Legal Question in Real Estate Law in California

The first thing you may want to do is start collecting the rents. If you have a standard form or short form deed of trust you are permitted to do that.

You have to decide whether you wish to do a judicial or non-judicial foreclosure. A non-judicial foreclosure is also known as a trustee's sale. You don't file a lawsuit for that. Just send the case to a foreclosure trustee. But if you opt for judicial foreclosure, a lawsuit is needed.

I would assume that (a) you have security in the form of a deed of trust containing both an assignment of rents and a power of sale clause, and (b) that you are in "first position," i.e. that your seller financing was a first mortgage.

If so, see if you can find a foreclosure service that is competent and not so swamped with business that they can't handle your needs. Find one that is bonded. Retain them, have them substitute in as trustee, and prepare, record and serve a Notice of Default. Recording the NOD starts the foreclosure-by-trustee's-sale ball rolling, and in 120 days, plus or minus, your trustee will be able to sell.

In the meanwhile, you can start collecting the rents under the assignment of rents clause. Ask the foreclosure service to explain how that is done.

You should speak to an attorney competent in this area. The first question, which both Mr. McCormick and Mr. Whipple touch on, is whether there was an assignment of rents, either in the original deed of trust, or a separate document. If there was, you can institute procedures now to have the rents delivered to you.

The attorney you speak to will also want detailed facts concerning the transaction, because it sounds as if the transaction was a seller financing arrangement, which would bring it squarely within the purchase money mortgage prohibitions of Code of Civil Procedure sectoin 580b.