HOBR and 2924

55-DEC Orange County Law. 12
Orange County Lawyer
December, 2013
Judge Kirk H. Nakamuraa1
Copyright © 2013 by Orange County Bar Association; Judge Kirk H. Nakamura
Since 2008, there have been over 3.9 million foreclosures in the United States. Lois M. Jacobs & Heather E. Stern, Rights in Foreclosure: To Protect Homeowners Facing Foreclosure, the National Mortgage Settlement and Homeowner’s Bill of Rights Impose New Standards on Mortgage Servicers, Los Angeles Law., January 2013, at 24. In response to mortgage servicer improprieties in the rising number of foreclosures, the attorneys general of every state, except Oklahoma and the District of Columbia, served suit against the five major mortgage servicers. Id. at 24-25. As a consequence, these mortgage servicers agreed to enter into consent judgments known as the National Mortgage Settlement (NMS). Id. at 25. The NMS imposed new mortgage servicing requirements on these servicers. Id.
California became a pioneer in creating homeowner rights in foreclosures proceedings by creating new statutory provisions governing the non-judicial foreclosure process based on these requirements. Id. California extended the protections guaranteed by the NMS by also holding accountable servicers and lenders not bound by NMS. These new statutory provisions are collectively known as the California Homeowners Bill of Rights (H BOR). Enacted on January 1, 2013, the HBOR greatly expanded a borrower’s private right of action against servicer/lenders and imposed more stringent requirements upon servicer/lenders before and during the non-judicial foreclosure process.
General Principles of Non-Judicial Foreclosures
In California, lenders can choose to initiate either a judicial or a non-judicial foreclosure. Mark S. Pécheck & Kelsey M. Lestor, The ABCs of California Foreclosure Law, Los Angeles Law., January 2012, at 13. The non-judicial foreclosure process is cheaper and more expedited. Id. For these reasons, lenders tend to prefer this method. Id.
Non-judicial foreclosures are governed by statute. See Cal. Civ. Code §§ 29242924k. Under the statute, lenders are authorized to initiate the non-judicial foreclosure process pursuant to provisions of a Deed of Trust (DOT). A DOT is “a deed conveying title to real property to a trustee as security until the grantor repays a loan.” Black’s Law Dictionary (9th ed. 2009). If the borrower defaults, the trustee has the power to sell the property under a ““power of sale” clause within the DOT. Pécheck & Lestor, supra at 13. Once the borrower defaults, lenders commence the non-judicial foreclosure process with the service of a Notice of Default (NOD). Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994). Once a NOD is served, the trustee must wait at least three months before proceeding with the sale. Id, “After the [minimum] three-month period has elapsed, a Notice of Sale must be published, posted, and mailed 20 days before the sale and recorded 14 days before the sale.” Id. On the day of the sale, the trustee will sell the property by auction to the highest bidder. Pécheck & Lestor, supra at 14. Once the sale is completed, a Trustee’s Deed Upon Sale is recorded, transferring title to the winning bidder. Id.
Prior to January 1, 2013, the statutes governing non-judicial foreclosures imposed certain requirements upon lenders before they recorded a NOD through the point of sale. In comparison to HBOR, these previous statutory requirements were minimal.
Non-Judicial Foreclosures Prior to HBOR (a) Servicer Requirements Before NOD Is Served
Prior to recording a NOD, lenders were required to contact the borrower to discuss his/her financial situation and options to avoid foreclosure. Cal. Civ. Code § 2923.5(a) (2). During this initial contact, the lender was required to advise the borrower that he or she had a right to request a second meeting. Id. In either meeting, the lender was to provide the borrower with a toll-free telephone number that would lead to a Department of Housing 1 and Urban Development (HUD)-certified housing counseling agency. Id. Lenders were required to make this initial contact in compliance with the “due diligence” standards set forth in Cal. Civ. Code section 2923.5(g). Due diligence requirements included, but were not limited to, sending the borrower a first-class letter with a toll-free number to find a HUD-cerufied counseling agency, attempting to *13 contact the borrower three different times on different days, and sending a certified letter with return receipt to the borrower. Id. After thirty days following the initial contact or thirty days following the satisfaction of the due diligence requirements, lenders were permitted to record a NOD. Cal. Civ. Code § 2923.5(a)(1).
(b) Post-NOD Servicer Requirements
Once a lender serves a NOD, at least three months must elapse before the trustee gives notice of sale. Cal. Civ. Code § 2924(a)(2). During these three months, borrowers can cure the default and “reinstate” the loan by bringing all payments current and paying all costs and fees to date of the lender and trustee. Pécheck & Lestor, supra at 14. If the default is not cured, a lender is allowed to file a Notice of Sale (NOS) up to five days before the lapse of the three-month period as long as the sale date occurs after three months and twenty days following the serving of the NOD. Cal. Civ. Code § 2924(a)(4). The sale can be postponed orally at any time on the day of the sale as long as a bid had not been accepted. Cal. Civ. Code § 2924(g). On the day of the sale, the trustee will sell the property by auction to the highest bidder and, upon the recordation of a Trustee’s Deed Upon Sale, title is transferred to the winner. Pécheck & Lestor, supra at 14.
