The Trustee Has a Duty to Cancel the Underlying Note After Sale!!

From Sal Danna

Kerivan v. Title Ins. & Trust Co., 147 Cal. App. 3d 225 – Cal: Court of Appeals, 2nd Dist., Div. 4 1983

How this document has been cited

—stating that a trustee ” `is the agent of all the parties to the escrow… and bears a fiduciary relationship to each of them.'”- in Hatch v. Collins, 1990 and one similar citation
—we note that decisions concerning secured promissory notes have evidenced a policy favoring the enforceability of choice-of-law provisions- in Guardian Sav. & Loan Assn. v. MD ASSOCIATES, 1998 and one similar citation
Cotton Lane contends that this statute does not apply to this case, however, because “[t] he `judgment’referred to in Code of Civil Procedure sections 580b and 580d refers only to a judgment rendered in [California] and not to a judgment pursued in a state allowing deficiencies following foreclosure sales. “- in Cardon v. Cotton Lane Holdings, Inc., 1992 and one similar citation
The court distinguished this situation from cases such as ours where both instruments are executed in the same state, finding that where the laws of California apply to both the promissory note and the deed of trust,” the trustee under a deed of trust has a duty to cancel the note following a nonjudicial foreclosure– in Ballengee v. Sadlier, 1986 and one similar citation
It is well established that under Civil Code section 1642, several agreements concerning the same subject matter and made as part of the same transaction must be construed together- in ANSWAR, LTD. v. BOLD ENTERTAINMENT, LLC, 2007 and one similar citation
However, the trustee need not cancel the note when the beneficiary may seek a deficiency judgment in another jurisdiction.
– in California Title Insurance Practice: June 1990 Supplement and one similar citation
Kerivan explained its analysis by quoting from the Restatement Second of Conflict of Laws section 229, comment e: ” `Issues which do not affect any interest in the land, although they do relate to the foreclosure, are determined… by the law which governs the debt for which the mortgage was given. Examples of such latter issues are the mortgagee’s rights to hold the …- in Consolidated Capital Income Trust v. Khaloghli, 1986 and one similar citation
He is the agent of all parties to the deed of trust and owes duties to the trustor as well as to the beneficiary- in Ballengee v. Sadlier, 1986 and one similar citation
Both the note and the guaranty contain a California choice of law clause, and a suit on the deficiency is a suit on the note without regard to the deed or the location of the property- in Consolidated Capital Income Trust v. Khaloghli, 1986 and one similar citation
Moreover, the Kerivan court stated in dicta that no deficiency judgment would be appropriate “if the trial court ascertained that [the] note and the deed of trust were to be construed under the laws of [California]….”- in Cardon v. Cotton Lane Holdings, Inc., 1992 and one similar citation

IE Associates v. Safeco Title Ins. Co.

How cited
702 P. 2d 596, 39 Cal. 3d 281, 216 Cal. Rptr. … – Cal: Supreme …, 1985 – Google Scholar
In April 1977, Associates, a general partnership, purchased certain real property from the Bishops for $105,000. As part of the purchase price, Associates gave the Bishops a promissory note for $8,250, secured by a deed of trust in favor of the Bishops, naming Safeco as trustee. The
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[CITATION] California mortgage and deed of trust practice

R Bernhardt – 1990 – Continuing Education of the Bar– …
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Cardon v. Cotton Lane Holdings, Inc.

How cited
841 P. 2d 198, 173 Ariz. 203 – Ariz: Supreme Court, 1992 – Google Scholar
In 1984 and 1985, Petitioner Wilford A. Cardon (Mr. Cardon) made several trips to Los
Angeles, California to negotiate a loan for Cardon Oil Co. from Imperial Bank of Commerce (Imperial
Bank), a bank chartered in Canada. On these occasions, Mr. Cardon negotiated with the
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Hatch v. Collins

How cited
225 Cal. App. 3d 1104, 275 Cal. Rptr. … – … of Appeals, 1st Dist., Div. 2, 1990 – Google Scholar In this action to set aside a foreclosure sale of three parcels of real property which occurred more than seven years ago, plaintiffs and appellants Noel Hatch and Nola Hatch appeal from summary judgments entered in favor of the defendants and respondents, who are the beneficiaries
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Consolidated Capital Income Trust v. Khaloghli

How cited
183 Cal. App. 3d 107, 227 Cal. Rptr. … – … of Appeals, 4th Dist., Div. 3, 1986 – Google Scholar
(1a) On cross motions for summary judgment, the superior court ruled for Khosro Khaloghli, an individual guarantor of a multimillion-dollar note and deed of trust on an apartment complex located in Texas, and against Consolidated Capital Income Trust, the lender, who brought this
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Ballengee v. Sadlier

