Legal Question in Real Estate Law in California

Defult on a deed of Turst

My husband & I sold are home which we carried back the second for the new owners, we were getting monthly payments but the payments stopped, found out the home is in forcloser. What can I do to collect on the second deed of trust that is dafulted, can I file for a judgment and collect?


Asked on 12/17/07, 2:56 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Defult on a deed of Turst

"File for a judgment?" If it were that simple, half the lawyers would be unemployed. Or maybe it would double the need for lawyers. Anyway, judgments are obtained by filing a lawsuit and winning. It is also possible to get a "default judgment" if the defendant doesn't respond to service of the summons and complaint, but this is unlikely here.

I would recommend getting in-person legal advice on your situation, but in general your first step is to review the terms of your defaulted second deed of trust, then make an estimate of where you will stand if and when the holder of the first D/T forecloses.

If the proceeds are insufficient to pay you off, you may be barred from seeking a deficiency judgment under the antideficiency laws - Code of Civil Procedure section 580(b) I believe - that bar deficiency judgments in most cases on purchase-money loans.

So, unless the buyer committed an actionable fraud, as by falsifying a loan application, you may not be permitted to sue for a judgment.

Possibly you should consider bidding at the foreclosure auction yourselves, if you are in a position to do so, to prevent the property from selling too far below fair market value.

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Answered on 12/17/07, 4:01 pm
Anthony Roach Law Office of Anthony A. Roach

Re: Defult on a deed of Turst

If the first forecloses, you will be what is known as a "frozen out" junior lienholder. A sold out junior lienholder is free to sue the obligor directly after the security is exhausted by the foreclosure of the senior lien, without regard to the one action rule, deficiency sale prhibitions, or fair fvalue deficiency limitations.

Mr. Whipple is correct in that you will need to speak to an attorney, and getting a judgment requires filing, and winning a lawsuit.

Very truly yours,

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Answered on 12/19/07, 3:38 pm


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