Limited Homeowner Rights of Action Prior
Before January 1, 2013, borrowers had limited rights to seek legal recourse against lenders for statutory violations in wrongful foreclosure proceedings. Additionally, there were few non-statutory based legal theories pursued by homeowners against servicers which courts found to be viable.
Courts have generally found there to be no private right of action for servicer’s statutory violations of the non-judicial foreclosure process. Courts have rejected causes of action for violations of both Civil Code § 2923.52 and § 2923.53, which provide for a ninety-day delay in the foreclosure process unless the lender had in place a qualified loan modification program. Vuki v. Superior Court, 189 Cal. App. 4th 791, 799-800 (2010). The Vuki court reasoned that because the statutory language for these subsections had a regulatory structure, the legislature intended that there be regulatory agency enforcement of such violations as opposed to enforcement by private lawsuits for damages Id. But cf. Mabry v. Superior Court, 185 Cal. App. 4th 208 (2010). Similarly, a court held that no private right of action existed for violations *14 of Civil Code § 2923.6, which the court held only “merely expresses the hope that lenders will offer loan modifications on certain terms. See Rodriguez v. JP Morgan Chase & Co., 809 F. Supp. 2d 1291, 1296 (2011). Morover, a borrower could not bring a judicial action testing whether the entity initiating the foreclosure has the authority to do so (wrongful initiation of the foreclosure process) under Civil Code § 2924(a), which provides that “a trustee, mortgagee, or beneficiary or any of their agents may iniriate the foreclosure process” since the statute does not expressly permit such action. The court reasoned that allowing such lawsuits would delay the nonjudicial foreclosure process, which the legislature intended to be a “quick, inexpensive, and efficient” process. Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149, 1155(2011).
Similarly, borrowers were generally not successful in pursuing non-statutory common law based actions against lenders. Courts held that a homeowner does not have the right to bring a judicial action to set aside a foreclosure sale based on miscommunications and the original lender. Nguyen v. Calhoun, 105 Cal. App. 4th 428, 445-46 (2003) (holding that the miscommunication does not constitute an irregularity in the foreclosure proceeding itself, which is required to warrant the invalidation of the trustee’s sale). A borrower could not set aside a foreclosure sale based on the repeated postponement of a foreclosure sale for periods of five or fewer business days during the time a sale is enjoined or stayed. Hicks v. E.T. Legg & Assocs., 89 Cal. App. 4th 496, 508 (2001) (holding that Civil Code § 2924g(d), which requires seven business days between the injunction or stay and the sale, does not prohibit postponements of five or fewer business days made during the enjoinment or stay).
Additionally, a borrower had no private right of action to challenge a foreclosure based on a lack of possession of the original promissory note. Debrunner v. Deutsche Bank Nat. Trust Co., 204 Cal. App. 4th 433, 440 (2012) (holding that nothing in the statutes governing non-judicial foreclosures precludes foreclosure when the foreclosing party lacks the original promissory note). Finally, borrowers had no private right of action based upon the contention that lenders gave them a loan they could not afford. See Perlas v. GMAC Mortgage, LLC, 187 Cal. App. 4th 429, 436 (2010) (holding that the borrowers could not state a valid cause of action for fraudulent misrepresentation when the lenders knowingly inflated the borrowers’ income and represented to them that they could make the loan payments, even though the borrowers could not possibly afford the loan payments based on their actual income).
(a) Viable Pre-HBOR Suits Based on Statutory Violations
Despite the court’s unwillingness to find viable private rights of actions for most statutory violations in most foreclosure actions, there were limited instances in which courts have found a private right of action against a lender to exist. These are lawsuits based on violations of Civil Code § 2923-5. (see Mabry v. Superior Court, 185 Cal. App. 4th 208 (2010) (discussing options to avoid foreclosure)) and Civil Code § 2924g(d) (see Ragland v. U.S. Bank Nat. Ass’n, 209 Cal. App. 4th 182, 201 (2012) (prohibiting foreclosure sales for seven days after the expiration of an injunction or bankruptcy)).
Moreover, courts have held that violations of Civil Code § 2924g(d) also created a homeowner’s private right of action. Ragland, 209 Cal. App. 4th at 201. In Ragland, the court relied on the reasoning provided in Mabry to hold that there is a private right of action implicitly created in the language of Civil Code § 2924g(d).
