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Monday, July 22, 2013

Statutory tolling of the statute of limitations in California under Code of Civil Procedure section 352

Statutory tolling of the statute of limitations in California under California Code of Civil Procedure section 352 is the topic of this blog post which is the second in a series that will discuss statutory tolling of the statute of limitations in California. 

Some of the situations in which section 352 does not apply are also discussed.  The laws in the State of California impose time limitations or deadlines to take legal action which are known as the “statute of limitations” (SOL).  If someone fails to fully settle their claim or file a lawsuit within a certain time period, they will forever lose their right to any recovery or other legal remedy against the other person, business or entity if the SOL defense is asserted and proven as a defense to their lawsuit.

The statute of limitations laws in California are fixed and very strict in their application unless a particular exception applies.  Knowledge of the exceptions can mean all the difference in the world in certain situations.

Some of the more common statutory exceptions are found in sections 351 through 356 of the Code of Civil Procedure.  This blog post will discuss only section 352.

Code of Civil Procedure § 352 states that “(a) If a person entitled to bring an action, mentioned in Chapter 3 (commencing with Section 335) is, at the time the cause of action accrued either under the age of majority or insane, the time of the disability is not part of the time limited for the commencement of the action. (b) This section does not apply to an action against a public entity or public employee upon a cause of action for which a claim is required to be presented in accordance with Chapter 1 (commencing with Section 900) or Chapter 2 (commencing with Section 910) of Part 3, or Chapter 3 (commencing with Section 950) of Part 4, of Division 3.6 of Title 1 of the Government Code. This subdivision shall not apply to any claim presented to a public entity prior to January 1, 1971.”

The first statutory exception in section 352 is that of a plaintiff or claimant who is under the age of 18, meaning under the age of majority. Family Code section 6500 specifies the age of majority, and section 7050(e)(4) may also be applicable depending on the particular case.  Under section 352 the statute of limitations does not start running until the plaintiff or claimant turns eighteen years old, or is emancipated by court order.

However this exception does not apply to a minor child injured before birth or in the course of birth, in those cases the SOL is six years after the date of birth pursuant to Code of Civil Procedure § 340.4.

The minority exception and the unborn exceptions do not apply to:

1.         Medical malpractice cases in general which are instead regulated by Code of Civil Procedure § 340.5; see also Photias v. Doerfler (1996) 45 Cal. App. 4th 1014, 1018-1020;

2.         Uninsured motorist cases which are governed by Insurance Code §11580.1(i)(1); see also Allstate Ins. Co. v. Orlando (1968) 262 Cal.App.2d 858, 865;

3.         Sexual abuse cases which are now regulated by the tolling provisions specified in Code of Civil Procedure §340.1, and

4.         Government meaning public entity claims generally, but there can be exceptions which are not discussed in this blog post.

The second exception in section 352 is the mental disability or incompetence of a plaintiff.

If plaintiff was “insane” also known as mentally incompetent at the time of or because of the tortuous wrongdoing, the statute of limitations is suspended for as long as the mental incompetence continues, even if a guardian ad litem has been appointed. See Tzolov v. International Jet Leasing, Inc. (1991) 232 Cal.App.3d 117, 120.

In the case of Feeley v. Southern Pacific Transportation Co. (1991) 234 Cal.App.3d 949, 953 the plaintiff was in a coma for twelve days after being knocked unconscious while on the defendant's premises. His suit, filed one year and one day after the attack, was timely because the statute was tolled while he was unconscious.

These SOL exceptions generally do not apply to Government or public entity claims, but there are times when they may apply which are not discussed in this blog post.

Attorneys or parties in California who would like to view portions of over 200 sample legal documents for California and Federal litigation sold by the author can use the following link: View over 200 sample legal documents
 
The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995. Visit the author's Facebook page at Visit my Facebook page
 
If you enjoy this blog post, tell others about it. They can subscribe to the author’s weekly California legal newsletter by visiting the following link: Subscribe to my FREE newsletter
 
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Statutory tolling of the statute of limitations in California under Code of Civil Procedure section 351

Statutory tolling of the statute of limitations in California under California Code of Civil Procedure section 351 is the topic of this blog post which is the first in a series that will discuss statutory tolling of the statute of limitations in California.  

