. 1632, 1660-62 (enacted May 20, 2009), as amended by Pub.
L. No. 111-203, tit. XIV, § 1484 (July 21, 2010) [hereinafter PTFA]. For a more
thorough treatment of the first three years of the PTFA and related case law, refer to
NHLP, supra note 7.
3
unlawful detainer process.9 If there is an existing lease, the tenant can
remain in possession until the lease expires.10 This protection does not
apply if the purchaser intends to occupy the property as their primary
residence.11 In that case, a bona fide tenant is still entitled to a 90-day
notice, but their tenancy can be terminated before the expiration of
their fixed-term lease.12
A tenant must be “bona fide” to qualify for the PTFA protection
described above: the tenant cannot be the former homeowner or the
child, spouse or parent of the homeowner, and the lease must have
been an “arm’s length” transaction for not substantially less than fair
market value rent.13 Tenants renting a room, rather than an entire
house, may still be “bona fide” under the PTFA,14 as may tenants
renting illegal units.15 Housing Choice Voucher tenants are
automatically bona fide tenants.16
9 PTFA § 702(a)(2)(B); Bank of N.Y. Mellon v. De Meo, 254 P.3d 1138, 1141 (Ariz. Ct.
App. 2011) (90-day period must be specified in the notice); Curtis v. US Bank Nat’l
Ass’n, 50 A.3d 558, 564-65 (Md. 2012) (90-day period begins the day tenant receives
notice, not the day of foreclosure). See generally NHLP, supra note 7, at 185. 10 PTFA § 702(a)(2)(A); Fontaine v. Deutsche Bank Nat’l Trust Co., 372 S.W.3d 257,
260 (Tex. App. 2012). To benefit from this provision, tenants must enter into their
leases before “notice of foreclosure:” when title is transferred to the new landlord at
the foreclosure sale. PTFA § 702(a)(2)(A); see 28th Tr. No. 119, City Inv. Capital v.
Crouch, 2013 WL 3356585, at *2 (Cal. App. Div. Super. Ct. June 27, 2013) (pointing
to the PTFA amendment that clarified this definition of “notice of foreclosure”). See
NHLP, supra note 7, at 184-85, for a more thorough discussion of this definition. 11 PTFA § 702(a)(2)(A). 12 Id. See generally CEB, California Eviction Defense Manual, § 20.8.3 (2d ed. 1993,
June 2013 update). 13 PTFA § 702(b). See generally NHLP, supra note 7, at 182, 185 (reviewing these
qualifications in more detail). To demonstrate fair market value, a tenant may offer
evidence of services they performed in exchange for rent. Rent does not require
monetary payment. 28th Tr. No. 119, City Inv. Capital v. Crouch, 2013 WL 3356585,
at *1 (Cal. App. Div. Super. Ct. June 27, 2013). 14 See, e.g., TDR Servicing LLC v. Smith, No. 37-2010-00200020 (Cal. App. Div.
Super. Ct. Aug. 29, 2012) (“Sub-tenant” status is not enough to disqualify a tenant
from PTFA protection.). 15 See Nativi v. Deutsche Bank Nat’l Tr. Co., 223 Cal. App. 4th 261, 286 (2014)
(extending PTFA protection (as a basis for affirmative state law claims) to tenants
renting an illegal garage unit). 16 PTFA § 703; Protecting Tenants at Foreclosure: Notice of Responsibility Placed on
Immediate Successors in Interest Pursuant to Foreclosure of Residential Property, 74
Fed. Reg. at 30,107, 30,108 (June 24, 2009) (“[T]he Section 8 tenant’s lease is, in
effect, a bona fide lease.”). The new owner takes title to the property subject to both
the Section 8 lease and the Housing Assistance Payments (HAP) contract with the
local public housing agency. PTFA § 703.
4
2. California protections
a. Time requirements
As part of the Homeowner Bill of Rights, the California Legislature
passed tenant protections that go beyond those in the PTFA.17
Effective January 1, 2013, all tenants occupying a foreclosed home
require a 90-day notice to quit, even tenants who do not qualify as
“bona fide” under the PTFA.18 Like the PTFA, tenants with fixed term
leases may maintain their tenancy through the lease term, paying rent
to their new landlord.19 Tenants with fixed-term leases must meet
criteria identical to the PTFA’s “bona fide” conditions to qualify for
protection throughout their lease term.20 Under state law, the plaintiff
in a UD action bears the burden of showing a tenant with a fixed-term
lease does not meet these requirements.21
b. Cover sheet & method of notice
California law also mandates additional notice requirements than
those in the PTFA. Unless the notice unambiguously provides at least
90 days to vacate, notices must be accompanied by “cover sheets” with
17 The PTFA established a base of protections that state and local jurisdictions can
expand upon: “[N]othing under this section shall affect the requirements for
termination of any . . . State or local law that provides longer time periods or other
additional protections for tenants.” PTFA § 702(a)(2)(B). For a more thorough review
of California statutory notice requirements for UD actions, refer to CEB, supra note
12, § 1.8. 18 See CAL. CIV. PROC. CODE § 1161b (2013). A “tenant” is considered a person who
pays rent for housing, or who works or provides services in exchange for housing. See
Rossetto v. Barross, 90 Cal. App. 4th Supp. 1, 5 (2001) (“Rent may not necessarily be
a single specific dollar amount. It consists even of services.”). People who rent illegal
units may qualify as tenants for purposes of the PTFA. Nativi v. Deutsche Bank Nat’l
Tr. Co., 223 Cal. App. 4th 261, 286 (2014). The reasoning in Nativi could form the
basis for arguing that tenants of illegal units are afforded the California-specific
protections as well. See Carter v. Cohen, 188 Cal. App. 4th 1038 (2010) (finding
tenant’s rental of an illegal unit not a bar to her claim against her landlord for illegal
rent increases). Former homeowners are not considered tenants under federal, state,
or local law. 19 Id; PTFA § 702(c). Also like the PTFA, there is an exception for purchasers who
intend to use the property as their primary residence. In that case, tenants still
require a 90-day notice. CAL. CIV. PROC. CODE § 1161b(b)(1) (2013). 20 § 1161b(b)(2)-(4) (The tenant cannot be the child, spouse, or parent of the landlord-
mortgagor and the lease must be an arm’s length transaction for fair market value). 21 See § 1161b(c).