Even though courts have found a private right of action existed for violations of Civil Code §§ 2923.5 and 2924g(d), these decisions limited the remedy available to borrowers to a postponement of a foreclosure sale. Borrowers could not set aside a foreclosure sale if the suit was brought post-foreclosure, nor recover any monetary damages against lenders for these violations. See Mabry, 185 Cal. App. 4th at 226 (holding that section 2923.5 “is limited to affording borrowers only more time when lenders do not comply with the statute”); see also Stebley v. Litton Loan Servicing, LLP, 202 Cal. App. 4th 522, 526 (2011) (holding that section 2923.5 neither provides for damages nor for setting aside a foreclosure sale, but only provides for more time before a foreclosure sale). Thus, courts have not only provided homeowners a private right of action for violations of only two statutes, but have also limited the homeowners’ remedies to postponement of sale.
(b) Viable Pre-HBOR Non-Statutory Private Rights of Actions
*15 Common law based private rights exist in limited situations. One court found a private right of action existed where the loan documents did not properly disclose a negative amortization loan. See Boschma v. Home Loan Ctr., Inc., 198 Cal. App. 4th 230, 249-54 (2011). In another case, a court found a private right of action to exist where the loan was unconscionable. Lona v. Citibank, N.A., 202 Cal. App. 4th 89, 111-12 (2011). Courts have also found there to be a private right of action under theories of promissory estoppel, finding that such a theory was supported where a borrower justifiably relied on a lender’s promise not to foreclose to the borrower’s detriment. Jolley v. Chase Home Fin., LLC, 213 Cal. App. 4th 872, 897 (2013); Raedeke v. Gilbraltar Sau. & Loan Ass’n, 10 Cal. 3d 665, 674-75 (1974). Finally, a lender’s failure to provide a permanent loan modification after successful completion of a preliminary modification may be actionable. West v. JP Morgan Chase Bank, N.A., 214 Cal. App. 4th 780, 799 (2013).
Homeowner’s Bill of Rights (HB0R): An Overview
As the first state to take servicing srandards from the NMS and use them to create new statutory provisions, California extended the protections guaranteed by the settlement by not only holding the signators, but also the non-signators to the NMS accountable. Lois M. Jacobs & Heather E. Stern, supra at 24. Effective January 1, 2013, HBOR grants borrowers additional rights during the non-judicial foreclosure process. Alejandro E. Moreno et al., California Homeowner Bill of Rights: A New Mortgage Law for the New Year, JDSupra Law News (Dec. 12, 2012), http://www.jdsupra.com/legalnews/california-homeowner-bill-of-rights-a-n-36921/. HBOR consists of the following six bills: AB 278 and SB 900 (enforceability); AB 2610 (tenant rights); AB 1950 and SB 1474 (fraud prosecution); and AB 2314 (blight prevention). California Homeowner Bill of Rights (2013), available at http://www.oag.ca.gov/hbor. It is codified in Civil Code sections 2920.5, 2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924, 2924.9, 2924.10, 2924.11, 2924.12, 2924.17, 2924.18, and 2924.19. Some of HBOR’s key provisions include the restriction on dual track foreclosure (Cal. Civ. Code § 2924.11), a guaranteed single point of contact (Cal. Civ. Code § 2923.7), verification of documents (Cal. Civ. Code § 2924.17), and enforceability (Cal. Civ. Code §§ 2924.12 and 2924.19). Id.
HBOR is designed to “ensure fair lending and borrowing practices for California homeowners” as is evidenced by the aforementioned key provisions. Id. HBOR requires lenders to take additional steps prior to serving a NOD, permits injunctive relief and monetary damages where none could be had before, and creates civil penalties for violations of certain statutes. Cal. Civ. Code §§ 2923.6, 2924.12, 2924.19. HBOR is available to most “borrowers” with few exceptions. A borrower is “any natural person who is a mortgagor or trustor and who is potentially eligible for any federal, state, or propriety foreclosure prevention alternative program offered by, or through, his or her mortgage servicer.” Cal. Civ. Code § 2920.5 (c)(1). Borrowers do not include individuals who have served for bankruptcy. Cal. Civ. Code § 2920.5(c)(2)(C). HBOR applies to “servicers” broadly. A “servicer” is defined as “a person or entity who directly services a loan, or who is responsible for interacting with the borrower, managing the loan account on a daily basis including collecting and crediting periodic loan payments ….” Cal. Civ. Code § 2920.5(a). HBOR divides servicers into two categories: those who process more than 175 foreclosures in a calendar year (hereinafter “Large Servicers”) and those who process fewer than 175 foreclosures (hereinafter “Small Servicers”). Depending on the category the *16 servicer belongs to, different provisions may apply. Regardless, HBOR changed the non-judicial foreclosure process by imposing new requirements. The requirements result in the extension of time when an application for loan modification is presented, the prohibition of dual tracking, the creation of a single point of contact, the prohibition of robo-signing, various additional bases for injunctive relief, the allowance of attorney’s fees, and more stringent requirements for lenders. Overall, it is clear that the legislature’s intent in enacting HBOR is to delay the foreclosure process and require lenders to seriously consider borrowers for the possibility of a loan modification.