Some of the situations in which section 351 does not apply are also discussed.  The laws in  the State of California impose time limitations or deadlines to take legal action which are known as the “statute of limitations” (SOL).  If someone fails to fully settle their claim or file a lawsuit within a certain time period, they will forever lose their right to any recovery or other legal remedy against the other person, business or entity if the SOL defense is asserted and proven as a defense to their lawsuit.

The statute of limitations laws in California are fixed and very strict in their application unless a particular exception applies.  Knowledge of the exceptions can mean all the difference in the world in certain situations.

Some of the more common statutory exceptions are found in sections 351 through 356 of the Code of Civil Procedure.  This blog post discusses only section 351.

Code of Civil Procedure § 351 states that, “If, when the cause of action accrues against a person, he is out of the State, the action may be commenced within the term herein limited, after his return to the State, and if, after the cause of action accrues, he departs from the State, the time of his absence is not part of the time limited for the commencement of the action.”

This means that the absence of a defendant from the state of California between the starting date and the ending date of the SOL will generally lengthen the SOL by the amount of the length of time that a defendant was absent from the state of California.

However California and Federal Courts have ruled that this exception does not apply in some circumstances including:

1.         Defendants engaging in interstate commerce. See Abramson v Brownstein 897 F2d 389, 392 (9th Cir. 1990);

2.         Corporations and limited partnerships.  See Epstein v. Frank (1981) 125 Cal. App. 3d 111, 119 n.4 and 120;

3.         Nonresident motorists. See Bigelow v. Smik (1970) 6 Cal. App. 3d 10, 15, and

4.         Resident motorists in some circumstances. See Vehicle Code Section 17460; see also Dovie v. Hibler (1967) 254 Cal.App 2d 673, 675.

Listed above are the most common circumstances in which section 351 does not apply.   

To view over 200 sample legal documents for California and Federal litigation created and sold by the author of this blog post visit: View over 200 sample legal documents
 
The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995. Visit the author's Facebook page at Visit my Facebook page

If you enjoy this blog post, tell others about it. They can subscribe to the author’s weekly California legal newsletter by visiting the following link: Subscribe to my FREE newsletter
 
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Friday, July 19, 2013

California Revocable Living Trusts with a spendthrift clause

California Revocable Living Trusts with a spendthrift clause are the topic of this blog post. Using a properly wored spendthrift clause in a California Revocable Living Trust (“trust”) will allow the trust to be considered as a spendthrift trust. This can be advantageous in certain situations where a beneficiary of the trust is not good with money, has an addiction that could cause them to squander the funds, may be easily deceived or defrauded by others, or could easily fall into debt with creditors.

In any of the situations described above, a spendthrift trust allows the trustee to provide for the beneficiary from the trust, without the risk that the principal of the trust will be squandered by misuse, drugs, gambling, a misguided relationship, or excessive debt.

A spendthrift trust is essentially a trust that limits the beneficiary’s ability to waste trust funds. It is set up so that the trustee has complete control over how the trust funds are spent for the benefit of the beneficiary. A spendthrift clause in a trust guards against creditors’ attachment of the beneficiary’s interest in the trust income or principal.

The beneficiary does not own any trust assets, as a result they have no right to offer trust principal, or income, as a guarantee of repayment of a loan. Thus the beneficiary’s creditors will be unable to seize trust assets if the beneficiary is sued.

To be regarded as a spendthrift trust, the creator of the trust must use trust language within the trust agreement that reveals that the trust creator intended that the trust be treated as spendthrift.

But there can be exceptions to spendthrift provisions. Among those exceptions are creditors who provide the beneficiary with necessaries, such as food and shelter. Additionally, trust assets in a spendthrift trust may be seized to make child support and spousal support payments.

If a trust calls for a distribution to the beneficiary, but the beneficiary refuses the distribution and elects to retain property in the trust, the spendthrift protection of the trust ceases with respect to that distribution and the beneficiary’s creditors can now reach trust assets. See Stein, Jacob (2011). A Lawyer's Guide to Asset Protection Planning in California. p. 126.

A typical spendthrift clause states that the trustee of a spendthrift trust has the power to stop all payments to a beneficiary on a temporary or permanent basis if the beneficiary starts spending money recklessly. The trustee may allow the income in the trust to increase or, distribute the income to another beneficiary.