5
exact language dictated by statute, advising tenants to seek legal
counsel, to respond to all forthcoming notices, and of the 90-day and
fixed-term lease protections.22
California law also governs the method of service of notices to quit,
requiring attempts at personal service first, and then outlining the
posting and mailing alternatives.23 UD plaintiffs must strictly comply
with the method of service requirements and tenant advocates can use
flaws in service to successfully defend a UD.24
3. Local protections
The California Homeowner Bill of Rights set a floor of tenant
protections that localities can build upon.25 There are fifteen California
cities and towns that provide some level of “just cause for eviction”
protection, including San Francisco, Los Angeles, Oakland, and San
Diego.26 In these localities, foreclosure is not considered a “just cause”
for eviction, which prevents landlords from evicting tenants simply for
leasing a home purchased at foreclosure.27 Accordingly, tenants may
retain possession until there is a “just cause” to evict, regardless of
22 § 1161c (“[T]he immediate successor in interest . . . shall attach a cover sheet, in
the form as set forth [below].”) (emphasis added). See 28th Tr. No. 119, City Inv.
Capital v. Crouch, 2013 WL 3356585, at *2 (Cal. App. Div. Super. Ct. June 27, 2013)
(reversing the trial court’s judgment for plaintiff in part due to plaintiff’s failure to
notify tenant of her right to remain in possession until the expiration of her lease,
violating § 1161c(c) cover sheet requirements). 23 See CAL. CIV. PROC. CODE § 1162 (detailing personal delivery and “nail and mail”
methods). 24 See, e.g., Liebovich v. Shahrokhkhany, 56 Cal. App. 4th 511, 513 (1997) (“A lessor
must allege and prove proper service of the requisite notice. [Citations.] Absent
evidence the requisite notice was properly served pursuant to section 1162, no
judgment for possession can be obtained.”); 28th Tr. No. 119, 2013 WL 3356585, at *3
(finding the failure to list a tenant name on the proof of service a fatal defect in
plaintiff’s UD case). 25 “Nothing in this section is intended to affect any local just cause eviction
ordinance.” CAL. CIV. PROC. CODE § 1161b(e) (2013); see also Gross v. Superior Court,
171 Cal. App. 3d 265 (1985) (California foreclosure laws do not preempt local eviction
protections). 26 Refer to Tenants Together, Foreclosure Related Laws,
http://tenantstogether.org/article.php?id=935, for a complete list and links to
municipal websites. 27 See, e.g., BERKELEY MUN. CODE, Rent Stabilization and Eviction for Good Cause
Ordinance § 13.76 (Ord. 5467-NS § 1, 1982: Ord. 5261-NS § 1, 1980).
6
whether they are month-to-month tenants or tenants with a fixed-term
lease.28
B. Former Borrowers
In terms of notice, former borrowers enjoy far fewer UD protections
than tenants. Absent any federal regulation, once title is transferred to
the new owner in a foreclosure sale, the purchaser may give the former
borrower a 3-day notice to quit.29 If the former borrower continues in
possession, the new owner must file an unlawful detainer to evict.30
Self-help, including locking the former borrowers out of the property
without going through the UD process, is grounds for forcible entry
and detainer, trespass, and wrongful eviction claims.31 The same
service requirements that apply to tenant notices-to-quit also apply to
notices served on former borrowers and may be used as defenses in a
UD answer.32
II. Compliance with California Foreclosure Law
Without a proper foreclosure sale, the purchaser does not hold
valid title to the property and cannot satisfy that UD prerequisite
under CCP § 1161a.33 There are two ways to show an improper
foreclosure sale, and both tenants and former borrowers can attack the
28 For more information on this topic, see CEB, supra note 12, at § 20.10.C. 29 See CAL. CIV. PROC. CODE § 1161a(b)(2). 30 Id. See generally CEB, supra note 12, at § 20.4.II. 31 See, e.g., Makreas v. First Nat’l Bank of N. Cal., 2013 WL 2436589, at *11-12 (N.D.
Cal. June 4, 2013) (granting former homeowner-plaintiff’s partial summary judgment
motion on his trespass and wrongful eviction claims based on defendant-bank’s
illegal, post-foreclosure lock-out); Karp v. Margolis, 159 Cal. App. 2d 69, 75-76 (1958)
(holding that purchasers who entered into the premises without legal process after
foreclosure were guilty of forcible entry). 32 See CAL. CIV. PROC. CODE § 1162; Bank of N.Y. Mellon v. Preciado, __ Cal. App. 4th
Supp. __, (publication order Mar. 19, 2014) (finding service improper because plaintiff
used the “nail and mail” method before attempting personal service on tenants and
former homeowner in a foreclosed home); US Bank, N.A. v. Cantartzoglou, 2013 WL
443771, at *10-11 (Cal. App. Div. Super. Ct. Feb. 1, 2013) (same). 33 See Preciado, __ Cal. App. 4th Supp. __, (publication order Mar. 19, 2014) (in a
CCP 1161a UD, a “plaintiff must show that he acquired the property at a regularly
conducted sale and thereafter “duly perfected” his title”); Aurora Loan Servs., LLC v.
Brown, 2012 WL 6213737, at *7 (Cal. App. Div. Super. Ct. July 31, 2012) (linking
invalid title with plaintiff’s lack of standing to sue for possession); US Bank N.A. v.
Espero, 2011 WL 9370474, at *4 (Cal. App. Div. Super. Ct. Dec. 27, 2011) (same).
7
sale to defend a post-foreclosure UD: 1) demonstrate that the
foreclosure notice and recording procedures were not followed; or 2)
show that the beneficiary or trustee did not have the authority to
foreclose.34 The latter can be much more difficult to prove but, if
shown, can void a completed foreclosure sale.