HBOR: New Servicer Prerequisites Prior to Recording a NOD (Collectively “HBOR Pre-NOD Statutes”)
Under HBOR, prior to serving a NOD, servicers are required to provide borrowers with a written determination regarding the borrower’s eligibility for the requested loan modification if the borrower submitted a completed loan modification application. Cal. Civ. Code § 2920.5(a). Large Servicers are additionally required to send borrowers a written statement that the borrower may request certain documents pertaining to the foreclosure (i. e., copy of borrower’s promissory note or other evidence of indebtedness, borrower’s deed of trust or mortgage, etc.). Cal. Civ. Code § 2923.55(b)(1). Thus, lenders are required to comply with additional notice requirements.
When a borrower requests a foreclosure prevention alternative, servicers are required to create a single point of contact. Cal. Civ. Code § 2923.7(c). The single point of contact will remain on the borrower’s account until the servicer has determined that all foreclosure prevention alternatives have been exhausted or until the borrower’s account becomes current. Id.
Upon the borrower’s submission of a complete first lien modification application, these servicers are required to provide borrowers with written acknowledgement of receipt of the application. Cal. Civ. Code § 2923.10(a). This should contain information informing the borrower about the process, including any applicable deadlines and deficiencies discovered in the borrower’s application. Id.
Once one of these servicers denies a loan modification application, the servicer must provide the borrower with written notice identifying specific reasons for the denial. Cal. Civ. Code § 2923.6(f). At least thirty days following this wrirten denial, the borrower has a right to appeal. *17 Cal. Civ. Code § 2923.6(d). However, these servicers are not obligated to evaluate loan modification applications from borrowers who were already evaluated or had an opportunity to be evaluated prior to January 1, 2013 unless there has been a material change in the borrower’s circumstances. Cal. Civ. Code § 2923.6(g). This right to appeal lengthens the foreclosure process by delaying the process another additional thirty days.
Following thirty-one days, after the borrower receives the written denial or fifteen days after the denial of an appeal, a holder of a beneficial interest under the mortgage can file a NOD. Cal. Civ. Code §§ 2924(a) (6), 2923.6(e). With the provision allowing borrowers the right to appeal, HBOR thereby extends the non-judicial foreclosure process by an additional forty-five days following the denial of an appeal.
HBOR: New Requirements After Recording NOD (Collectively “HBOR Post-NOD Statutes”)
Within five business days of recording a NOD, Large Servicers are required to send a written communication to borrowers that includes information regarding the borrower’s eligibility for a foreclosure prevention alternative and the process in which to apply for such alternative. Cal. Civ. Code § 2924.9(a). This is not required if the borrower has already exhausted the loan modification process. Id. This provides borrowers with a final opportunity to avoid foreclosure even after a NOD has been recorded.
Additionally, whenever a sale is postponed for at least ten business days, all servicers are required to give the borrower written notice within five business days following postponement. Cal. Civ. Code § 2924.9(a)(5). This provision is a change from the previous law, which permitted oral notice up to the point a bid was accepted on the day of the sale.
Expanded Borrower Rights Under HBOR
Under HBOR, borrowers’ private rights of actions against lenders were greatly expanded. Unlike the statutes in effect prior to January 1, 2013, which courts found to only provide injunctive relief under two statutes, HBOR provides for injunctive relief and monetary damages for violations of no less than seven provisions under Civil Code section 2924.12(a)(1) by Large Servicers and an additional three provisions under Civil Code section 2924.19(a)(1) by Small Servicers.
Injunctive Relief Under HBOR
If a trustee’s deed upon sale has not been recorded, borrowers may bring an action for injunctive relief to enjoin servicers from violating certain statutes. Cal. Civ. Code §§ 2924.12(a)(1), 2924.19(a)(1). The instances in which a borrower is allowed to bring such action against a Small Servicer include: (1) when a servicer records a NOD either thirty days before the initial contact requirements have been satisfied or while a loan modification application is pending under Civil Code § 2924.18(a)(1) (Cal. Civ. Code §2923.5); (2) when a servicer records a declaration pursuant to Civil Code § 2923.5, a NOD, NOS, assignment of a deed of trust, or substitution of trustee or a servicer serving a declaration or affidavit relative to a foreclosure proceeding without ensuring that the documents are complete and supported by competent and reliable evidence (Cal. Civ. Code § 2924.17); (3) when a servicer records a NOD while a loan modification application is pending (Cal. Civ. Code § 2924.18(a)(1)) or records a NOD while a borrower is in compliance with an approved foreclosure prevention alternative plan (Cal. Civ. Code § 2924.18(a)(2)).
