The perils of mistakes in foreclosures were on display in two cases recently published by the California Supreme Court. The mortgage crisis that precipitated from the economic collapse of 2008 has led to a large number of lawsuits concerning the ownership and possession of real property. California is a non-judicial foreclosure state, which means that the party trying to foreclose does not need to file a lawsuit in order to foreclose on a property. Another important difference between judicial and non-judicial foreclosure is that a non-judicial foreclosure is initiated by a trustee while judicial foreclosure is initiated by the lender. The trustee in a non-judicial foreclosure has a fiduciary responsibility to both the lender and the borrower and is supposed to be independent of both.
Despite being a non-judicial foreclosure state, many foreclosures end up in the California court system due to unlawful detainer complaints after the property was foreclosed on or in a wrongful foreclosure or similar action. When those cases arrive before the courts, you need to make sure that the documents are in good order, specific and without mistake or you may lose your case. An experienced real estate attorney from Los Angeles Jewish Lawyer’s network will guide you through this process so you will not lose your home due to a mistake in your filings.
In Bank of Mellon v. Preciado, Nos. 1-12-AP-001360 & 1-12-AP-001361 (Cal. App. Div. Super. Ct. Aug. 19, 2013), the wrong party filed for foreclosure and they incorrectly served the defendant. In Cansino v. Bank of America, ___ Cal. App. 4th ___ (2014) (Sixth Appellate District, filed 3/26/14), the plaintiff failed to plead with specificity his fraud allegation. In both cases, we see that all parties and their attorneys need to be careful that they are accurate in all their filings or they risk losing the property.
The California Supreme Court published Preciado on March 19, 2014, because the Court dealt with two issues that demonstrated that the plaintiff bank did not have the right to evict the tenants of the property: improper service and a title that was not “duly perfected.” In this case, the owner of the property was foreclosed on and the property was sold to Bank Mellon in a trustee’s sale that was conducted by Recontrust Company N.A. that was acting as the trustee for this sale on July 25, 2011. Bank of Mellon served the defendants with written notice to quit and deliver the property to the Bank on September 1, 2011 and then filed an unlawful detainer action on December 19, 2011 against the former owner and tenants of the property. In its proof of service, the Bank listed the property as being located in San Jose rather than Alviso where the property is actually located. Finally, the Court noted that the registered process server did not provide sufficient evidence that he attempted personal service.
The Court reversed the trial judge’s judgment giving the Bank possession of the property. The Court held that the service of the notice of eviction was not proper because the registered process server did not demonstrate that he attempted personal service. Under California Code of Civil Procedure Section 1162, there are three methods of service: personal service, substituted service and post and mail service. The Bank attempted to use post and mail service, which is when you post the notice on the said property in a visible location and then mail the notice to the same property. When one uses post and mail service though, s/he must attempt personal service first. Here, the registered process server did not demonstrate through his affidavit that he attempted personal service. So the Court reversed the judgment for failure to properly serve the defendants.
In addition, the Court looked into the issue of whether the title of the property after the trustee’s sale was “duly perfected.” Code of Civil Procedure Section 1161(a) requires that a property owner make a showing that he/she/it owns the property and has “duly perfected” title prior to evicting any tenants of the property. Here, Bank of Mellon purchased the property at a trustee’s sale conducted by Recontrust Company N.A. Yet Recontrust was not the trustee but was only “acting as trustee.” No evidence was provided that Recontrust was substituted for the original trustee. Therefore, the Court held that the sale was not valid and ordered the trial court to enter a judgment in favor of the former property owner and his tenants.
In Cansino, the former property owner challenged Bank of America’s foreclosure on their property. In August 2005, America’s Wholesale Lender provided an Adjustable Rate Mortgage in the amount of $496,000 to refinance a mortgage that the plaintiffs already had on the property. The plaintiff claimed that the representatives of America’s Wholesale Lender committed fraud in two instances. First, the plaintiff claims that the Lender committed fraud when one its agents represented that the property is valued at $620,000. Second, the plaintiff plead that the representatives of the Lender said that the value of the home would appreciate by the time that the plaintiff had to pay the principal. The plaintiff claims that these representations constitute fraud because an appraisal done more than five years later valued the home at $350,000 to $400,000.
The Court held that the fraud claims are without merit because they do not say with specificity which agent of the Lender made the claims. The plaintiff only identified “lending personnel” as the persons who made representations about the future appreciation of the property. Fraud allegations against a corporate entity requires more specificity as to how, when and by whom the representations were made. The plaintiff failed to provide any of those details. In addition, the Court held that the representations of the lending personnel was about future events and therefore constituted an opinion and was not actionable as fraud.
The Court also held that the valuation of the property at $620,000 was also not fraud because the plaintiff failed to provide specific details about “how, when, where, to whom and by what means” the information was given to the plaintiff. The failure to provide said details does not give Bank of America an opportunity to rebut the claims. This is why the Court held that this claim for fraud was invalid. Finally, the Court refused to hear the claim that the Bank fraudulently concealed relevant information because the plaintiff again failed to plead such concealment with specificity.
The two cases above demonstrate the need to be especially careful when filing legal documents in a legal case. In Preciado, we see that a Bank that did not strictly adhere to the rules regarding the sale of a foreclosed property and process service lost possession of the property. In Cansino, we see that the failure to provide the necessary information in a pleading lost the plaintiff his case.
An experienced foreclosure defense attorney in Los Angeles from LA Jewish Lawyer’s network can ensure that you do not suffer from mistaken drafted or missing legal documents. Call us today to see how we may help you with your real estate issue.
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