A. Improper Foreclosure Notice & Recording Procedures
Once a trustee’s deed upon sale is recorded, there is a presumption
that the foreclosing entity complied with the notice and recording
requirements of CC 2924.35 Absent evidence to the contrary, this
presumption may be difficult for former borrowers and tenants to
overcome.36 The presumption becomes conclusive for bona fide
purchasers of the property.37 Importantly, this presumption does not
apply to the authority to foreclose aspect of CC 2924.38
B. Authority to Foreclose & Duly Perfected Title
Pre-HBOR, former borrowers generally had a limited ability to
challenge plaintiff’s title in an unlawful detainer action: only
noncompliance with foreclosure statutes and the legitimacy of the sale
itself could be litigated.39 However, if a defendant could show defects
or serious questions going to the validity of assignments or
substitutions of trustees, or if a plaintiff simply failed to provide any
evidence showing duly perfected title, courts generally reversed
34 See generally HBOR Collaborative, Litigating Under the California Homeowner
Bill of Rights, part II.A (Jan. 2014) (discussing the authority to foreclose and its
relation to CC § 2924(a)(6)). 35 Biancalana v. T.D. Serv. Co., 56 Cal. 4th 807, 814 (2013); Moeller v. Lien, 25 Cal.
App. 4th 822, 831-32 (1994). 36 See, e.g., Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587, at *6-7
(Cal. App. Div. Super. Ct. Mar. 28, 2012) (accepting the trial court’s finding that
defendant borrower’s allegations that they never received foreclosure notices were
not credible and applying the presumption of compliance to § 2924’s notice
requirements, but not its authority to foreclose element); US Bank N.A. v. Espero,
2011 WL 9370474, at *2 (Cal. App. Div. Super. Ct. Dec. 27, 2011) (same). 37 Biancalana, 56 Cal. 4th at 814. 38 See Bank of Am., N.A. v. La Jolla Group II, 129 Cal. App. 4th 706 (2005) (statutory
presumptions do not apply to purchasers at invalid sales). 39 Cheney v. Trauzettel, 9 Cal. 2d 158, 160 (1937); Old Nat’l Fin. Servs., Inc. v.
Seibert, 194 Cal. App. 3d 460, 465 (1987).
8
judgments for plaintiffs and prevented evictions.40 HBOR has since
codified this authority to foreclose requirement in CC 2924.41
Even when the authority to foreclose is not an issue, there may be
some defect that would void the foreclosure sale and destroy the
plaintiff’s claim of “duly perfected title.”42 In Barroso v. Ocwen Loan
Servicing, LLC, for example, borrowers were compliant with their
permanent modification when their servicer foreclosed and the
purchaser brought an eviction action.43 The borrowers defended the
UD as part of larger litigation initiated by the borrowers against their
servicer.44 The court did not resolve the unlawful detainer, but found
that the servicer had breached the permanent modification contract
and that borrowers had a valid wrongful foreclosure claim to void the
foreclosure.45
40 See, e.g., Bank of N.Y. Mellon v. Preciado, __Cal. App. 4th Supp. __, (publication
order Mar. 19, 2014) (reversing UD court’s judgment for plaintiff because plaintiff
had failed to show compliance with CC 2924 – specifically, plaintiff failed to explain
why DOT and Trustee’s Deed upon Sale listed two different trustees); Aurora Loan
Servs., LLC v. Brown, 2012 WL 6213737, at *5-6 (Cal. App. Div. Super. Ct. July 31,
2012) (finding plaintiff’s lack of evidence showing valid assignment and substitution
of trustee fatal to their UD action, in the face of irregularities in the recording of
those documents); Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587, at
*7 (Cal. App. Div. Super. Ct. Mar. 28, 2012) (reversing judgment for plaintiff because
plaintiff could not show a valid, recorded substitution of trustee that would have
given the foreclosing entity authority to foreclose); US Bank N.A. v. Espero, 2011 WL
9370474, at *4 (Cal. App. Div. Super. Ct. Dec. 27, 2011) (reversing trial court’s
judgment for plaintiff because plaintiff provided no evidence that it was assigned the
property from the purchaser after foreclosure). But see Aurora Loan Servs. v. Akins,
No. BV-029730 (Cal. App. Div. Super. Ct. Apr. 26, 2013) (rejecting former borrower’s
argument on appeal that plaintiff had to produce evidence of duly perfected title
because in an appeal, defendant borrower had to offer some evidence of her own to
reverse a trial court’s error). 41 CAL. CIV. CODE § 2924(a)(6) (2013) (“No entity shall record . . . a notice of default
. . . or otherwise initiate the foreclosure process unless it is the holder of the
beneficial interest under the mortgage or deed of trust, the original trustee or the
substituted trustee under the deed of trust, or the designated agent of the holder of
the beneficial interest.”). 42 “Duly” perfected title encompasses all aspects of purchasing the property, not just
recorded title. See Bank of N. Y. Mellon v. Preciado, __ Cal. App. 4th Supp. __,
(publication order Mar. 19, 2014) (finding the trial court erred in accepting the
recorded trustee’s deed as conclusive evidence of duly perfected title in the face of
contradictory evidence that the property was sold to borrower’s loan servicer, not the
UD plaintiff asserting title); Dang v. Superior Court, No. 30-2013-684596 (Cal. App.
Div. Super. Ct. Jan. 31, 2014) (finding the homeowner likely to succeed on appeal
because the plaintiff filed the UD before recording the trustee’s deed). 43 Barroso v. Ocwen Loan Servicing, LLC, 208 Cal. App. 4th 1001, 1007 (2012). 44 Id. 45 Id. at 1017.
