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ThatTenant

Title Company Won't Remove Exception for Void Trust Deed

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I purchased a California property from a court appointed referee that had a trust deed recorded against it during a court proceeding for partition by a party to that action. The trust deed was recorded after a notice of action for that proceeding had already been recorded and was still in force. I believe the final order of the court confirming sale automatically voided the trust deed for being recorded after the notice of action per Civil Code 1214. However, the lender will not voluntarily remove the lien and two title companies I asked (subsequent to the sale due to an oversight by my now-deceased attorney) to provide policies of title insurance will not now provide a policy that does not include an exception for the trust deed I believe to be void. One told me they do not exclude liens on the bases of theories of law, such as Civil Code 1214, but on recorded documents. (My argument,  to no avail, was Civil Code 1214 is not a theory of law, it is law.) I think the final court order confirming my purchase was such a recorded document but they disagree saying the document has to explicitly name the lien and say it is off so I have declined those offered title policies. Are the title companies wrong and, if so, how do I convince them to remove the exception for the void trust deed? Could I, as the buyer confirmed by the court, ask the court to revise its final order confirming sale (of 2014) to explicitly say the trust deed, which predated the original court order, is void so I can avoid a whole new lawsuit to clear my title? Thanks

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Based on my experience with title companies, there is no way you are ever going to convince the title companies  to remove the exception.  Title companies only insure titles where there is actually no need for insurance.  You will have a problem when you try to sell the property.  I believe your only recourse is a quiet title action to have the lien declared null and void and, perhaps, even ordering the trustee to record a deed of satisfaction.  Consult local counsel.

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Thanks RetiredinVA. My attorney died. Could I have another attorney represent me to intervene in the partition action and ask the court to simply revise or amend his final order (2014) to declare the trust deed void? The notice of action was never ended so I'm hoping that makes it still not too late. I was not a party (directly) but I think I should have standing to appear in the action because I was the purchaser named in the final order. It seems so unnecessary to have to create a whole new lawsuit and argue over all the same facts just to deal with this one oversight by my attorney. I would expect the court would prefer to minimize its workload. Thanks

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If you were not a party to the original action you would have  no standing to ask the court to reopen the action.  Judges do, indeed, prefer to lighten their load.  But, they are not about to allow individuals who were not parties to an action to force the actual parties to respond to a motion by a stranger (which is what you legally are.)  If there was a motion to reopened the case, the original parties would have to be served with a notice of the motion, have a right to be heard, and the attorneys for the original action might very well object to the reopening.If you filed an action to quiet title, the only other party would be the trustee who did not release the lien.  It would be a lot simpler.  Again, consult local counsel.

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To PG1067.

 

I do not understand how you can say the DOT is not void given the language of CC1214. Assuming the final order confirming sale that concluded the partition action is a "judgment" for the purposes of CC1214, the DOT was not recorded before the notice of that action was recorded and, therefore, does not meet the exception stated in that law: "...unless the conveyance shall have been duly recorded prior to the record of the notice of action." It wasn't. My original attorney (now deceased) and even the trustor's own attorney both argued in court during post- final order motions that the DOT was not a valid lien and it appears the judge agreed based on his decision, which unfortunately was not written. So I may be utterly unqualified to say the DOT is invalid but those attorneys were both very experienced and held that view.

 

I have spent thousands on other attorneys looking into this. The advice has not been consistent. I've learned in employing attorneys that one should study the subject as best as one can and watch them like a hawk or pay a heavy price. Attorneys have a financial incentive to take a path that is more in their interest than the client's. I may yet hire another attorney but I'm considering the option of just ignoring the DOT. I think I'd remain on solid legal ground to void any deed resulting from a trustee's sale and maybe I can sell the place despite the exception in the title report. A quiet title action might cost more than the unencumbered value of the property, especially now that it went up in a recent wildfire, so the only reason to fight is principle.

 

Thanks for your thoughts on the matter.

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53 minutes ago, ThatTenant said:

I do not understand how you can say the DOT is not void given the language of CC1214.