The bankruptcy courts do honor spendthrift clauses in trusts. If the trust has a valid spendthrift provision the trust is not considered part of the bankruptcy estate and the bankruptcy trustee cannot go after the assets in the trust. Title 11 U.S.C. Section 541 (c)(2) states in pertinent part that “a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable non-bankruptcy law is enforceable in a case under this title."

So that individuals will not create trusts to defeat their own creditors, the laws of most states provide that a spendthrift clause in a trust document does not protect the beneficiary to the extent that the beneficiary is also the person who created the trust. Such a trust is known as a self-settled trust. The settlor does not need to be either the sole settlor or the only beneficiary of the trust. As long as the settlor is a beneficiary of the trust to any extent, to that extent the trust will be deemed self-settled. See Stein, Jacob (Winter 2007). "The Importance of Trusts in Asset Protection". California Trusts and Estates Quarterly.

Attorneys or parties in California who wish to view a sample California Revocable Living Trust for a husband and wife that contains a spendthrift clause sold by the author can use the following link:


The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 235 sample legal documents. Visit his website at LegalDocsPro website and his Facebook page at Facebook page

If you enjoy this blog post, tell others about it. They can subscribe to the author’s weekly California legal newsletter by visiting the following link: Subscribe to FREE weekly newsletter

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:
 
Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

 

 

Tolling of the statute of limitations in California on equitable grounds

Tolling of the statute of limitations in California on equitable grounds is the topic of this blog post. The statute of limitations may be equitably tolled which essentially suspends the time limitation for filing a particular action under certain circumstances.  Equitable tolling is a doctrine created by the courts that recognizes that there are some exceptions where a purely technical application of procedural rules would result in a manifest injustice.

For instance in one case the Plaintiff's lawyer was hit by a car and seriously injured. While he was incapacitated, the statute of limitations expired on one of his cases.  The statute of limitations was equitably tolled pursuant to Civil Code § 3531 which states: "The law never requires impossibilities." Lewis v. Superior Court (1985) 175 Cal. App. 3d 366, 380. And the same court also stated that a catastrophic fire or earthquake could also invoke the impossibility grounds, see Lewis supra, 175 Cal. App. 3d at page 378.

Other cases have involved interference. In one case decided by the California Supreme Court almost 70 years ago the defendant’s conduct contributed to the plaintiff’s delay in filing his lawsuit. Bollinger v National Fire Ins. Co. (1944) 25 Cal. 2d 399, 411.

The limitations period is also extended when a person has several legal remedies and, “reasonably and in good faith,” “timely” meaning within the statute of limitations pursues one of them but believing the second “similar” claim is unnecessary or can’t be filed until the first remedy is pursued; and the defendant is not prejudiced because the first claim alerts the defendant to begin investigating the facts which form the basis for the second factually similar claim.  Collier v. City of Pasadena (1983) 142 Cal. App. 3d 917, 924-926; see also Myers v. County of Orange (1970) 6 Cal. App. 3d 626, 634.

This blog post contains some very valuable information that just might revive a case where the statute of limitations may be seemingly blown.  Future blog posts will discuss other examples of tolling of the statute of limitations in California. 
Attorneys or parties in California who wish to view all of the sample legal documents for use in California and Federal Courts sold by the author can use the following link:  View over 200 sample legal documents for sale 
The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents as the owner and creator of LegalDocsPro. 



If you are in need of assistance with any California or Federal litigation matters, Mr. Burman is available on a freelance basis. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information. He accepts payments through PayPal which means that you can pay using most credit or debit cards.

Visit the facebook page for LegalDocsPro by visiting the following link: Visit my Facebook page
If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.


The Real Estate Settlement Procedures Act and a Qualified Written Request Letter


The Real Estate Settlement Procedures Act (RESPA) and a Qualified Written Request Letter (QWR) pursuant to RESPA are the topic of this blog post.  The relevant statutes for RESPA are found in Title 12, Chapter 27, Sections 2601 through 2617 of the United States Code.

RESPA authorizes the use of a Qualified Written Request in which a homeowner may dispute information contained in an account, request information from the servicer or lender, and have their issues answered by the company in a reasonable amount of time. Many times, servicers or lenders may not enjoy disclosing certain information to the homeowners as they may have significant problems answering the questions.

