Legal Question in Real Estate Law in California

Re: Failure to make last mortage payment

To answer this question, one would need to know whether you authorized the release of a deed of reconveyance.

Re: Failure to make last mortage payment

The Deed of Trust you hold is a mark on the title...you DID file it didn't you? It will be a problem for them on a sale because they do not have clean title, unfortunately, this information does not help you in the here and now.

To more specifically answer your question, if they are behind on payments for a Deed of Trust, then you can foreclose on the Deed and demand sale of the home to cover the payment; this requires Court intervention.

I would need to see the agreements to know if you will fall under the standard guidelines, everything is dependant on the wording of your signed agreements; note, only the signed ones.

Please feel free to contact me if you require additional assistance at 626-578-0708 or through our website at www.No-Probate.com.

Re: Failure to make last mortage payment

Did the escrow company ask you for a payoff demand? If so, that would specify just how much you are/were owed. If you received less, talk with the escrow company. If you still have the deed of trust recorded (no "deed of reconveyance" has been filed by you yet), you have leverage and can demand payment in full before signing and recording the deed of reconveyance.

Re: Failure to make last mortage payment

Sounds as though someting was done too informally somewhere along the line here. Normally, a refinancing cannot close escrow until the old lender has presented his/her/its payoff demand, showing the escrow holder exactly how much the old lender gets per month and per day, and then the old lender is paid off to the day from escrow. (The settlement calculation may also include a proration of property taxes, if these are being or are to be impounded.)

Of course, if your dealings with the borrower were informal, something could have been omitted, such as instructing the escrow holder, requesting the payoff demand, responding to the demand, or even recording the trust deed.

The finger of suspicion points initially at the escrow holder, because it should have the experience and professional caution to make certain that the pay-off amount is correct to the dime based upon the actual day of closing. That is where your inquiry should begin.

If, however, your payoff instructions were incomplete or inaccurate, a substantial part of the fault would be your own. For example, you may have failed to tell the escrow agent about payments in arrears or your payment schedule.

When you loan money secured by a deed of trust on real property, you receive a recordable interest in the property; when the loan is paid off, you "reconvey" this security interest to the borrower by a so-called deed of reconveyance. As long as you have not reconveyed, you have a potential lever to oblige payment. However, you may never have received and recorded your deed of trust, or your interest may already have been reconveyed.

I thus repeat my suggestion that you start with the escrow or title company that handled the escrow; also, look at your closing statement to see what was debited and credited to you.

If this fails, take your documents to a local real-estate lawyer and ask for a free initial consultation.

In sum, this may be a case of botched paperwork as easily as one of the borrower's trying to pull a fast one.