 

I think your lack of understanding is a result of not understanding what the word "void" means.

 

I think what you're arguing is that the judgment in the partition action is effective as of the date of the "notice of action" (by which I assume you mean a lis pendens pursuant to CCP 405, et seq.) and that, because the DOT was recorded subsequent to the lis pendens, the DOT is unenforceable.  "Void" simply isn't the right term.

 

The bottom line is that title companies are not in the business of taking unnecessary risks, and issuing you a title policy without an exception for the DOT would be such a risk.

 

 

1 hour ago, ThatTenant said:

A quiet title action might cost more than the unencumbered value of the property, especially now that it went up in a recent wildfire, so the only reason to fight is principle.

 

Unless your financial resources are without limit, "principle" is a really dumb reason to engage in a legal battle.

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To PG1067: I agree with what I think you are pointing out (on a literal-only interpretation of the law) that the DOT did not become void unless and until the judgment in the action was actually issued, which it was. I also agree that the judgment priority in the chain of title would revert back to the date of recording of the notice of action. I used the word "void" because that's the word CC 1214 used.

 

I'd be interested to know if you (and/or RetiredinVA if he's listening) think either or both of the below code sections would be effective yet less costly than a quiet title action? All I really need is to nix the DOT, not clear the entire title from scratch:

 

Civil Code 3412: Cancellation of Instruments

Code of Civil Procedure 765.010 - 765.060: harassment liens ($5000 penalty)

 

"Really" dumb is a relative term. Not all human wants have a price. I was threatened, after my attorney filed the partition action, that they would cost me as much time and money as possible and prevent me from ever owning the place.

 

Thanks again

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It is hard to see the difference between filing an action to have a lien adjudged to be cancelled and an action to quiet title.  You seem to be seeking a non-judicial, cheap, and easy way to avoid a document on record in a clerk's official land records.  You are not likely to find it.

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To RetiredinVA: I thought that just addressing one lien would take much less of an attorney's time than addressing all possible liens. When I meet with the next attorney I plan to ask about all these possible approaches and see what he recommends. I'd like to pursue the penalties for the harassment. That would probably cost more to prosecute but that CCP then opens the possibility of an award of attorney fees to the victor. While I have confidence I should prevail, I know being correct does not guarantee a correct decision (especially in that jurisdiction). Plus one of the two persons that made the threats and started this is judgment proof.  (The other, however, is a business.) The other fly in the ointment is there are no good attorneys locally so I have to hire one in the big city 150 miles away. Hopefully he can appear by phone. Thanks again.

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16 hours ago, ThatTenant said:

I'd be interested to know if you (and/or RetiredinVA if he's listening) think either or both of the below code sections would be effective yet less costly than a quiet title action?

 

No statute or law is an alternative to a quiet title action, but you're free to cite whatever laws you like if you think it will convince a title company to remove an exception.

 

 

4 hours ago, RetiredinVA said:

It is hard to see the difference between filing an action to have a lien adjudged to be cancelled and an action to quiet title.

 

Indeed,   The prudent thing to do would be to allege causes of action for quiet title, cancellation, etc.

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Thanks again. I think RetiredinVA hit the nail on the head when he said title companies only insure titles where there is no need for insurance. I found a provision that would authorize a title company to cancel a DOT after notice giving the trustee time to produce evidence the DOT was still justified. They refused to initiate such a process even though they could have bailed if the trustee returned such evidence. This is why maybe I'm better off to just do nothing and explain the exception in the title report to my broker and she can explain to any potential buyers. Along those lines, maybe I should just pay for a letter opinion from an attorney that the lien is not enforceable. I'll rely on the next attorney to plan the strategy. My biggest problem now is finding an attorney I can have confidence in is competent in all the issues and honest enough to follow the most economical path if it means litigation.

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3 hours ago, ThatTenant said:

This is why maybe I'm better off to just do nothing and explain the exception in the title report to my broker and she can explain to any potential buyers

The problem will be that no mortgage lender will finance the purchase without clear title insurance.

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