Some servicers or lenders do not keep adequate records, make material mistakes, and also engage in a practice of fraudulent servicing such as excessive or “junk” mortgage fees. In the right situations the use of a QWR can be very helpful in shedding light on these activities that can jeopardize the foreclosure case and may allow the homeowners to obtain a loan modification or other concessions from the servicer or lender.

Section 2614 of RESPA states that for a violation of Section 2605 relating to a failure to respond or to correct erroneous information outlined in a QWR, the statute of limitations is 3 years from the date of the occurrence of the violation.

The servicer or lender must acknowledge the receipt of the QWR in writing within five (5) business days from receipt unless the actions requested in the QWR are taken within that time period.
 
Although not specifically required by law, the QWR should be in the form of a letter sent by Certified Mail, Return Receipt Requested and should include the name and account number of the borrower, and should include a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

Within thirty (30) business days from receipt of the QWR, the servicer or lender must make any appropriate corrections in the account of the borrower, including crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower as well as other specified information.

The thirty (30) business day period to respond may be extended for not more than 15 business  days if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the delay in responding.

If the servicer or lender fails to comply with any provision of RESPA they can be liable to the borrower for any actual damages to the borrower as a result of the failure, and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000. They may also be liable for the costs of any successful action, together with any attorneys fees incurred in connection with such action as the court determines to be reasonable under the circumstances of that particular case.

Attorneys or parties who wish to view or download a FREE sample Qualified Written Request letter created by the author can visit the link shown below:
View a FREE sample Qualified Written Request Letter
 
The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter
 
To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 200 sample legal documents for sale
 
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

 

California Civil Code section 2943 beneficiary statement request


A California Civil Code section 2943 beneficiary statement request to a lender is the topic of this blog post.   Section 2943 of the Civil Code states in pertinent part that the request may be sent any time before, or within two months after, the recording of a notice of default under a mortgage or deed of trust. The request MUST be sent before any notice of sale has been recorded. 

The request may be sent to the address listed on the latest billing statement.  Although not actually required under the law, sending the notice by Certified Mail, Return Receipt requested with another copy to the Trustee is a good idea.

Homeowners in California who are presently in default, or may be close to defaulting on the loan securing their home should seriously consider requesting a beneficiary statement request to their lender to request that all of the information listed in, and documents described in, this blog post be provided to them.  Certain lenders keep sloppy records and the homeowner may find discrepancies or errors in the documents or information received from the lender that may support a defense to any foreclosure.

Section 2943 of the Civil Code states in pertinent part that the lender must provide certain information within 21 calendar days from the date of receipt of the request for a beneficiary statement including the amount of the unpaid balance of the obligation secured by the mortgage or deed of trust, the interest rate, together with the total amounts, if any, of all overdue installments of either principal or interest, or both,  a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto as well as other specified information.

A copy of the deed of trust or mortgage may also be requested at the same time as the beneficiary statement.

If a lender willfully fails to prepare and deliver the beneficiary statement they are liable to the person requesting the statement for all damages which they may sustain by reason of the refusal or the sum of $300.00 if no actual damages are sustained.

Attorneys or parties in California who would like to view a sample request for a beneficiary statement created by the author can visit the link shown below.


The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for sale.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter!
To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 300 sample legal documents for sale
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Thursday, July 18, 2013

Why a mortgage and a deed of trust are different

Why a mortgage and a deed of trust are different is the topic of this blog post.  Some people are under the impression that the only difference is in the name.  The confusion likely stems from the fact that loans securing real property are often referred to as mortgages by many people, but in reality only loans backed by mortgage notes are truly mortgage loans. Home loans backed by a deed of trust are trusts.

California is one of more than 12 states, in addition to the District of Columbia in which most, if not all, home loans are secured with a deed of trust also known as a trust deed.  California law allows the use of either a trust deed or a mortgage, but because lenders have more power under a trust deed as compared to a mortgage virtually all lenders use a trust deed in California, rather than a mortgage.

When a borrower takes out a home loan, they must sign a promissory note which is a document pledging to repay the loan. Depending on the particular state the transaction takes place in will determine whether the document is a mortgage note or a deed of trust. The main difference between them is in who holds the title to the house while the borrower is paying off the loan.