For Large Servicers, the statutes that provide a borrower with a private right of action are more extensive. In addition to *18 a violation of Cal. Civ. Code § 2924.17 (verification of documents), the instances in which a borrower is allowed to bring such action against a large servicer include: (1) when a servicer records a NOD without sending the borrower a written statement indicating the documents (e.g., copy of borrower’s promissory note) that a borrower may request, recording a NOD thirty days before the initial contact requirements have been satisfied, or recording a NOD before the time specifications under Civil Code § 2924.6 have expired (Cal. Civ. Code § 2923.55); (2) when a servicer records a NOD before thirty days from the date of a written denial has expired, before fourteen days has expired since a loan modification has been offered, or before fifteen days has expired since the denial of the appeal (Cal. Civ. Code § 2923.6); (3) when a servicer fails to create a single point of contact upon a borrower’s request for a foreclosure prevention alternative (Cal. Civ. Code § 2923.7); (4) when a servicer fails to send written communication to the borrower within five business days after recording a NOD that indicates a borrower may be eligible for a loan modification unless the borrower previously exhausted the process (Cal. Civ. Code § 2924.9); (5) when a servicer fails to provide written acknowledgment of receipt of a loan modification application within five business days (Cal. Civ. Code § 2924.10); and (6) when a servicer records a NOD while a borrower is in compliance with an approved foreclosure prevention alternative plan (Cal. Civ. Code § 2924.11(a)(1)).
Damages Under HBOR
Damages may be awarded to aggrieved borrower only after the trustee’s deed upon sale has been recorded. Servicers are liable to borrowers for actual economic damages for violations that remain uncorrected post-foreclosure. Cal. Civ. Code §§ 2924.12(b), 2924.19(b). The court may also award treble actual damages or $50,000, whichever is greater, for intentional or reckless violations. Id. Small Servicers are liable for material violations of Civil Code sections 2923.5 (notice requirements before recording a NOD), 2924.17 (verification of documents), or 2924.18 (prohibition of dual tracking). Large servicers are liable for material violations of Civil Code sections 2923-55 (notice requirements before recording a NOD), 2923.6 (additional time requirements), 2923.7 (single point of contact requirements), 2924.9 (loan modification after NOD recordation), 2924.10 (acknowledgement of loan modification application), 2924.11 (prohibition of dual tracking), or 2924.17 (verification of documents). However, a signatory to the NMS who is in compliance with the relevant terms of that consent judgment, is not liable for a violation of Civil Code sections 2923.55, 2923.6, 2924.9, 2924.10, 2924.11, or 2924.17. Cal. Civ. Code § 2924.12(g). Thus, for any inconsistencies between the NMS and the previously listed HBOR statutes, the signatories would not be liable under Civil Code § 2924.12. The situations in which this would occur would be limited as the HBOR statutes have codified virtually all of the NMS terms.
By providing the right to monetary damages under Civil Code § 2924.12(b) and 2924.19(b) only when a trustee’s sale has been completed, HBOR pressures servicers to negotiate loan modifications to avoid potential monetary damages. Since a NOS would not be recorded if there is a successful loan modification, the legislature must have intended to encourage servicers to consider loan modifications or risk civil monetary liability.
*19 Attorney’s Fees and Civil Penalties Under HBOR
As previously explained, Civil Code sections 2924.12 and 2924.19 have expanded the situations in which a borrower is allowed to seek relief against servicers by providing for injunctive relief for violations of numerous subsecrions. Moreover, by providing for damage after the foreclosure sale, the legislature has greatly expanded the scope of remedies available to homeowners.
Additionally, under HBOR the legislature has provided for the recovery of attorney’s fees by aggrieved borrowers attorney’s fees for successful legal actions against offending lenders. Cal. Civ. Code §§ 2924.12(i), 2924.19(h). If a borrower obtains injunctive relief or is awarded damages pursuant to Civil Code section 2924-12 or 2924.19, the court may award the borrower reasonable attorney’s fees and costs. Cal. Civ. Code §§ 2924.12(i), 2924.19(h).
Lastly, HBOR provides civil penalties for repeated violations of Civil Code § 2924.17(b), which provides that prior to serving any declarations or affidavits for a NOD, NOS or any part of a foreclosure proceeding, all servicers are required to review the documents and ensure that there is comperent and reliable evidence to substantiate the foreclosure. Servicers who engage in multiple and repeated uncorrected violations of Civil Code § 2924.17(b) by recording or serving improper documents are liable for a civil penalty up to $7,500 per mortgage or deed of trust in an enforcement action brought by the government. Cal. Civ. Code § 2924.17(c).
HBOR has afforded homeowners statutory rights in a wide range of situations where previously none existed in either statutory or common law. Moreover, the available remedies for aggrieved homeowners involved in improper foreclosure proceedings have been greatly expanded under HBOR, providing for expanded equitable relief, damages, attorneys fees, and civil penalties.


The Honorable Kirk H. Nakamura is a member of the Orange County Superior Court Civil Panel. He organized the first court-supervised Foreclosure Prevention Settlement Program in the state in response to the Foreclosure Crisis. The assistance of Juliette Tran is acknowledged in the writing of this article. He can be reached through the Editor-in-Chief at galisa@gmail. Com.

