Recording a Trustee’s Deed is Privileged Under CA Civil Code Section 47

by Wendel, Rosen, Black & Dean LLP
Contact

California law is pretty clear that the recordation of a notice of default and notice of sale — two key documents that are a prerequisite to a nonjudicial foreclosure sale (aka trustee’s sale) — are privileged and cannot form the basis of liability in court.

Civil Code section 2924(d)(1) says so.

Section 2924(d)(1) states that the “mailing, publication, and delivery of notices as required” by section 2924 “constitute privileged communications pursuant to Section 47.”  Section 2924(a)(1) and (a)(3) require the recordation of both a notice of default and a notice of sale.

But what about the recordation of a trustee’s deed — the aftermath of a nonjudicial foreclosure sale that officially vests title in the winning bidder?  Is that privileged too?  Section 2924 does not “require” the recordation of a trustee’s deeds.

A recent decision from California’s Second Appellate District — Schep v. Capital One, N.A. (with modifications here) — recently weighed in on the question….

Facts and Trial Court’s Judgment

In 2007, Raymond Schep borrowed $910,000 from a mortgage company.  The loan was secured by a deed of trust on a home in Beverly Hills, with Mortgage Electronic Registration Systems, Inc. (MERS) listed as beneficiary, and a predecessor of Capital One, N.A. was the trustee.

By late 2009, the loan was in default.  MERS substituted a new trustee to handle the foreclosure (T.D. Service Company). T.D. recorded a notice of default, and later, a notice of trustee’s sale.

In between the recordation of those two documents, an outsider with no legitimate connection to the loan (one Mr. Timothy Fitzgerald of US Banc Trustee TTE) recorded a “wild deed” claiming to be the beneficiary, and purporting to substitute himself as trustee and to reconvey the deed of trust to Schep without further payment.  The “unbroken chain of title” (which the trial court later took judicial notice of) showed that Fitzgerald’s “wild deed” was false.

In 2011, Capital One bought the property at a trustee’s sale.  The trustee recorded a trustee’s deed upon sale.

Schep sued T.D. and Capital One for slander of title, based on the trustee’s recording of the notice of default, notice of sale, and trustee’s deed.  Capital One filed a demurrer arguing that the recording of those documents was privileged.  The trial court agreed, and dismissed the case.

Schep appealed.

Court of Appeal’s Opinion

The court of appeal affirmed the trial court’s judgment.

The opinion started with the easy issue, noting that the recordation of the notice of default and notice of sale were expressly privileged under Civil Code sections 2924 and 47.

As to the notice of sale, the court held the privilege likewise applied.  The court pointed to a different subdivision of the statute, section 2924(d)(2), stating that the privilege broadly applies to the “performance of the procedures set forth in this article[.]”  That article (titled “Mortgages in General”) includes other sections (2924.12 and 2924.19) that “specifically contemplate that a trustee’s deed upon sale will be recorded as the capstone of the process of nonjudicial foreclosure.”

The court stated the policy considerations behind its conclusion:

Our Legislature’s purpose in declaring these procedures privileged was to give trustees some measure of protection from tort liability arising out of the performance of their statutory duties. … That purpose is fulfilled only if all of the procedural steps attendant to a nonjudicial foreclosure are privileged, from the recording of the notice of default and notice of sale through the recording of the trustee’s deed upon sale following the foreclosure sale.

The court also held that the privilege applied not just to the trustee who records a trustee’s deed upon sale, but also to “the principal who directs that recording.”  Section 2924 contemplates that recording of documents can be accomplished by a “trustee, mortgagee, or beneficiary, or any of their authorized agents.”

Lesson

Just like recording a notice of default or a notice of sale, recording a trustee’s deed after a completed nonjudicial foreclosure sale is privileged, and cannot form the basis of liability in court.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wendel, Rosen, Black & Dean LLP | Attorney Advertising

Written by:

Wendel, Rosen, Black & Dean LLP
Contact
more
less

Wendel, Rosen, Black & Dean LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.