Legal Question in Real Estate Law in California

I think you have asked three questions, here. (1) What happens to your 1st Deed of Trust, if the 2nd Deed of Trust forecloses? (2) What can you do when the holder of the 2nd Deed of Trust owes you payments and falls behind? (3) Do you need a lawyer?

First question: If you have a 1st and the 2nd forecloses, you retain your security interest in the property. Said another typical way, when the 2nd forecloses, the purchaser at the trustee's sale take the property "subject to" your 1st. As long as the transaction is honest, you lose nothing. But, see the answer to question number 3.

Second question: You have not stated any reason that the holder of the 2nd owes payments to you. If the holder of the 2nd has a note, promising payments to you and this obligation is secured by a Deed of Trust, you can foreclose. If the obligation of the 2nd is not secured, you will likely be limited to suing the 2nd, after making a demand. Of course, you would want to see if you can work out the problem, without a lawsuit. Again, see the answer to question number 3.

Third question: Yes. You need a lawyer. You want to make sure that the 2nd's foreclosure is done properly and honestly. You also want to make sure that your 1st is properly recorded and, in fact, you are in the first position. You also may have rights against the property, after the 2nd forecloses. Sometimes, Deeds of Trust include "do on sale" clauses. So, after someone buys the property at the 2nd's trustee's sale, you may not feel comfortable with the new owner. If so, you may be able to foreclose, based on the property having changed hands. Note that some ownership changes trigger the "do on sale" clause. Others do not.

As for the second question, get your lawyer to look into exactly what the 2nd's obligation is to you. Why does the 2nd owe you money? What are the terms of the debt? Under the right circumstances you can have a great negotiating position to do such things as buy the property for yourself, have the 2nd pay off your loan, or an endless list of other possibilities. A lawyer, experienced in real estate, can help.

In my humble opinion, I would look for a lawyer who would sit down and talk with you about it for an hour, charging you around $300 to $400. You may only need an hour's consultation and, frankly, I think that anyone who pays a lawyer more than $400 and hour is off his or her rocker.

I'm confused by your post. Are you the beneficiary under the second trust deed or the first, or both? My answer would depend on you clearly setting forth the facts.