Duly perfected for eviction

In General; Words and Phrases Term “duly” implies that all of those elements necessary to valid sale exist. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814. Title that is “duly perfected” includes good record title, but is not limited to good record title. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
Title is “duly perfected” when all steps have been taken to make it perfect, that is, to convey to purchaser that which he has purchased, valid and good beyond all reasonable doubt. Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814. The purpose of CCP 1161a, providing for the removal of a person holding over after a notice to quit, is to make clear that on acquiring ownership of real property through foreclosure can evict by a summary procedure. The policy behind the statute is to provide a summary method of ouster where an occupant holds over possession after sale of the property. Gross v. Superior Court (1985, Cal App 1st Dist) 171 Cal App 3d265, 217 Cal Rptr 284, 1985 Cal App LEXIS 2408.

So here they are – the Top 10 Deposition Questions :

Lorenzo Velez

  • “Have you ever been arrested?”  (And the follow-up:  “Have you ever been convicted?”)  Opposing counsel may go ballistic on this one, but it is a proper question.  Remember, felony convictions and any convictions for fraud, dishonesty or moral turpitude are generally admissible for impeachment.
  • “Have you ever been deposed before?”  I ask this at the beginning of the deposition, as part of the standard admonition, when it sounds like an innocent inquiry related to the ground rules for the depo.  But if the answer is ”yes,” I always follow up later with questions about the prior deposition(s).  I also ask the related questions, “Have you ever testified in court?” and “Have you ever been a plaintiff or a defendant in another lawsuit?”  Prior testimony and lawsuits can be a treasure trove of accusations and impeachment.
  • “Have you ever seen the [plaintiff/defendant/employee] before the events related to this lawsuit?”  This question may uncover connections between a supposedly independent witness and the other side.
  • “Did you meet with the other side’s counsel before this deposition?”  Pin down the number of meetings, where they occurred and how long they lasted.  This information can help dismantle the claim of independence.
  • “Have you signed any written statements/made any recorded statements/spoken to any reporters about the events related to this lawsuit?”  To this list, you might add:  “Have you posted any statements about these events on any internet site?”  Of course, you will have conducted a search engine and, perhaps, database query on the witness as part of your preparation for the deposition, so you’ll know if he or she is lying.
  • “Did you read any witness statements or depositions, listen to any recorded statements, look at any diagrams or photographs, or did somebody else read you any statements before the deposition?”  Okay, this is more than one question, but I had to combined them here to meet the 10-question quota imposed by the title of this article.
  • “Tell me everything you did to get ready for this deposition.”  The answer can lead you to what the witness or opponent perceives as his or her weak spots, including areas of which you were unaware.  After all, it is only natural to prepare for the hardest questions or topics.  Remember to find out the specific documents reviewed, places visited and persons met with by the witness.
  • “Was anyone else present when you met with your lawyer?”  If a third-party was present during the meeting, the witness may have waived the attorney-client privilege.
  • “How did you find your attorney [doctor/chiropractor/therapist/expert]?”  This can lead to interesting prior legal issues, lawsuits or self-interest/improper involvement on the part of opposing counsel.
  • “Do you have your driver’s license with you?”  If so, ask to see it.  Take down the personal information and, if appropriate, read it into the record.

Non Refundable Earnest money Deposit ??? not

In many real estate transactions, the seller requires the buyer to pay earnest money in the form of a nonrefundable deposit. Indeed, this procedure is often the best way for a buyer to communicate to the seller that he or she really means business. Although such deposits have been commonplace for many years, a recent court of appeal ruling holds that in certain circumstances a nonrefundable deposit is an invalid form of liquidated damages. For that reason, the court allowed the buyer to reclaim the deposit despite clear contractual language that deemed it “nonrefundable” (Kuish v. Smith, 181 Cal. App. 4th 1419 (2010)). When proceeding to escrow, real estate lawyers and their clients must be prepared to face this new reality. Retention of Buyer’s Deposit
In Kuish the court held that the seller’s retention of the buyer’s deposit in a rising real estate market constituted an invalid forfeiture. In the case, the buyer entered into a contract in early 2006 to purchase a Laguna Beach residence for $14 million, but later unilaterally cancelled escrow. The sellers quickly bettered their lot and sold the property to another party for a tidy $15 million. But they refused to return the initial prospective buyer’s $620,000 deposit, relying on clear language in the purchase agreement that designated the deposit as nonrefundable. The Kuish court rejected that label by relying on the California Supreme Court’s decision in Freedman v. The Rector (37 Cal. 2d 16 (1951)), which held that any contractual provision in which money or property is forfeited without regard to actual damages suffered constitutes an unenforceable penalty. The state Supreme Court explained that if the seller is allowed to retain the amount of a down payment in excess of expenses associated with a contract breach, the seller will be unduly enriched and the buyer “will suffer a penalty in excess of any damages he causes.” (Freedman, 37 Cal. 2d at 1920.) In so ruling, the