How cited
179 Cal. App. 3d 1, 224 Cal. Rptr. … – Cal: Court of Appeals, 6th …, 1986 – Google Scholar
Ballengee loaned money to Timothy and Judy Sadlier (Sadlier). Sadlier executed a promissory note for $70,000 secured by a second deed of trust on real property in Santa Cruz County. The existing first deed of trust was in favor of Crocker National Bank (Crocker). Sadlier
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In Re Crystal Properties, Ltd., LP

How cited
268 F. 3d 743 – Court of Appeals, 9th Circuit, 2001 – Google Scholar
Beal Bank (“Beal”) appeals the district court’s order affirming the bankruptcy court’s grant of summary judgment in favor of the debtor, Crystal Properties (“Crystal”). Beal asserts that the bankruptcy and district courts incorrectly concluded that Crystal was not required to pay interest at the
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In re Bisbee

How cited
754 P. 2d 1135, 157 Ariz. 31 – Ariz: Supreme Court, 1988 – Google Scholar
On February 10, 1986, Mr. and Mrs. Bisbee, as debtors in possession, filed an adversary complaint against Security National Bank seeking to invalidate the Bank’s security interests. Rule 7001(2), F.Bk.R. Under federal bankruptcy law, a Chapter 11 debtor in possession has
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Romo v. Stewart Title of California

How cited
35 Cal. App. 4th 1609, 42 Cal. Rptr. 2d … – Cal: Court of Appeals, 1st …, 1995 – Google Scholar
This is the second appeal before us in this action by a home seller against an escrow agent for various misdeeds which allegedly occurred in connection with the sale of plaintiff’s house. In the first appeal we held that the trial court properly concluded that plaintiff’s claims for
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Guardian Sav. & Loan Assn. v. MD ASSOCIATES

How cited
75 Cal. Rptr. 2d 151, 64 Cal. App. 4th … – … of Appeal, 1st Dist., Div. 1, 1998 – Google Scholar
In 1983, Michael D. Barker was recruited by the chairman of Guardian Savings and Loan Association (hereafter Guardian) to act as a development partner for office building projects in a territory that included San Francisco. The parties’ first investment was in 100 First Street in San
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Equating California Foreclosure Sales with Ordinary Residential Sales

R Breitman – S. Cal. L. Rev., 1994 –
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In re Rossi

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86 BR 220 – Bankruptcy Appellate Panel, 9th Circuit, 1988 – Google Scholar
In re Robert Anthony ROSSI, Debtor. In re Patricia Ann ROSSI, Debtor. In re Eugene
HESTER; Claudette Hester, Debtors. Lawrence A. DIAMANT, Trustee, Appellant, v. BANK OF
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Application of California’s Antideficiency Statutes in Conflict of Laws Contexts

JH Shadduck – Cal. L. Rev., 1985 –
18. 147 Cal. App. 3d 225, 195 Cal. Rptr. 53 (1983). See infra text accompanying notes
105-12. 19. In Hersch, the litigants conceded that Younker v. Reseda Manor, 255 Cal. App. 2d
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[CITATION] California Title Insurance Practice: June 1990 Supplement

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On Fri, Jan 29, 2010 at 6:53 AM, Walter Hackett <> wrote:

My understanding, developed during my years in banking, has always been that once an election of remedies is made by the obligee of the Note to non-judicially foreclose the Note ceases to have any existence as evidence of an obligation.  The only time I ever delivered a Note to a Trustee was when submitting a request for a full reconveyance.  I read this case to mean the Trustee must make demand on the holder of the Note upon conclusion of a non-judicial foreclosure sale but not as a condition to conducting one.  In 27 years I never provided a Note to a Trustee before a non-judicial foreclosure was concluded (and don’t remember doing so afterwards).

9 Responses

  1. Help…I have been violated under TILA laws and Fair Debt Collection Act and have filed a suit. I have an Ex-Parte Motion for Wednesday, asking for an injunction (in pro per and lost)
    I sent in a Recission letter for my TILA before Trustee Sale, but the Lender, without notice or posting, procured Trustee Sale.
    Even thought I sent in letter before sale, I’d like to have back law protecting my rights even after Trustee Sale, to have in court, in the event the Judge is unschooled on TILA. My home’s first is 3.6M, credit line 500K.
    Please advise (I’d be happy to pay).

