Legal Question in Real Estate Law in California
Want to pay off mortgage
Our property was seller financed - no prepayment penalty, etc. We want to pay the note off in a few weeks (3 years early). I wrote the lender informing her of the date, etc. Sent it certified, return receipt. She recieved it over a week ago. I told her we would meet her and to have the note and deed of trust ready for her notarized signature. She could pick the time of day and place and we would give her a certified check for the balance, including interest to date. She hasn't answered us. We are concerned that the interest will continue to acrue and that she can put us off. I also mentioned that, if she has lost the note, we could have a substitution written up (my niece is an escrow officer with a CA title company). We need to merge this property with another that is free and clear in the very near future so as to do some badly needed construction/repairs. What can we do to get her to respond and preform in a timely manner?
2 Answers from Attorneys
Re: Want to pay off mortgage
Civil Code section 2943 seems to cover your situation. You would be what the code section calls an "entitled person," the lender would be the "beneficiary," and what you're asking for is a "payoff demand statement."
The beneficiary must provide a payoff demand statement to the entitled person within 21 days of receipt of the entitled person's written demand for the statement.
If the beneficiary willfully fails to furnish the payoff demand statement, she is liable for your damages. Civil Code, section 2943(e)(4).
There are other Civil Code sections of possible interest. For example, 2941(b) requires the beneficiary and trustee to take prompt steps to reconvey the property.
Also, section 1500 and I think 2924c provide mechanisms for obliging a creditor to accept tender of payment.
These code sections are generally, way too long to cite in full here, much less to explain adequately. Suffice it to say, it is very unlikely your lender can continue to be stubborn or stonewall you on pay-off without becoming liable to you for any ill consequences.
You should explain this to her and if necessary cite the Civil Code. If this fails, find a local real-estate lawyer to write a demand letter for you. I could do this for you if you wish.
Re: Want to pay off mortgage
Who is the beneficiary under the Deed of Trust? Presumably, it's the seller, since this was seller financed. Read California Civil Code sections 2943(a)(5) and 2943(c). These, along with a variety of other statutes, provide guidance. In short, you (as the trustor) may, at any time, make a demand on the beneficiary under a deed of trust for a payoff demand (also known as a beneficiary statement or payoff demand statement). This is required by statute and the failure of a beneficiary to do it will subject the beneficiary to a variety of problems. You can sue the beneficiary to force him/her to comply with his/her statutory duties. Presumably, your Deed of Trust and/or original Note provide for recovery of attorneys' fees in a lawsuit between you and the seller. This could also impact the seller's decision to be uncooperative; and you should point out to the seller that you will seek attorneys' fees against him/her if it becomes necessary to file suit.
Seek out the counsel of a qualified real estate litigator if you need to proceed further. Good luck.
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