9
III. Litigation Issues Unique to Post-Foreclosure
Unlawful Detainers
A. Tender
As a general rule, parties seeking to undo a foreclosure sale must
“tender” (offer and be able to pay) the amount due on their loan.46
There are several exceptions to this general rule, including when the
sale itself would be void.47 Accordingly, when a former borrower
defends an unlawful detainer by asserting that the plaintiff failed to
comply with the duly perfected title/authority to foreclose aspect of
CCP § 1161a(b), most courts do not require tender.48 In addition,
because they are not parties to the loan, courts have not imposed the
tender requirement on tenants who challenge the plaintiff’s compliance
with foreclosure notice and recording requirements of CC § 2924.49
B. The Res Judicata Problem for Former Borrowers
If a foreclosing bank proved “duly perfected” title in an unlawful
detainer, then a subsequent, affirmative wrongful foreclosure claim
brought by the former borrower against the bank is often barred by res
judicata, if the basis for the borrower’s affirmative claim is also
validity of title. This is true even if the borrower did not allege
improper title as an affirmative defense to the UD action, but could
have used this defense.50 This is a tricky problem to address because
46 See Lona v. Citibank, N.A., 202 Cal. App. 4th 89 (2011) (stating the general tender
rule). 47 See, e.g., Dimock v. Emerald Props., 81 Cal. App. 4th 868, 877-78 (2000). A full
discussion of the tender rule and its exceptions in a foreclosure context is in HBOR
Collaborative, supra note 34, at part III.C. 48 See, e.g., Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587 (Cal. App.
Super. Ct. Mar. 28, 2012) (excusing tender when the sale was found void due to an
invalid trustee substitution); Seastone v. Perez, 2012 WL 6858725 (Cal. Super. Ct.
Dec. 13, 2012) (finding tender excused because defendant (former borrower) brought
a statutory attack on plaintiff’s title under CC § 2924); cf. MCA, Inc. v. Universal
Diversified Enters., 27 Cal. App. 3d 170 (1972) (requiring tender when the defendant
combined statutory defenses with claims for affirmative relief to invalidate the sale). 49 JP Morgan Chase Bank v. Callandra, No. 1371026 (Cal. Super. Ct. Santa Barbara
Cnty. Oct. 21, 2010) (allowing tenant to challenge the foreclosure without tender
because the foreclosing entity had failed to post a notice of trustee sale). 50 See, e.g., Hopkins v. Wells Fargo Bank, N.A., 2013 WL 2253837, at *4-5 (E.D. Cal.
May 22, 2013) (barring former borrower’s wrongful foreclosure claim because
defendant bank had already established duly perfected title in a previous UD action
10
many former borrowers choose to litigate UD actions without legal
representation, not anticipating that, by not addressing title, they are
destroying any chance they have of attacking the foreclosure in the
future. Even if former borrowers are represented, advocates defending
UD actions are unlikely to also represent former borrowers in
affirmative wrongful foreclosure cases.
This is an unsettled area of law, but if a former borrower or their
counsel is fortunate enough to realize the impending res judicata
problem as they defend an eviction (or even before the UD is filed),
they should file an affirmative suit against their servicer (which is, or
will be, the UD plaintiff) as soon as possible. This allows for a couple of
different options moving forward: 1) move to stay the UD until the
wrongful foreclosure suit is resolved; or 2) move to consolidate the UD
with the wrongful foreclosure suit.51 Either option allows for the
litigation of title outside the context of an unlawful detainer, which is
meant to decide possession only.52
C. Rights of Unnamed Occupants
A new landlord who wishes to evict existing, holdover tenants must
serve a summons and complaint to begin the UD process.53 To evict
unnamed tenants, they must also include a blank prejudgment right to
possession form.54 Before HBOR, any unnamed tenants residing on a
and the borrower could have litigated their § 2923.5 issue there); Castle v. Mortg.
Elect. Registration Sys., Inc., 2011 WL 3626560, at *4-9 (C.D. Cal. Aug. 16, 2011)
(dismissing plaintiff borrower’s wrongful foreclosure claims because title was
“litigated” in the previous UD action, even though there was a default judgment in
that action); Lai v. Quality Loan Serv. Corp., 2010 WL 3419179, at *4 (C.D. Cal. Aug.
26, 2010) (finding borrower’s requests for declaratory relief and to set aside the
foreclosure sale issues already litigated in a previous UD action); Malkoskie v.
Option One Mortg. Corp., 188 Cal. App. 4th 968, 973 (2010) (applying the same
reasoning described in Hopkins). 51 See Martin-Bragg v. Moore, 219 Cal. App. 4th 367, 385 (2013) (finding that the UD
defendant and former borrower was prejudiced by the trial court’s refusal to
consolidate the UD with the former borrower’s affirmative wrongful foreclosure suit). 52 A recording of an HBOR Collaborative webinar on this issue will be available
starting in April, 2014. 53 The standard procedure, at least for corporate purchasers of foreclosed homes, is to
name only the former borrower on a UD summons and complaint, but to also list
“Does 1-10” and “all occupants,” thereby covering any tenants that may or may not
reside on the property. 54 See CAL. CIV. PROC. CODE § 415.46 (2012). Including this form complied with pre-
HBOR post-foreclosure eviction law but did not give tenants a fair opportunity to
11
foreclosed property needed to complete this form and file it with the
court within 10 days of being served notice.55 If they did not, these
tenants lost all rights to assert possession by defending the UD,56 or to
object to the enforcement of a judgment for possession.57 Because of
HBOR, however, unnamed tenants in post-foreclosure UD actions can
now file a claim of right to possession or object to a judgment at any
time before a lockout.58
D. Masking Rule
Finding rental housing with an eviction on your rental record can
be difficult and often puts another strain on already stressed tenants
and former borrowers. Usually, court documents related to unlawful
detainer cases are “masked,” or not available to the public, for only 60
days after the complaint is filed.59 After this 60-day “curtain,” the case
file becomes public unless the defendant prevailed in the UD.60 Since
2010, tenants and borrowers defending post-foreclosure evictions have
been afforded more protection: UD documents are masked for 60 days
following the filing of the complaint, and then permanently masked
unless the plaintiff prevails within those 60 days, against all
defendants, after a trial.61
IV. Evictions of Tenants for Nonpayment of Rent and
Breach of Lease
Because California law now clarifies that the landlord-tenant
relationship continues after foreclosure,62 a tenant may also face
assert the right to possession they were entitled to under PTFA or local just cause
statutes. 55 See CAL. CIV. PROC. CODE § 1174.25(a) (2007). 56 Id. 57 See 1174.3 (2007). For more on this subject, see CEB, supra note 12, at § 24.2. 58 See CAL. CIV. PROC. CODE § 415.46(e)(2) (2012); Manis v. Superior Court, No. 1-13-
