Legal Question in Real Estate Law in California

First check to be sure your deed of trust was in fact recorded. When you are sure, speak directly to the agent who prepared the release and find out why and under what right did he state your debt had been paid off. Contact the lenders [they probably recorded their loans and superior to yours] and find out how they gave a loan without knowing your deed of trust was recorded and whehter they feel your loan is junior to their. Your damages are the sum of the loans claimed to be superior to you. Under the fraud cause of action you can try to argue emotional distress. You sue everyone who did not do their job correctly.

You have a problem, and need to have an attorney review all of the recorded documents to advise you. A "release of obligation under a deed of trust" has the same effect as a reconveyance of a deed of trust, when it is recorded. (Civ. Code, sect. 2941 subd. (b)(3)(B).) A "release of obligation under a deed of trust" is required to name the beneficiary, the name of the trustor, and refer to the recorded deed of trust, with a statement that obligation secured by the deed of trust has been paid in full.

A trustee who is not named in a deed of trust, and not named in any substitution of trustee cannot release an obligation under a deed of trust.

While Mr. Roach is correct that a trustee who is not named in the DoT or a substitution of trustee cannot reconvey a deed of trust, a title company can under Civil Code section 2941(b)(3). That subsection provides a manner of clearing title when a debt secured by a deed of trust has been paid off, but neither the trustee nor the beneficiary (you) have reconveyed the deed of trust. Apparently your borrower convinced the title company that you had been paid. Considering the modest amount involved, I am pretty sure that if you can document that the debt has not been paid in full, the title company involved will be happy to pay off the debt rather than fight about it. I have over twenty years of real estate litigation experience, including defending these kinds of cases as a vice president and litigation counsel for Fidelity National Title and Chicago Title for six years. If you would like my help clearing this up and/or getting your balance paid off, please send me an email or give me a call.