  2. We are doing everything in our “neck of the woods” to fight this evil, and we have a bit of a testimony of what occurred in court today. We went to our Summary Judgement on an Unlawful Detainer hearing…BUT, what we had done 2 days ago seemed to turn the tides. We were desperate not to lose our home, so we filed to Remove to Federal Court…and we succeeded! There are certain criteria which have to be met in order to file a Federal Case (look them up in the Federal Rules of Civil Procedure, or FRCP). We attempted to include all of the criteria in our case. We brought up the issue of “Federal Question”, diversity/jurisdiction, issues of title and contract, all of which cannot nor will not be heard in a UD court…but will be heard in Federal court. I have copies of all of our docs to send to anyone who wishes to see what we have done. Our email is: Of course, we still have to win the Fed Case, but at least this is a start. We need them to hear all the issues that are so relevant to a typical foreclosure case, and a Federal case my just be the place to do it…all without risking losing your home in the meantime! In Fast track or Rocket Docket UD courts, you most likely will not be heard…and then the Sheriff will come knocking on your door! Scary thought! There is something you can do! Even if you don’t go to the Federal Court…at least appeal! Don’t give up!
    Best Wishes to my Fellow Foreclosure Fighters, ~Ruth~

  3. *dny – re: appraisals. the topic usually receives such little discussion but it amounts to usury. amc’s, avm’s, portals, the gutting of firrea, the ivpi, the appraisal institute (non-profit) selling out it’s own members to a fee for service (for profit) data portal that it owns & makes money off of (and puts appraisers out of work).

    we all know amc’s are much like a pimp, taking a large portion of the appraisal fee (usually half) and paying the appraisers who are willing to take assignments at 50% of the fee and will not balk on giving the lender the number they need to make the deal work. amc’s have managed to dumb down the entire appraisal industry, leaving tens of thousands of appraisers to file petition for being pressured to hit numbers or lose work.

    the housing industry was hit bad… yes, but the appraisal and title industry have been vandalized yet again. S&L veterans have only perfected their craft! who knows if meaningful change will ever come…
    i won’t hold my breath.

    google Pam Crowley Appraiser. she was being sued for speaking up about being pushed out of the appraisal business. WAMU/E-APPRAISEIT is a prime example of what kind of shady relations these hooligans had going on. look for Larry Levy’s “the fraud of appraisal regulation” and think about who controls the zoning, tax assessments and has the ability to promote or hinder workforce housing. local govt. is not without blame in any of this either.

    FL DEPT OF LAW ENFORCEMENT in 2005 put out the MORTGAGE FRAUD ASSESSMENT. It mentions (on page 20) the fraud taking place on govt. backed mortgage loans (FANNIE/FREDDIE/FHA/ETC.).

    seems like any time there is an insurance company or product involved chances are fraud is not too far behind… things that make you go hmmm!!!

  4. These cases are great additional ammo to include in our covering the entire range of requested docs in the scope of QWR and Rescission Notices: we should put even nonjudicial Trustees on notice that THEY have liability esp. for RESPA and TILA violations. Hopefully local judiciate are beginning to get word of MERS et al & their lack of full disclosure + nonrecording for public
    accountability & title-chain verification of true owners and investor(s) and insurer(s).

  5. Does anyone have examples (links to case decisions) that display the amounts of awards, including punitive damages, when the homeowner wins, on anything?
    1) Wrongful foreclosure
    2) Fraud
    3) Deceptive Sales practices
    4) Predatory Lending
    5) Filing false documents with the courts
    6) Sanction Awards

  6. From today’s NY Times:

    “I took a loan on an asset that I didn’t see was overvalued,” he said. “As much as I would like my bank to pay for that mistake, why should it?”

    That is an attitude Wall Street would like to encourage. David Rosenberg, the chief economist of the investment firm Gluskin Sheff, wrote recently that borrowers were not victims. They “signed contracts, and as adults should also be held accountable,” he wrote.

    Of course, this is not necessarily how Wall Street itself behaves, as demonstrated by the case of Stuyvesant Town and Peter Cooper Village. An investment group led by the real estate giant Tishman Speyer recently defaulted on $4.4 billion in debt that it had used to buy the two apartment developments in Manhattan, handing the properties back to the lenders.

    Moreover, during the boom, it was the banks that helped drive prices to unrealistic levels by lowering credit standards and unleashing a wave of speculative housing demand.



    See article at:

  7. The trustee, like everyone else involved, will sadly always follow the money.

  8. zurenarrh, re:
    “The Trustee Has a Duty to Cancel the Underlying Note After Sale…”

    Can you give an interpretation of the significance of this
    Case Law to Foreclosure Defense?

    Or, does it only help in some way once a person
    has lost their house?

    Hate to Plead “Lack Of Understanding” but I got too!

  9. Does this apply only in California? Anybody know?

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