Legal Question in Real Estate Law in California

First of all, lenders don't use mortgages in California. The law provides for them, but no one uses them. The security instrument used in California is a deed of trust. The reason that I point this out is people who read my posts feel it necessary to later argue with me by researching mortgage law in other states, which does not apply here.

Normally when a party defaults on a loan or other obligation that is secured by a deed of trust, the beneficiary (the lender) must decide whether to foreclose nonjudicially by conducting a trustee's sale or to foreclose judicially by filing a lawsuit to foreclose. The reason the term nonjudicial is used when referring to a trustee sale is that normally court oversight and intervention never take place.

If a lender forecloses by way of trustee's sale, California's anti-deficiency laws come into play, and Code of Civil Procedure section 580d would bar a personal money judgment against either you or your ex-husband. In order to get a deficiency judgment against you, the lender would have to file a lawsuit to foreclose. The vast majority of foreclosures in California are done nonjudicially, and I can say that I have only seen one judicial foreclosure in the eight (8) years that I have been practicing law.

With your name on the loan, however, you should be aware that if your ex husband defaults, your credit could be negatively affected, as lenders tend to report the foreclosure with the three (3) credit reporting agencies. Lenders don't usually agree to take an obligor off a promissory note, and that is usually only accomplished by refinancing in the other spouse's name with a new lender.

You may also end up with some bizarre tax liability for loan forgiveness, but other attorneys on here are better versed with the tax issues than I am.

While I agree with Mr. Roach 100% as far as he goes, there seem to be some aspects of your problem that he hasn't touched upon.

First, in a California divorce (which I assume this was??), the final decree or judgment should contain orders relating to all of the couple's assets and liabilities. The general principle is that each of the former spouses is to be allocated an equal amount of the assets....and that each is to assume an equal amount of the liabilities. So, assuming from your Zip code that this was a California dissolution of marriage, I'd say as a starting point you need to go back to the wording of your judgment (decree) and see what the judge said about the deed of trust and the house. I wouldn't give up anything that was awarded to you.

Some other states have divorce laws very similar to California -- mostly in the west, where Spanish influences have given us the community-property concept. Elsewhere, the rules might be quite different, and if this weren't a California dissolution, I'd recommend that you re-ask the question specifying the state where the divorce case was decided.

Finally, it's interesting that you may have, in effect, paid the down payment on this property. Under certain conditions, this would make you the sole owner, despite how title was taken, but perhaps with some erosion of your 100% ownership due to the marital community funds being used for the mortgage (er, "deed of trust") payments. The legal principle here is called "purchase-money resulting trust" and it's kind of a long shot after a decree in a dissolution has been entered, but I suppose there's an outside chance you have a claim to 100% (or almost 100%) ownership.