Legal Question in Real Estate Law in California

Re: land & UCC filing

Starting with the last item first, I think your next move should be to find a lawyer who practices in the county where the land is and who has some experience in foreclosures, credit and collections, or secured transactions, preferably all three.

OK, it sounds as though you made a single loan secured by two types of collateral: a deed of trust on some vacant land and a security agreement naming a "manufactured home" as additional collateral, with the security interest in the latter hopefully perfected by a UCC-1 filing. Now, two things have gone wrong: the loan is in default and the manufactured home has disappeared.

Your lawyer would first have to look really carefully at the manufactured home part of the deal. You can't get a UCC-type security interest in a motor vehicle (motor home) nor in ordinary building materials going into construction, nor in any type of home after it is affixed to the ground. A true manufactured or modular housing unit should be OK once it comes into existence by being manufactured, and up till the time it is attached to a foundation on site.

Next, your lawyer would want to look at your promissory note (or notes) and deed of trust. The rules for foreclosing on a note secured only by a deed of trust are complex enough; when you have mixed collateral, some real and some personal property, the lawyer has several foreclosure choices under the applicable codes, including Commercial Code Section 9604.

The lawyer must also consider the effects of Code of Civil Procedure (CCP)section 580b (purchase-money defenses); the one-action rule, CCP 726; the trustee sale deficiency bar of CCP 580d; the fair value rule of CCP 580a, and on and on.

Note that the phrase "deed in lieu of" ends up with the word "foreclosure" if fully written out, and by accepting a such a deed (and by signing the accompanying agreement, which I suppose the borrower would be asking you to sign), you would probably be giving up your right to foreclose. You might also be giving up your right to the home, especially if there is but a single note with two securities, but there is no hard-and-fast rule and what you give up in exchange for the "deed in lieu" will probably depend upon something you and the borrower will be putting in writing and signing.

Finally, if the borrower has signed over pledged property to his buddy, this is a fraudulent transfer under Civil Code 3439 et seq. and also probably a default and possibly a fraud under the terms of your security agreement (assuming it was properly drawn up).

If you hire a lawyer, which I think you should, show him or her this response along with all your other deal documents as a partial checklist.