AP-001491 (Cal. App. Div. Super. Ct. Apr. 26, 2013) (claim of right to possession
must be granted when the claimant has a valid claim to possession); see also CEB,
supra note 12, at § 24.6. 59 See CAL. CIV. PROC. CODE § 1161.2(a)(5) (2013). 60CAL. CIV. PROC. CODE § 1161.2(a)(6) 61 CAL. CIV. PROC. CODE § 1161.2(a)(6) (2013). Documents are still available to parties
listed as exceptions in § 1161.2(a)(1)-(4). 62 See CAL. CIV. PROC. CODE § 1161b (2013) (“[A]ll rights and obligations under the
lease shall survive foreclosure.”). Several courts have also found that the landlord-
12
evictions due to non-payment of rent or breach of a lease term.63
Because these evictions are based on CCP § 1161, the 90-day notice
protection in CCP §1161b and the cover sheet requirement of CCP §
1161c do not apply. Even in that situation, however, courts have held
that bona fide tenants under the PTFA still must receive a 90-day
notice.64
Finally, successors-in-interest (new landlords) must provide notice
to existing tenants of the change in ownership within 15 days of
assuming ownership.65 A new landlord must comply with the notice
requirement before the landlord can evict for non-payment of rent.66
They may, however, request back-rent for any time the tenant was not
paying rent, and bring an action in small claims court to do so.67
Conclusion
Defending tenants and former borrowers in post-foreclosure
unlawful detainer actions requires advocates to become versed in
California foreclosure law. These types of cases also open up UD
defenses uncommon in standard landlord-tenant cases: improper
foreclosure notice and recording procedures and imperfect title.
The California Homeowner Bill of Rights Collaborative works to
train advocates, provide technical assistance, and create a space where
California consumer attorneys can share information on tenant and
homeowner legal developments in California. Visit our website to
access updated information on these topics: www.calhbor.org.
tenant relationship continues post-foreclosure under the PTFA. See Mik v. Fed.
Home Loan Mortg. Corp., __ F.3d __, 2014 WL 486214 (6th Cir. Feb. 7, 2014); Nativi
v. Deutsche Bank Nat’l Tr. Co., 223 Cal. App. 4th 261, 277-84 (2014). 63 But see Solid Rock Homes, LP v. Woods, No. 37-2012-00200205-CL-UD-CTL (Cal.
App. Div. Super. Ct. Nov. 20, 2013) (finding tenants need not pay rent to benefit from
the post-foreclosure notice requirements in former CCP § 1161b or the PTFA). 64 PNMAC Mortg. v. Stanko, No. 11U04495 (Cal. Super. Ct. Los Angeles Cnty. Mar.
7, 2012); Fed. Nat'l Mortg. Ass'n v. Vidal, 2012 WL 597929 (Mass. Hous. Ct. Feb 17,
2012). 65 CAL. CIV. CODE § 1962(c) (2013). 66 Id. 67 “Nothing in this subdivision shall relieve the tenant of any liability for unpaid
rent.” Id.
Landlord serves tenant notice to pay rent, cure violation of rental agreement,
or quit (move out)
Tenant pays rent, cures violation or moves out within
time given
Landlord claims tenant did not pay, cure, or move
within time given
Sheriff posts Notice to Vacate
Tenant files answer or one of a few motions.
Which to file is a question for lawyer.
Tenant does not timely file a response with the court
Landlord files Unlawful Detainer (eviction lawsuit) and serves tenant with a
Summons & Complaint
Tenant should document how they timely complied
Tenant moves out. Tenant should document when they
move out.
Landlord serves tenant 30, 60, 90, 120 day notice to terminate tenancy
(move out)
Landlord can get a default judgment against
the tenant—tenant loses automatically.
Tenant loses
Court trial—tenants rarely able to secure legal representation in UD cases
Tenant wins
Tenant stays in home and must immediately
pay all rent
Sheriff comes to lock tenant out
As soon as the next day
About one week
5 days
Tenants can make an agreement with the landlord
at any time. Consult with a lawyer before
signing anything.
Tenants have only 5 calendar days including weekends to properly
respond to the court. If tenant is not served, they
should go to the court to get a copy.
Basic Eviction Process in California
Court also sends courtesy letter
notifying tenant of UD filing.
10-21 days from the date answer was filed
If legal help is sought, tenant can try to file a stay to
get more time.
UDs to owners in foreclosure: tenant also
needs to respond and can file a pre/post judgment
claim any time before eviction.
California Nonjudicial Foreclosure Statutory Requirements: CC 2924 – 2924k
Statute
Subsection Procedural Requirement
2924: NOD (and some NTS and sale)
recording requirements
(a) A power of sale may be exercised:
after a breach of the loan obligation and
only if the following apply (a)(1)-(6):
(a)(1) The trustee, mortgagee, or beneficiary (or their agents) records an NOD in the county recorder’s office
(a)(1)(A)-(D) The NOD must: (A) Identify the DOT by either:
naming the trustor(s) and identifying where in the records the DOT was recorded OR
describing the property (B) State that a breach has occurred (C) Describe the nature of the breach and the foreclosing entity’s intent to exercise their power of sale (D) How much $ it would take to cure the default (see 2924c(b)(1) for exact wording of statement)
(a)(2) The power of sale cannot be exercised until 3 months after the NOD is recorded
(a)(3) The foreclosing entity must wait at least 3months after recording the NOD to record a Notice of Sale (NTS). The NTS state the time and place of sale
(a)(5) (HBOR addition): if sale is postponed for 10 business days or more, a notice of the new sale time/date/place must be given to borrower within 5 business days of the postponement
(a)(6) *Not really
procedural; more substantive (chain
of title)
(HBOR addition): identifies which entities have “the authority to foreclose:” 1. Holder of the beneficial interest under the DOT 2. Original or substituted trustee under the DOT 3. Designated agent of the holder of the beneficial interest Acting within the scope of authority designated by the holder of the beneficial interest
2924b: NOD & NTS notice requirements
(b)(1) The foreclosing entity must mail a copy of the NOD to each borrower within 10 bus. days of recording the NOD
(b)(2) The foreclosing entity must mail a copy of the NTS at least 20 days before the sale date
2924c: Curing the default
(a)(1) Lists amounts to be included in the NOD statement about how much $ it would take to cure the default
(a)(2) If the default is cured, the foreclosing entity must instruct the trustee to rescind the NOD within 21 days following the loan reinstatement. The trustee must record the rescission within 30 days of being notified of the rescission
(b) NODs recorded under 2924 and mailed under 2924b must include the word-for-word statement described in this section
(e) A borrower can cure their default (reinstate their loan and escape foreclosure) at any time between the recording of the NOD and 5 business days before the sale date listed in the operative NTS or sale postponement notice.
