Legal Question in Real Estate Law in California

Lots of questions. 1. Maybe. It depends on the loan agreement. A bare deed of trust and note will probably not contain language making default on the first an event of default on the second. A well and properly drafted loan agreement, however, should have such a provision. 2. This is again a question for the loan documents. Most document provide for such a right. You probably would, however, need to get the probate court's approval as well. You should consult a probate specialist on that issue. There are also general legal doctrines that allow you to make payments to protect your own interests, but it would be far better if you can rely on documents and probate court approval, rather than having to argue that your situation fits some legal principal. 3. Yes, if he can find a buyer.

Um, it is arrears. In the rears means something else that we don't discuss in polite company.

The second cannot foreclose unless the deed of trust provides that in the event of default on other obligations, such as taxes or default on the first trust deed, that the holder of the second can cure and those become obligations secured by the second deed of trust. Only when the trustor fails to pay those demands does it entitle the second to foreclose.

To answer you other question, the second can always bring the first current, but the trust deed will require a properly worded "dragnet" or "anaconda" clause to become security for these advances. Some deeds of trust have this wording, and I have seen some that do not.

The second rarely forecloses, because they are still subject to the first. It is a matter of economics. At one time, being second depended on the amount of equity remaining in the property, and the credit of the trustor, but lenders got greedy.

The second can sell the note, and the security is deemed to follow the transfer of the note.

Any lender, first, 2nd or umpteenth, may foreclose if and only if the borrower is in default. Ordinarily, the kind of default that results in a foreclosure is failure to make payments to the foreclosing lender, but other acts or omissions can be defaults under a loan agreement as well, such as failure to pay property taxes, failure to carry fire insurance, use of the property for an illegal purpose, causing environmental harm, and often, failure to stay current on other loans, senior or even junior.

Junior lenders also have the right, but not the obligation, to cure defaults on senior loans.

Holders of notes generally have the right to sell or pledge the notes. With notes representing real-estate lending, the notes are almost always fully negotiable, as packaging up and selling mortgage notes is an accepted practice in the industry