Client Alert: From the Scheer Law Group: Evictions: Record Trustee’s Deed or “Do Not Pass Go” and Do not Obtain Judgement

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To All SLG Clients and Affiliates.

From: Spencer Scheer
Date: March 13, 2017
Client Alert: From the Scheer Law Group:
Subject: Evictions:  Record Trustee’s Deed or “Do Not Pass Go”, Do Not Obtain Judgement.”

It would seem to be common sense that a foreclosing lender or a third party purchaser at a foreclosure sale would have the  trustee’s deed upon sale  (“TDUS”) recorded before commencing an eviction. Unfortunately this is not the case in more than a few eviction matters, where some owners immediately commence eviction before the TDUS is recorded. Much like players in the game of Monopoly who get a “Go to Jail” card and cannot pass go and collect $200.00 until they get out, foreclosing lenders or buyers at a sale that fail to record a TDUS before evicting may be told that they cannot pass go and must start their eviction over again.

This was recently confirmed in the case of U.S. Financial, L. P. v Mclitus (2016) 6 Cal. App. 5^th Supp. 1. In this case the court held that the requirements of CCP 1161a (eviction statute in CA) include perfecting sale and title and that perfecting title requires recordation of the TDUS.

This case mixed issues of title and foreclosure law, but the moral is clear: Record the TDUS before commencing eviction or face the prospect of having to start all over again.

UPDATE: A case just decided and holding just the opposite is DR. LEEVIL, LLC, Plaintiff & Respondent, v. WESTLAKE HEALTH CARE CENTER, Defendant & Appellant., No. 2D CIV. B266931, 2017 WL 895808, at *1 (Cal. Ct. App. Mar. 7, 2017). The court in this case specifically rejected the logic and the holding in the U.S. Financial, L. P. v Mclitus case cited above.  and rejected the argument that the failure to record the TDUS would prejudice the occupant from verifying the identity of the purchaser at sale.

SLG still recommends recording the TDUS before proceeding with an eviction, if possible. There is  now a split in the two appellate districts ruling on this issue in CA, and unless the CA Supreme Court reconciles the issue, why take chances?

Please call me if you would like to discuss

Spencer Scheer