2924f: NTS notice, publication &
recording requirements
(b)(1) NTS must specify time and date of sale, the specific location of where the sale will be held, and a description of the property Must be posted at least 20 days before the sale date in a public place in the city (or judicial district) where the sale will take place. This NTS copy must be published in that place each week, 3 weeks in a row
(b)(2) NTS must be published in a newspaper of general circulation, at least 20 days before the sale date
(b)(3) NTS must be posted on the property to be sold, in a conspicuous place (the door) at least 20 days before the sale date
(b)(4) NTS must be recorded with the county recorder’s office least 20 days before the sale date
(b)(5) NTS must include:
Name of the original trustor
Name and CA contact info for the trustee
Street address of the property to be sold (or legal description)
(b)(7) NTS must include:
Total unpaid balance at the time of the publication of the NTS
2924g: Sale requirements
(a) Sales must:
happen in the county the property is located
be conducted via auction and the property sold to the highest bidder
occur between 9am and 5pm M-F and coincide with the time and date listed in the NTS
(c)(1) Sales may be postponed but never more than 365 days from the date in the most recent NTS
(c)(2) If a sale is postponed for more than 365 days:
foreclosing entity must issue a new NTS and go through all the notice, publishing, and recording requirements in 2924f
(d) For a regular (less than a year) postponement, the foreclosing entity must:
declare, at the would-be auction, the reason for postponement and the new sale date and time (the place must remain the same)
Special rules and timelines apply to situations where the sale was postponed because of an injunction, restraining order, or stay
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Filed 8/19/13 (ordered published by Supreme Ct. 3/19/14)
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
APPELLATE DIVISION
THE BANK OF NEW YORK MELLON,
Plaintiff and Respondent,
v.
VIDAL A. PRECIADO et al.,
Defendants and Appellants.
Appellate Division No. 1-12-AP-001360
(Super. Ct. No. 111CV215286)
THE BANK OF NEW YORK MELLON,
Plaintiff and Respondent,
v.
ROLAND LUKE et al.,
Defendants and Appellants.
Appellate Division No. 1-12-AP-001361
(Super. Ct. No. 111CV215288)
THE COURT*
The appeal by appellants Vidal Preciado (“Preciado”), Roland Luke (“Luke”), and
Kenneth Henderson (“Henderson”) (collectively, “Appellants”) from the unlawful detainer
judgments entered on March 16, 2012, came on regularly for hearing and was heard and
submitted on August 16, 2013. We hereby hold as follows:
Procedural History
This is an appeal from two related unlawful detainer actions. Respondent The Bank of
New York Mellon (“Bank”) is the owner of 1343 State Street, in Alviso, California. On July
25, 2011, Bank acquired title to this property at a trustee’s sale pursuant to foreclosure upon a
deed of trust. The property was previously owned by Preciado and occupied by Appellants.
* Before Lucas, P. J., Ryan J., and Alloggiamento, J.
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On September 1, 2011, Bank served a written notice to Appellants to quit and deliver
possession of the property within three days, 30 days, or 90 days (depending on their occupancy
status). After waiting more than 90 days, Bank filed two unlawful detainer complaints against
Appellants on December 19, 2011. The complaints incorrectly described the property as being
located in San Jose instead of Alviso. Appellants filed individual answers to the complaints,
and Henderson and Luke also filed individual prejudgment claims of right to possession.
Trial on the unlawful detainer actions was held on March 16, 2012, before the
Honorable Socrates Manoukian.1 That same day, a judgment was entered in each case which
awarded Bank possession of the property, rent, and damages. However, when the sheriff sought
to execute the writ, it was discovered that the property was incorrectly listed as being in San
Jose. The sheriff was unable to execute the writ due to this error, and Bank moved for an ex
parte order to amend the judgment. On April 13, 2012, the court entered an order amending the
judgments to change the property address to Alviso.
At Appellants’ request, the court stayed Appellants’ eviction for 40 days, up to and
including April 28, 2012. Appellants filed individual notices of appeal from the March 16,
2012 judgments.
Appealability
A final judgment in a limited civil case is appealable to the appellate division of the
superior court. (Code Civ. Proc., § 904.2, subd. (a).) The trial court entered judgment in these
limited civil cases on March 16, 2012. Accordingly, the judgments are appealable to the
Appellate Division.
Issues on Appeal
On appeal, Appellants make the following arguments:
1) The Appellate Division must conduct an independent review of the entire
record pursuant to People v. Wende;
2) “The Service Process was littered with gross procedural irregularities”;
1 On that same day, Preciado filed a wrongful foreclosure action against Bank and other defendants.
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3) Bank of America did not produce evidence sufficient to prove that the
foreclosure sale was conducted in strict compliance with Civil Code section
2924 and that title was duly perfected; and
4) Bank improperly filed two separate unlawful detainer actions for the same
property.
Standard of Review
In an appeal from an unlawful detainer judgment, “[w]e review the trial court’s findings
of fact to determine whether they are supported by substantial evidence.” (Palm Property
Investments, LLC v. Yadegar (2011) 194 Cal.App.4th 1419, 1425.) To the extent the trial court
drew conclusions of law based upon its findings of fact, we review those conclusions of law de
novo. (Id. at pp. 1425-1426.)
