EDITOR’S NOTE ON SAL D’ANNA CONTRIBUTION: Excellent submission Sal. I have a few thoughts in addition to what you have stated in your post. You make a great point about the distinction between void, voidable and invalid. They are three different things. In the context of a securitized mortgage and note, there are additional factors that should be kept in mind. First, the NOD is VOID if it didn’t come from someone who has authority to issue it. If you give a written instrument to a courier and he stops off at the courthouse or the post office and issues an NOD as the HOLDER or on behalf of the HOLDER as himself, he is probably performing a criminal act. It might be that any Trustee or pretender lender is performing a criminal act in attempting a non-judicial sale within the context of a securitized mortgage simply because they have ACTUAL KNOWLEDGE AND INTENT that the certificate of title is not going to be issued to the HOLDER or HOLDER in due course of the note — i.e., the bondholders who have OWNERSHIP or papers declaring ownership of the note and mortgage. They also have actual knowledge of credit enhancements (insurance, hedge products, federal bailouts) that may have resulted in the investor bondholder being satisfied in whole or i part in which case there is either no obligation at all, the note is paid, and the mortgage is extinguished as an incident to the note OR if the insurer, counterparty or Federal government has subrogation rights, they would be the party to foreclose or make a claim on the obligation. Whether it is criminal or not, the attempted transaction is as void as if I signed a deed to your house without having any title interest. I can’t convey what I don’t have. Therefore I have conveyed nothing. You would be entitled to have that removed from the title record because it was a meaningless cloud on title — in other words VOID.
—– FROM SAL ——
Even though non compliance with Civil Code 2923.5 makes the foreclosure sale void from the start because the NOD can not be filed until compliance with 2923.5 has occurred, the court may try to claim that the defect is voidable rather than void. The effect of declaring the sale voidable is that you must offer to tender full payment of the debt before the sale will be set aside.
Offer To Tender Full Payment of Indebtedness Not Required for Non-Compliance with Civil Code 2923.5 Because Foreclosure Sale was VOID, not simply Voidable.
Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 577 [205 Cal.Rptr. 15], held that “before a junior lienor may set aside a nonjudicial foreclosure of real property under a deed of trust because of irregularities in the sale, the junior lienor must first tender the full amount owing on the senior obligation.” In Arnolds, plaintiffs filed an action to set aside a foreclosure sale and for damages for wrongful foreclosure based upon an alleged defect in the notice concerning the date of sale which prevented their attendance or participation. They also demanded damages for fraud and negligence premised upon the trustee’s misrepresentations of the actual date of sale.
The court noted in Arnolds that generally “an action to set aside a trustee’s sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.” ( Arnolds Management Corp. v. Eischen, supra, 158 Cal.App.3d at p. 578; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117 [92 Cal.Rptr. 851].) This rule, traditionally applied to trustors, is based upon the equitable maxim that a court of equity will not order a useless act performed. ( Arnolds, supra, at pp. 578-579.) “A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust.” ( Karlsen, supra at p. 117.)
“The word ‘void,’ in its strictest sense, means that which has no force and effect, is without legal efficacy, is incapable of being enforced by law, or has no legal or binding force, but frequently the word is used [***5] and construed as having the more liberal meaning of ‘voidable.'” (Black’s Law Dict. (5th ed. 1979) p. 1411, col. 2.) “Voidable” is defined as “[that] which may be avoided, or declared void; not absolutely void, or void in itself . . . .” (Ibid.)
Another term frequently used in cases dealing with sales under trust deeds is ” invalid,” which is defined in Black’s as “Vain; inadequate to its purpose; not of binding force or legal efficacy; lacking in authority or obligation.” (Id., at p. 739, col. 2.)
In many of the cases, void, voidable, and invalid appear to be used interchangeably. Examples of cases in which the terminology is difficult to understand are Seccombe v. [**925] Roe (1913) 22 Cal.App. 139 [133 P. 507] and Mack v. Golino (1950) 95 Cal.App.2d 731 [213 P.2d 760].
The general rule in the United States on voidness or voidability of sale is set out in 55 American Jurisprudence Second: “[Defects] and irregularities in a sale under a power render it merely voidable and not void . . . . However, substantially defective sales have been held void where the defect lay in a particular as to which the statutory provision was regarded [***6] as mandatory . . . .” (55 Am.Jur.2d, Mortgages, § 746, p. 673.) “A sale under a power in a mortgage without reasonable notice will be set aside.” (Id., § 775, p. 691.)