court relied in part on Civil Code section 3294, which governs the imposition of punitive damages. According to the express mandate of that section, punitive damages may not be recovered in a case “arising from contract.” Thus, although the seller of real estate may clearly recover actual damages for breach of contract (see Cal. Civ. Code § 3307), the seller cannot recover punitive damages for such claims. Accordingly, the state Supreme Court found that if the seller could retain a real estate deposit without proving actual damages, the retention of that money would constitute a “penalty” against the breaching buyer in violation of section 3294 (37 Cal. 2d at 2122). The Kuish court also noted that retention of a deposit under these circumstances would violate the rules governing liquidated damages (see Cal. Civ. Code §§ 1670-1671). Because the seller in the Kuish case actually received a $1 million profit as a result of the buyer’s breach, the court found that there were no damages and, for that reason, forfeiture of the deposit was inappropriate. However, the court observed that the buyer’s “deposit would have been nonrefundable in a falling market to the extent defendants were able to show damages.” (Kuish, 181 Cal. App. 3d at 1429.) Real Property Damages
Civil Code section 3307 controls the recovery of general damages in a failed real estate transaction. Absent a contractual damages provision that provides otherwise, the statute allows a seller to recover the benefit of the bargain: the excess, if any, of the amount that would have been due the seller under the contract over the value of the property to the seller, as well as consequential damages and interest. Sellers are thus entitled to general damages to the extent that they can establish that the contract price exceeds the value of the property, determined as of the date of the buyer’s breach. (See Askari v. R&R Land Co., 179 Cal. App. 3d 1101, 1106 (1986).) General damages are intended to place the seller in the position he or she would have enjoyed had the buyer not breached the purchase agreement. Accordingly, such damages cannot exceed what the injured party would have received had the contract been fully performed (Cal. Civ. Code § 3358; see also, Lewis Jorge Const. Mgmt., Inc. v. Pomona Unified School Dist., 34 Cal. 4th 960, 967-968 (2004)). Thus, in a booming real estate market the seller may not sustain any “benefit of the bargain” damages (Kuish, 181 Cal. App. 4th at 1426, quoting 1 Cal. Real Property Remedies and Damages (CEB 2d ed., 2009) § 4.75, p. 354). Indeed, the seller may be better off by virtue of the breach because the property can be sold for a higher price. Under section 3307 a seller may also be able to recover consequential damages-those suffered by a seller as a “natural consequence” of a buyer’s breach. Such damages must be reasonable, foreseeable, and necessary to make the seller whole (Royer v. Carter, 37 Cal. 2d 544, 550 (1951)). The law requires that conditions giving rise to consequential damages must have actually been communicated to the breaching party, or otherwise be of such nature that the breaching party should have been aware of them. (See Lewis Jorge Constr. Mgmt. Inc., 34 Cal. 4th at 968-970.) Such damages include costs and expenses incurred in the aborted sale of the property, loss of income suffered as a result of the seller’s reliance on closing the purchase agreement, and payment of additional operating expenses. (See Greenwald & Asimow, Cal Practice Guide: Real Property (TRG, 2009) at ¶¶ 11:120128.) It is important to note that even in cases where general damages are not available-because of an appreciating market, for instance-the seller may still be entitled to consequential damages. However, because the theory of consequential damages is to make the seller whole, any appreciation in value after the buyer’s breach may offset the seller’s recovery to avoid unjust enrichment (Askari, 179 Cal. App. 3d at 1101). Interest is another component of the seller’s recovery. In most real estate transactions, general damages typically are not “certain, or capable of being made certain by calculation” as of the date of the breach, so interest cannot be calculated from that date. (See Cal. Civ. Code § 3287(a).) Nonetheless, the court may award an injured seller prejudgment interest on general damages beginning on the date the complaint is filed (Rifkin v. Achermann, 43 Cal. App. 4th 391, 396-397 (1996)). Still, recovering general damages, consequential damages, and interest may be difficult. The seller must prove not only the buyer’s breach but also that the seller sustained actual and consequential damages as a result of the breach. There are, however, other ways for sellers to protect themselves in the event of a breach by a buyer without having to prove damages. Two of these alternatives-liquidated damages and options to purchase-are discussed below. Liquidated Damages
Liquidated damages clauses are commonly used in commercial purchase agreements as well as in the standard residential purchase agreement drafted by the California Association of Realtors. The objective of a liquidated damages clause is to have the parties stipulate to an estimate of damages prior to any dispute so that both will know the extent of liability in the event of a breach (El Centro Mall, LLC v. Payless Shoesource, Inc., 174 Cal. App. 4th 58, 63 (2009)). For sellers, a liquidated damages clause spares them the arduous task of having to prove actual damages. Instead of being required to introduce evidence of appraisals and other elements of damage at trial, the seller need only establish that the buyer breached the agreement. Additionally, liquidated damages are “certain,” thereby entitling sellers to interest from the date of the breach, not just from the date of the filing of the complaint, as in the case of a general damages claim. Indeed, the court has no discretion and must award prejudgment interest upon request, from the first day there exists both a breach and a liquidated claim. (See