People v. Wende is Inapplicable to Civil Appeals
Appellants’ first argument is that the Appellate Division must conduct an independent
review of the entire record pursuant to People v. Wende (1979) 25 Cal.3d 436. However, a
Wende review only applies to criminal appeals. (See In re Sade C. (1996) 13 Cal.4th 952, 984.)
In civil appeals, the appellate courts are not required to perform an unassisted study of
the record or review of the law relevant to a party’s contentions on appeal. (Air Couriers
Internat. v. Employment Development Dept. (2007) 150 Cal.App.4th 923, 928; Guthrey v. State
of California (1998) 63 Cal.App.4th 1108, 1115.) Instead, a party’s failure to perform its duty
to provide argument, citations to the record, and legal authority in support of a contention may
be treated as a waiver of the issue. (Annod Corp. v. Hamilton & Samuels (2002) 100
Cal.App.4th 1286, 1301; People ex rel. 20th Century Ins. Co. v. Building Permit Consultants,
Inc. (2000) 86 Cal.App.4th 280, 284; Guthrey, supra, at pp. 1115-1116.) Thus, Appellants’
request for an independent Wende review is improper.
Service of Notices to Quit
Appellants argue that they were not properly served with notices terminating their
tenancy. As a prerequisite to filing an unlawful detainer action, a tenant must be served with
either a 3, 30, or 90 days’ notice, depending on the individual’s status as a tenant. (Code Civ.
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Proc., §§ 1161, 1161a, 1161b.) Code of Civil Procedure section 11622 provides three methods
of serving these notices: (1) by personal delivery to the tenant (personal service); or (2) if the
tenant is absent from his residence and usual place of business, by leaving a copy with a person
of suitable age and discretion at either place, and sending a copy through the mail to the tenant’s
residence (substituted service); or (3) if a place of residence and usual place of business cannot
be ascertained or a person of suitable age or discretion cannot be found there, then by affixing a
copy in a conspicuous place on the property and delivering a copy to a person residing there, if
such a person can be found, and also sending a copy through the mail addressed to the tenant at
the place where the property is situated (post and mail service). A notice is valid and
enforceable only if the lessor has strictly complied with these statutorily mandated requirements
for service. (Losornio v. Motta (1998) 67 Cal.App.4th 110, 113-14; Liebovich v.
Shahrokhkhany (1997) 56 Cal.App.4th 511, 513.)
At trial, Henderson testified that he did not receive any notice to quit. (RT, p. 14:11-15.)
In response, Bank’s counsel explained that all the occupants were served with a notice to quit
on September 1, 2011. Bank’s counsel referred the court to Exhibit B of Bank’s complaint
which contained the proofs of service for the notices. (RT, p. 14:16-23.) In the proofs of
service, registered process server Kris Vorsatz (“Vorsatz”) declared that he served the notices
on September 1, 2011. (CT-286, pp. 11-12; CT-288, pp. 11-12.) According to the proofs of
service, “[a]fter due and diligent effort” Vorsatz posted a copy of the notices on 1343 State
Street, San Jose, California. (Id.) Thereafter, Vorsatz mailed a copy of each notice to a post
office box that was designated as Presiado’s mailing address. (Id.) The court then entered
judgment for Bank. (RT, p. 14:26-27.)
Where service is carried out by a registered process server, Evidence Code section 647
applies to eliminate the necessity of calling the process server as a witness at trial. (Palm
Property Investments, LLC v. Yadegar, supra, 194 Cal.App.4th at p. 1427.) Under Evidence
Code section 647, “[t]he return of a process server [ ] upon process or notice establishes a
presumption, affecting the burden of producing evidence, of the facts stated in the return.” As
2 Hereafter, unless otherwise stated, all section references are to the Code of Civil Procedure.
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Bank did not produce Vorsatz as a witness, the question is whether Vorsatz’s proofs of service
established Bank complied with the notice requirements of section 1162.
In Highland Plastics, Inc. v. Enders (1980) 109 Cal.App.3d Supp. 1, the court analyzed
whether there was sufficient evidence that the landlord complied with the “post and mail”
provision of section 1162. The court noted that this code section does not require a showing of
reasonable diligence in attempting personal service before utilizing the substituted service
provisions, as required in Code of Civil Procedure section 415.20, subdivision (b). (Id. at p. 6.)
It does require, however, “that if the tenant cannot be located for personal service that the
person making this substituted service first determine either that the tenant’s ‘. . . place of
residence and business cannot be ascertained, or that a person of suitable age or discretion there
cannot be found. . . .’ ” (Id.) In Highland Plastics, the deputy marshal testified that when he
attempted to serve the 30-day notice on defendant, no one answered his knock on the door of
the premises which had been identified to him as the place of residence and business of
defendant. (Id. at pp. 6-7.) When there was no response to the deputy’s knock, he then posted
the notice “in a conspicuous place on the property” and mailed a copy to the place where the
property was situated. (Id. at p. 7.) Thus, the court concluded that there was substantial
evidence supporting the trial court’s finding that there had been a proper service of the notice
utilizing the “post and mail” provisions as neither the defendant nor a person of suitable age and
discretion could be found. (Id.)
Similarly, in Hozz v. Lewis (1989) 215 Cal.App.3d 314, the court held that trial court
properly found that the landlord’s “post and mail” procedure of service of a three-day notice
pursuant to section 1162 was adequate. In that case, testimony at trial established that the
landlord’s agent went to the apartment, rang the bell and knocked on the door. When no one
answered, the employee taped a copy of the notice to the door and slipped another copy under
the door. He then posted another copy by mail addressed to the tenant. (Id. at p. 316.) Since no
one was present when the process server went to the apartment, “post and mail” service was
authorized under section 1162. (Id. at p. 317.)
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As explained above, no showing of reasonable diligence in attempting personal service
before utilizing the substituted service provisions is required under the statute. (See Hozz v.
Lewis, supra, 215 Cal.App.3d at p. 317.) Nevertheless, “post and mail” service is not
authorized as a first-resort method of service. Here, Vorsatz’s declaration does not establish
that Bank complied with section 1162 as it does show that personal service was ever attempted.