In a real estate transaction involving a mortgage note, the note serves as a lien on the property. This means the borrower cannot sell the house until the debt is repaid and the lien is satisfied. With a mortgage note, either the lender or the borrower can hold the actual title to the house, depending on which state the house is located in. In states known as "title theory" states the lender keeps the title and owns the house until the borrower pays off the loan.  In other states known as “lien theory" states the borrower holds the title and owns the house, but the mortgage note gives the lender the right to seize and sell the house for non-payment.

For home loans backed by a deed of trust, neither the borrower nor the lender holds the title to the property. The deed of trust brings in a third party to hold the title. This party is the trustee. The trustee might be a bank, a lawyer or some other entity, but the law requires that it must be a neutral party. When the borrower has repaid the loan, the lender will instruct the trustee to release the title to the borrower, who now owns the house free and clear.

The difference between a mortgage and a deed of trust will become crystal clear if the borrower defaults on the loan and the lender then forecloses on the house. With a mortgage, regardless of who is holding the title, the lender usually has to get a court order allowing it to seize the home and sell it. This is called "judicial foreclosure." With a deed of trust, the trustee already has the power to sell the home. All the lender has to do is furnish proof to the trustee that the borrower has defaulted. This is called "non-judicial foreclosure," and because it doesn't need to go through the court system, it's usually quicker and easier for the lender. California is a non-judicial foreclosure state which means that in most cases no court order is required.

Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.


The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 225 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE newsletter
To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 200 sample legal documents
 
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

California foreclosure defense strategy using the MERS defense

California foreclosure defense strategy using the defense that Mortgage Electronic Registration Systems, Inc. (MERS) does not have standing to commence a foreclosure in California is the topic of this blog post. As a foreclosure defense strategy in California the so called “MERS defense” is not very effective as will be shown by this blog post.

Some loan documents will state right in the document that the borrower consents to MERS having authority to initiate foreclosure.  Anyone considering using the MERS defense in California needs to read this blog post and then read their Deed of Trust.

In at least one case decided by a California Court of Appeal, the plaintiff actually attached a copy of the Deed of Trust to the complaint in which they argued that MERS had no standing to initiate the foreclosure.  The big problem was that the Deed of Trust mentioned MERS by name! Keep reading to find out what happened.

The trial Court sustained a demurrer to the complaint and all causes of action therein without leave to amend, a California Court of Appeal affirmed that order in Gomes v. Countrywide (2011) 192 Cal. App. 4th 1149, 1157 where the Court stated that, “As an independent ground for affirming the order sustaining the demurrer, we conclude that even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust -- which Gomes has attached to his complaint -- establishes as a factual matter that his claims lack merit. As stated in the deed of trust, Gomes agreed by executing that document that MERS has the authority to initiate a foreclosure. Specifically, Gomes agreed that "MERS (as nominee for Lender and Lender's successors and assigns) has . . . the right to foreclose and sell the Property." (Emphasis added.)

It is true that in other parts of the country, and in some bankruptcy courts, borrowers have had some success with the argument that since MERS is a "nominee" and "nominee" is not defined in the loan documents, that it does not have standing to initiate foreclosure.

That argument has not been particularly successful in California, mainly because of these reasons:

1.         Non-judicial foreclosures only require that the trustee on the deed of trust conduct the foreclosure.

2.         The deed of trust is recorded and so are any substitutions and assignments. In other states   MERS had tried to circumvent the recording statutes by not recording these transfers with the County recorder.
 
3.         The borrower  also known as the Trustor has signed the Deed of Trust and voluntarily consented to a 3rd party conducting the Trustee's sale, regardless of who the beneficiary is.

Despite several recent Court decisions rejecting the MERS defense many people are still under the mistaken impression that the defense is valid. The fact is that the MERS defense has been rejected by the California Courts.  

Note that the author has NO sympathy for major lenders or loan servicers who like most large corporations want to privatize their profits, but socialize their losses.
 
Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.


The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 225 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author's weekly California and Federal legal newsletter by visiting the following link: Subscribe to my FREE weekly legal newsletter

To view all of the sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 200 sample legal documents for California and Federal litigation
Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.