In our research as to the circumstances in which California courts have determined sales under a deed of trust to be either void or voidable for notice defects, we have found no case which presents our precise factual pattern. No case draws a bright line between a major and a minor notice defect so as to dictate a certain result. A full range of notice defects is alleged in both [*1359] lines of cases, from no notice of any kind of the ultimate sale date ( Pierson v. Fischer (1955) 131 Cal.App.2d 208 [280 P.2d 491], “voidable”; Holland v. Pendleton Mtge. Co. (1943) 61 Cal.App.2d 570 [143 P.2d 493], “void”) to inadequate posting on the property to be sold ( Leonard v. Bank of America etc. Assn. (1936) 16 Cal.App.2d 341 [60 P.2d 325], “voidable”; United Bank & Trust Co. v. Brown (1928) 203 Cal. 359 [264 P. 482], “void”).
Although the extent of the defect is not determinative, what seems to be determinative is the existence and effect of a conclusive presumption of regularity of the sale. A deed of trust, which binds the trustor, may direct the trustee to include in the deed to the property recitals that notice was given as required under the deed of trust and state that such recitals shall be conclusive proof of the truthfulness and regularity thereof.
Where there has been a notice defect and no conclusive presumption language in the deed, the sale has been held void. ( Scott v. Security Title Ins. & Guar. Co. (1937) 9 Cal.2d 606 [72 P.2d 143]; United Bank & Trust Co. v. Brown, supra, 203 Cal. 359; Standley v. Knapp (1931) 113 Cal.App. 91 [298 P. 109]; Seccombe v. Roe, supra, 22 Cal.App. 139.)
Where there has been a notice defect and conclusive presumption language in a deed along with recitals as to the various postponements of a sale, the court has held the sale void on the basis that the deed showed that proper notice could not have been given. It has been held that the recitals of the postponement dates were controlling rather than the recitals as to the regularity of the notice. ( Holland v. Pendleton Mtge. Co., supra, 61 Cal.App.2d 570, 576-577.)
Where there has been a notice defect and conclusive presumption language in the deed, courts have characterized the sales as “voidable.” ( Lancaster Security Inv. Corp. v. Kessler (1958) 159 Cal.App.2d 649 [324 P.2d 634]; Pierson v. Fischer, supra, 131 Cal.App.2d 208; Mack v. Golino, supra, 95 Cal.App.2d 731; Leonard v. Bank of America etc. Assn., supra, 16 Cal.App.2d 341.) The trustor wishing to set aside a “voidable” sale must prove to the trial court that the conclusive presumption language does not apply to the sale either because there are grounds for equitable relief, such as fraud related to the provision, or because the conclusive presumption does not apply to the buyer, often on the basis that the buyer is not a bona fide purchaser for value. The trustor may then attempt to prove defective notice. ( Wolfe v. Lipsy (1985) 163 Cal.App.3d 633, 639-640 [209 Cal.Rptr. 801]; Lancaster Security Inv. Corp. v. Kessler, supra, 159 Cal.App.2d 649, 655.) 1
1 Many notice defect cases do not even address the question of whether the sale was void or voidable. In these cases the trustor was precluded from challenging the sale by conclusive presumption language as to the regularity of notice in the executed and delivered deed. ( Sorensen v. Hall (1934) 219 Cal. 680, 682-683 [28 P.2d 667]; Pierson v. Fischer, supra, 131 Cal.App.2d 208, 217; but see Garfinkel v. Superior Court (1978) 21 Cal.3d 268, 279, fn. 16 [146 Cal.Rptr. 208, 578 P.2d 925]; and see also Civ. Code, § 2924, which provides that notice recitals in deeds shall constitute prima facie evidence of compliance and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice.)
THE TRUSTEE DEED UPON SALE IS VOID
In the case at hand, the deed of trust, which binds the trustor, directs the trustee to include in the deed to the property recitals that notice was given as required under the deed of trust and state that such recitals shall be conclusive proof of the truthfulness and regularity thereof. The Trustee Deed upon Sale includes the following recitals:
This conveyance is made pursuant to the powers conferred upon Trustee by that certain Deed of Trust dated 05/05/2005 and executed by FRANK D’ANNA, A MARRIED MAN, as Trustor, and Recorded on 05/09/05 AS DOC#2005-0391304 of official records of San Diego County, California, and after fulfillment of the conditions specified in said Deed of Trust authorizing this conveyance.
Default occurred as set forth in a Notice of Default and Election to Sell which was recorded in the Office of the Recorder of said County, and such default still existed at the time of sale.
All requirements of law regarding the mailing of copies of notices or the publication of a copy of the Notice of Default or the personal delivery of the copy of the Notice of Default and the posting and publication of copies of the Notice of a Sale have been complied with. EMPHASIS ADDED.
The Trustee recital above is not conclusive proof of Compliance with Civil Code Section 2923.5 which is not mentioned in the above recital. The above recital is only conclusive evidence that mailing, posting, and publication of Noticed were done as required by law. It does not state that the Declaration required by Civil Code 2923.5 was attached to the Notice of Sale as required by law and since no such recital was made, the foreclosure is completely void, not voidable which relieves Plaintiff of the requirement to do equity before the Sale will be set aside because no valid sale ever took place to set aside as it was void ab initio.
Filed under: foreclosure