Legal Question in Real Estate Law in California

It seems to me there are two main possibilities. (1) You signed a reconveyance and forgot about it, or did so mistakenly; or (2) Someone forged your signature on a reconveyance.

You should immediately obtain a certified copy of the reconveyance from the County Recorder.I believe the L.A. County Recorder is at the Hall of Records near 2nd & Hill, downtown.

If it is not your signature on the reconveyance, contact a real estate lawyer immediately. You might also want to report the forgery to the police.

If you did in fact sign a full reconveyance, that had the legal effect of releasing the collateral for your loan. Releasing the collateral is not the same as releasing the obligation; it does however leave you unsecured. (If the reconveyance also contains wording stating that the obligation has been paid or otherwise satisfied, it will also release the obligation.)

If you have become an unsecured creditor due to an unintended release of the collateral, you can still sue to collect but you cannot foreclose.

In addition to the possibilities 1 and 2, there are a couple other things that might have occurred. Maybe someone made a mistake - for example, the title company may have looked at the wrong property, or the county recorder could have mis-filed someone else's reconveyance. Perhaps there has been a foreclosure of a lien senior to yours, or legal action involving the property. It is often a good idea to record a "Request for Notice of Default" when taking a junior position on real property so that you get copied on default notices sent by other lenders. If you go to the Hall of Records, look for other notices and instruments on file regarding this property.

Mr. Whipple did not read your question correctly, so his answer is wrong. A release of obligation under deed of trust is not done by the beneificary or the trustee, but rather by a title company under provisions of the Civil Code that allow a title company to record that document when a loan has been repaid but the lender fails or refuses to reconvey the deed of trust. Obviously there was either a mistake or fraud involved at the title company if you were not repaid but they still recorded the release of obligation. It sounds like when your "friend" contacted you in January 2009 and wanted you to reconvey and you wanted to be paid, he pulled a fraud on the title company and got them to record the release of obligation in February 2009. You need to find out what happened from the title company that recorded the release of obligation and demand that they either restore your security interest or compensate you for your loss. If I can be of assistance with that, please let me know. I was a vice president of Fidelity National Title and Chicago Title some years ago, and know this industry quite well.

Mr. McCormick is correct in that a "release of obligation under a deed of trust" is normally performed by a title company. But it is clear that you had no intention of this happening, as you state that money was still owed on the underlying obligation, so "normal" does not apply here.

I believe that you posted this question earlier. As I stated before, 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).) So I can understand why Mr. Whipple refers to this as a "reconveyance", as it has the same effect.

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.

I cannot completely agree with all of Mr. McCormick's analysis, however, because title companies are sometimes named as trustees under deeds of trust, so it is not clear in what capacity the title company acted. 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.

As I relayed to you before, an attorney familiar with this area of law is going to have to review your matter.