Legal Question in Real Estate Law in California

Re: Short pay sale 2nd mortgage statute of limitation

Yes you should hire an attorney and yes there may be a statute of limitations issue. Good luck.

Re: Short pay sale 2nd mortgage statute of limitation

The statute of limitations for breach of written contract in California is 4 years. It is far too late to take any action this debt.

The first thing I would do is send them a letter disputing the debt. Tell them you are disputing the debt under the federal Fair Debt Collection Practices Act ("FDCPA") and instruct them not to contact you again. You can get a sample of such a letter with a simple Google search using terms like "FDCPA sample dispute letter". Send the letter via fax or certified mail so you have proof of delivery and keep records of any letter they send you or calls you have with them. If they keep contacting you, you might be able to sue them for damages under the FDCPA

Next, get a copy of your credit report from the following website: https://www.annualcreditreport.com/cra/index.jsp. Review your credit report and dispute any errors in writing, including this old debt. If they continue to contact you, feel free to contact my office for a consultation.

Re: Short pay sale 2nd mortgage statute of limitation

In addition to the previous advice, which is very good, I would suggest that you or the attorney you retain take a look at your records covering the creation and terms of that second deed of trust. In some cases, especially where the D/T is for purchase money, the borrower is protected by the antideficiency statutes, which require the lender to look to the collateral alone.

A problem with relying upon the statute of limitations may arise if the final due date of the second was within the last four years, particularly if a balloon payment was due....the lender may have a substantial claim that's within the limitations period, since only the part that was due more than four years ago would necessarily be time-barred.

There is, to be sure, a major cottage industry in trying to collect uncollectable debt, but until a competent attorney has read the D/T, interviewed you about who was notified and how escrow was handled at close of the short-payment sale, and other related matters, you can't be too sure the claim isn't enforceable, at least in substantial part -- especially if it wasn't a purchase-money loan.

Re: Short pay sale 2nd mortgage statute of limitation

Yes, the statute of limitations is 4 years from the date of the breach. Assuming you did not send any payments during the last 10 years, you have a complete defense in the event suit should be brought to collect on the promissory note which was secured by the second deed of trust. The collection agency probably won't listen to you, but see an attorney and have him or her straighten them out.

Re: Short pay sale 2nd mortgage statute of limitation

The statute of limitations for outstanding debt in California is 4 years from the time of your last payment, especially if the original finance company was on notice of the debt being owed at the time your home sold. The second finance company who purchased the debt later would not have any greater rights than the original. Thus, under your facts, your debt here is procedurally "wiped out" by California state law if you have not made any payments in 10 years on it. However, these mere FACT alone will NOT stop unscrupulous creditors unless you retain an attorney to literally stop them in their tracks or face prosecution under the FDCPA laws firmly in place to protect you. An attorney knows the correct laws, letters to write and law enforcement agencies to carbon copy in order to cease and desist this type of creditor harassment. If you would like swift, affordable assistance in this matter for your overall peace of mind, contact us directly for a free consultation.