The proofs of service do not state that Appellants were not home or that no one of a suitable age
was home when the server posted the notice “in a conspicuous place.”
In its opposition brief, Bank argues that Appellants may not challenge service of the
notices as they did not include this as an affirmative defense in their answers. Bank is mistaken.
An affirmative defense is an allegation of new matter in the answer that is not responsive to an
essential allegation in the complaint. In other words, an affirmative defense is an allegation
relied on by the defendant that is not put in issue by the plaintiff’s complaint. (Bevill v. Zoura
(1994) 27 Cal.App.4th 694, 698; State Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228
Cal.App.3d 721, 725.) Where the answer alleges facts showing that some essential allegation of
the complaint is not true, those facts are not “new matter,” but only a traverse. (Ibid.) Because
proper service of the termination notices was an essential element of Bank’s unlawful detainer
actions, Appellants’ general denial of each statement of the complaint sufficiently put the
service of the notices at issue and Appellants were not required to plead ineffective notice as an
affirmative defense. (See Bevill v. Zoura, supra, 27 Cal.App.4th at p. 698.)
Accordingly, the judgment for possession must be reversed because Bank failed to
establish proper service of the notices. (See Liebovich v. Shahrokhkhany, supra, 56
Cal.App.4th at p. 514.)
Sale in Compliance with Civil Code § 2924 et seq. and the Deed of Trust
“Historically a cause of action for unlawful detainer was available only to a landlord
against his tenant.” (Gross v. Superior Court (1985) 171 Cal.App.3d 265, 271.) The remedy
has been expanded by statute to additional categories of plaintiffs (see Code Civ. Proc., § 1161)
and defendants (see Code Civ. Proc., § 1161a). The purpose of section 1161a of the Code of
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Civil Procedure was to make clear that one acquiring ownership through foreclosure could also
evict by a summary procedure. (See Gross v. Superior Court, supra, 171 Cal.App.3d at p. 271.)
In an unlawful detainer action brought pursuant to Code of Civil Procedure section
1161a, subdivision (b)(3), the plaintiff must show that he acquired the property at a regularly
conducted sale and thereafter “duly perfected” his title. (Stephens v. Hollis (1987) 196
Cal.App.3d 948, 952; Evans v. Superior Court (1977) 67 Cal.App.3d 162, 169.) “[W]here the
plaintiff in the unlawful detainer action is the purchaser at a trustee’s sale, he or she ‘need only
prove a sale in compliance with the statute and deed of trust, followed by purchase at such sale,
and the defendant may raise objections only on that phase of the issue of title.’ ” (Old Nat’l
Fin. Servs. v. Seibert (1987) 194 Cal.App.3d 460, 465.) “The statute” with which a post-
foreclosure plaintiff must prove compliance is Civil Code section 2924. (Seidell v. Anglo-
California Trust Co. (1942) 55 Cal.App.2d 913, 920.) On appeal, Appellants asserted that Bank
did not meet its affirmative burden in this regard.
At trial, Bank provided the Trustee’s Deed Upon Sale, recorded August 8, 2011. (See
RT, p. 5:1-11.) The Trustee’s Deed Upon Sale purportedly showed that Bank purchased the
property at the trustee’s sale held on July 25, 2011. (See CT-286, pp. 6-8.) Luke then testified
that he was at the auction, and that the property “went back to Bank of America.” (See RT, p.
6:25-26.) Preciado testified that the loan was originally with Countrywide, and then
Countrywide was “taken over by Bank of America.” (See RT, p. 6:27-28.) The court
responded, “Well, I don’t know what Bank of America did or didn’t do, but they have a deed
here showing it’s duly authenticated, the deed that Bank of New York Mellon owns the property
here.” (See RT, p. 7:16-19.) When Appellants pressed Bank to prove it owned the property, the
court stated, “They have a deed showing that they own the property, and that’s all they need to
do.” (See RT, p. 8:21-23.)
The trial court erred when it found that the Trustee’s Deed Upon Sale was sufficient
proof that Bank acquired the property at a regularly conducted sale and thereafter “duly
perfected” its title. “[T]itle is duly perfected when all steps have been taken to make it perfect,
i.e., to convey to the purchaser that which he has purchased, valid and good beyond all
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reasonable doubt, which includes good record title, but is not limited to good record title, as
between the parties to the transaction. The term ‘duly’ implies that all of those elements
necessary to a valid sale exist, else there would not be a sale at all. (Kessler v. Bridge (1958)
161 Cal.App.2d Supp. 837, 841 [internal citations omitted].) Under a deed of trust, power of
sale upon the trustor’s default vests in the trustee. (Calvo v. HSBC Bank USA, N.A. (2011) 199
Cal.App.4th 118, 122.) Therefore, in order to prove compliance with section 2924, the plaintiff
must necessarily prove the sale was conducted by the trustee.
Here, the Trustee’s Deed Upon Sale indicates the property was sold by Recontrust
Company, N.A. acting as trustee. However, the Deed of Trust identifies Commonwealth Land
Title Company as the trustee. (See CT-286, p. 121.) Bank did not provide any evidence
establishing Recontrust’s authority to conduct the trustee’s sale. As Bank failed to provide any
evidence that Recontrust was substituted for the original trustee, Bank was not entitled to
judgment.
Appellants’ Remaining Arguments
Given our decision to reverse the judgments, we need not reach Appellants’ remaining
arguments.
Conclusion
The judgments entered on March 16, 2012, are REVERSED and the trial court is
instructed to entered judgments in favor of Appellants. Appellants are the prevailing party and
are entitled to costs on appeal. (See Cal. Rules of Court, rule 8.891(a)(2).)
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Trial Court: Superior Court of the County of Santa Clara
Trial Judge: Honorable Socrates Manoukian, J.
Iscandari & Associates and Alieu Iscandari for Defendants and Appellants.
Bryan Cave, Andrea Hicks; Miles Bauer Bergstrom & Winters and Christine Chung for
Plaintiff and Respondent.