Cal. Civ. Code § 3287(a); North Oakland Medical Clinic v. Rogers, 65 Cal. App. 4th 824, 828 (1998).) Moreover, in an appreciating market, the seller can sell the property to another buyer at a higher price and still recover liquidated damages from the defaulting buyer. (In the Kuish case cited above, there was no liquidated damages clause and, accordingly, no right to such damages in a rising market.) The seller’s downside is minimal, but it includes the possibility that in a depreciating market actual damages may exceed the amount stipulated as liquidated damages. Although a liquidated damages clause may not be in the buyer’s best interest, the reality is that many sellers insist on one as part of the deal. Such provisions do serve to fix the amount of a buyer’s exposure in the event of a breach (thus at least the buyer knows the consequences of a breach in advance), but the stipulated amount is generally considerable, and sellers are usually able to prove their case with relative ease. If the parties have agreed to a liquidated damages provision, it must be able to withstand attack. In general, liquidated damages clauses are valid unless an opposing party demonstrates that the fixed dollar amount was “unreasonable under the circumstances existing at the time the contract was made.” (Cal. Civ. Code § 1671(b).) In determining reasonableness, courts primarily focus on whether the amount of money in question was within the reasonable range of harm anticipated at the time the parties entered into their agreement (Allen v. Smith, 94 Cal. App. 4th 1270, 1278 (2002)). Courts may also consider any of the following factors as well: the amount of liquidated damages compared to the total purchase price; the parties’ relative bargaining power; the parties’ sophistication, and whether they were represented by counsel; how long the seller committed to taking the property off the market; the parties’ anticipation that proof of actual damages would be costly or inconvenient; the difficulty of proving causation or foreseeability; and whether the liquidated damages clause is included in a form contract and thus not the product of negotiation. (See Greenwald & Asimow at ¶ 4:316.) For residential purchase agreements, Civil Code section 1675(e) provides that the “reasonableness” of the liquidated damages provisions shall be determined by taking into account both the circumstances existing at the time the contract was made, as well as the price and other terms and circumstances of any subsequent sale within six months of the buyer’s default. Generally, when the liquidated damages provision does not exceed 3 percent of the purchase price, the provision is presumed reasonable and valid (Cal. Civ. Code § 1675(c)). Validity and enforceability of a liquidated damages provision also depends on compliance with certain technical requirements. First, the clause must be separately signed or initialed by both the buyer and the seller. Second, if it is included in a printed contract, it must be set out in either minimum 10-point bold type or minimum 8-point bold contrasting red type (Cal. Civ. Code § 1677(a) & (b)). These requirements are intended to “make it [more] likely that the parties appreciate the consequences” of such a provision (see Allen, 94 Cal. App. 4th at 1282-1283), and they apply regardless of the nature of the real property involved in the transaction. Options to Purchase
An option to purchase is a unilateral contract in which the prospective buyer (the optionee) pays a specified sum to the property owner in return for an exclusive right to purchase the property within a specified time frame. If the optionee elects to purchase the property, the agreement effectively converts into a binding purchase and sale contract (Wachovia Bank v. Lifetime Indus., Inc., 145 Cal. App. 4th 1039, 1049-1050 (2006)). Conversely, if the optionee does not elect to purchase the property within the term of the option, the consideration paid by the optionee is forfeited to the seller. Accordingly, commentators have noted that “options to purchase are virtually identical to a binding purchase and sale agreement with a liquidated damages” provision. (See Greenwald & Asimow at ¶ 8:3.) However, important differences exist between the two, and buyers and sellers should be aware of them. For instance, to recover under a liquidated damages provision, the seller must prove that the buyer breached the agreement. In contrast, under an option agreement, the seller has already received consideration and doesn’t have to prove anything. Moreover, there are restrictions on the validity of, and maximum amount stated in, a liquidated damages provision, whereas the consideration paid for an option agreement is entirely negotiable. Additionally, liquidated damages are usually recovered from an escrow account, requiring legal action if the breach is contested; conversely, under an option agreement, the seller has already received the consideration and therefore no legal action is required. However, a seller should take note that using an option agreement instead of a liquidated damages provision will entail at least one considerable disadvantage. Option agreements often are recorded and thus cloud title, whereas a purchase agreement containing a liquidated damages clause generally is not. (See Greenwald & Asimow at ¶¶ 8:156161.) Remember the Context
Although there are many ways parties to a real estate transaction can fix damages in the event of a breach, never lose sight of the context in which the dispute arises. In a rising market, actual damages generally are insufficient and, according to Kuish v. Smith, parties cannot simply rely on a “nonrefundable” deposit as a source of recovery. However, even when real estate prices are skyrocketing, the parties can still rely on a properly structured liquidated damages clause or an option to purchase contract. Both are effective alternatives. – See more at: http://www.callawyer.com/Clstory.cfm?eid=911394#sthash.BjG8zoX2.dpuf
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