To be enforceable, a deed of trust must sufficiently describe the real property security.
There are several different ways to describe real property. Commonly used methods include referring to a block and lot number from a recorded subdivision map, and “metes and bounds” descriptions (often used for property not within a subdivision).
Assessor’s Parcel Numbers (APNs) also describe real property. So, is it sufficient for a deed of trust to just rely on a reference to an APN?
Based on a recent opinion from California’s Fourth Appellate District — MTC Financial Inc. v. California Department of Tax and Fee Administration — the answer is: don’t count on it.
Facts: “First in time” recorded lien holder relies on ambiguous deed of trust using APN number to describe property
After a foreclosure sale conducted by a trustee under a deed of trust, a dispute erupted over the proceeds and the trustee deposited the proceeds with the court.
Rajindar Mehta claimed his 2004 deed of trust was recorded “first in time” and therefore was senior to the competing “later in time” 2008 tax lien held by the state Department of Tax and Fee Administration.
But Mehta’s deed of trust contained “multiple points of inaccuracy or ambiguity,” including: (1) reference to an incorrect lot number from a recorded map; (2) reference to an incorrect book page number of a recorded map; and (3) omitting the city in which the property was located. But, despite these problems, Mehta’s deed of trust did refer to an APN.
Trial court: deed of trust property description was “fatally defective”
The trial court ruled in favor of the Tax Department.
The court rejected the sufficiency of the APN: “As for the assessor’s parcel number appearing on the face of the [trust deed], there is no evidence that such number is the correct assessor’s parcel number assigned by the Orange County Assessor to the subject real property, especially given the other erroneous information appearing in the deed of trust.”
Court of Appeal: affirmed – APN not sufficent
The Court of Appeal affirmed the judgment of the trial court.
The court acknowledged that Mehta’s deed of trust was recorded “first in time” and thus if it was enforceable, it would have priority over the Tax Department’s lien. But to be enforceable, “a trust deed must sufficiently describe the property securing it” and “the description must be such that the land can be identified or located on the ground by use of the same.”
The court further observed that a deed of trust lacking a sufficient legal description of property is void — even “without any connection to fraud-related claims.”
The court then held:
While we find no reason to disagree that a parcel number could theoretically satisfy the law’s requirement for sufficient legal description of a property, we also find a parcel number, by itself, does not necessarily demonstrate the actual, physical location of a property. Generally, such a number corresponds to an assessor’s map …, which is a type of map that does not have to necessarily correspond with the actual physical location of a property.
The court also noted that Mehta offered no extrinsic evidence shedding further light on the APN’s accuracy, and the deed of trust’s other ambiguities only further muddied the water.
To ensure enforceability, a deed of trust’s legal description of real property should not rely solely on an APN.