Legal Question in Real Estate Law in California

Re: Can a 2cnd trust deed force the sale of property?

Yes he can foreclose, but he must follow the same requirements as any other lender. That means he must file the notice of default, in which time you have 3 months (not 90 days) to cure the default by bringing the loan current. Then he must file the notice of trustees sale at least 3 weeks prior to the sale, and publish in the newspaper. He would be responsible for the 1st mortgage. If he recovers more than the amount of loan and costs, it must be paid to you.

Re: Can a 2cnd trust deed force the sale of property?

The answer is yes.

Keep in mind that the whole purpose of using a deed of trust to secure a note is to give the lender collateral. If the lender had no means to foreclose on the collateral, the deed of trust (whether first, second or 99th) would be an exercise in futility.

If you pay off the note secured by the second deed of trust, the trustee must reconvey the collateral (your house) and there will no longer be any right or power for that lender to carry on a foreclosure. This is true whether you pay off that note through refinancing, lottery winnings, a big inheritance, or whatever. The amount you have to pay to pay off the note will be its face or principal amount, plus interest and penalties allowable under the terms of the note. These will vary and you need to read the note itself. There are some statutory limitations on prepayment penalties. When maturity is accelerated due to the borrower's default, a prepayment penalty can't be charged. See Civil Code section 2954.10.

Re: Can a 2cnd trust deed force the sale of property?

Of course the holder of the beneficial interest in the 2nd TD can foreclose--same for the holder of a 3rd, 4th, etc. The "rep" for the loan company is not an attorney and is clearly ignorant and why would you ask such a question of a representative of another lender? Foreclosure laws vary from state to state, and California is very unique--your "rep" may be in Texas or some other state, and they haven't a clue about what the foreclosure process is in CA. It never ceases to amaze me that people ask legal questions of people who are not attorneys!

It makes no sense to pay on the first deed of trust if you are not going to keep the other loans current. When 90 days has elapsed after having issued the Notice of Default, then the foreclosing lender will send a Notice of Trustee's Sale and that notice will have a specific day for the sale, and that date must be at least 21 days in future. You can sell the house and payoff the loan or bring the loan current at any time up to five (5) days before the sale, and even later, if the lender will let you.