Legal Question in Real Estate Law in California

Re: deed of trust

You didn't give the sequence of events, but I'll assume the house was community property at the time the deed of trust was recorded. I'm also assuming for now that title was and is held as community property, rather than as joint tenants or tenants in common.

If this is all accurate, the deed of trust is not enforceable, because the way the title was held was notice to the creditor of the marriage relationship and the Family Code (section 1102) requires both spouses to join in executing any deed, long-term lease or encumbrance whenever the buyer, lessee or lender has actual notice of the marriage relationship. The way title was held would have been notice. I would say the lender cannot foreclose.

This doesn't mean the lender can't collect, however. The lender may not have collateral for its note, but the note itself remains your obligation, and the lender can sue on the note as an unsecured creditor. If (or when) it wins, it will record an abstract of judgment. Then, you're right back where you started - a lien on the house (which can be foreclosed).

It may be time to record a declaration of homestead! This will protect additional equity in the house when the suit and judgment follow.

Community property will be liable for the creditor's judgment, and your wife may be entitled to reimbursement.

Please note that the Family Code also requires spouses to be open and candid with one another about the business and fiancial aspects of their marriage, and to deal with one another and with the community assets with the highest good faith (section 721(b)).

As to your investment in the LLC, I would approach this not only as a breach of contract matter, but also (since reliance upon oral contracts is a bit unreliable) as a securities law violation. Taking investments from strangers is highly regulated and the laws are very protective of the investor. If the LLC has any net assets, you should be able to find a legal theory, sue successfully (or settle before trial), and collect your damages. Another answer has suggested fraud as a basis for suit; I'd probably throw this in for good measure, but fraud must be pleaded and proven meticulously, and defendants accused of fraud have a tendency to file demurrers, the handling of which slows down the proceedings and costs money.

Re: deed of trust

The lender can foreclose. You can sue the LLC for breach of contract and fraud.

Re: deed of trust

You are in a pickle and should consult with our CA NanceGroup.com member. He is very experienced in real estate law.