I think that fact situation can be distinguished: In Mark's situation, thelender took the affirmative step of defeasing itself of its property interest.
It no longer has a property interest, although, were there not an issue with
the SOL, it could seek judicial intervention to void its mistake. In Stella's
situation, the lender still had a property interest, although unperfected.
Kenneth Jay Schwartz, Esq.
LAW OFFICE OF KENNETH JAY SCHWARTZ
21031 Ventura Boulevard, Suite 640
Woodland Hills, California 91364-2226
Telephone: (818) 226-1205
Facsimile : (818) 226-1213
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________________________________
To:
cdcbaa@yahoogroups.com
Sent: Sun, December 11, 2011 8:08:06 AM
Subject: RE: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition
trust deed reconveyance? [2 Attachments]
[Attachment(s) from Stella Havkin included below]
If the loan is deemed to be an unrecorded and unperfected mortgage which the
mortgage company had the right to record, the Chapter 7 discharge will not get
rid of the lien. The mortgage company will have the right after the discharge to
record the lien and the lien will pass through bankruptcy and the Chapter 7discharge will have no effect. I found out this recently and was surprisedbecause I believed that unperfected liens were discharged. I filed a chapter 7
thinking that I could discharge as to an unperfected mortgage. I found outabout it and had to convert to chapter 13 to get rid of the unperfected
mortgage, where according to the 9th Circuit BAP, the debtor can use Section 544
- the trustee strong arm powers - to avoid the lien. Here are the cases onpoint. Good luck. Let us know how it turns out.
Stella
From:
cdcbaa@yahoogroups.com [mailto:
cdcbaa@yahoogroups.com] On Behalf Of Mark T.
Jessee
Sent: Saturday, December 10, 2011 10:40 PM
To:
cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition
trust deed reconveyance?
Like I said the allegedly mistaken reconveyance from the junior lien holder was
recorded over 5 years before the Chapter 7 was filed. The current property value
is less than is owed on the first trust deed and there were no new liens
recorded by anyone after the reconveyance. The chapter 7 trustee is not going to
administer the estate since there is no equity above what is owed the firsttrust deed, let alone after exemptions and costs of sale. Thus any potential
lien avoidance powers of the trustee are not at issue. The debtor had no idea
the 2nd trust deed had been reconveyed and continued to make payments towards
the loan until shortly prior to the bankruptcy being filed, when the
reconveyance was discovered. The lender was listed as an unsecured creditor with
an explanation in Schedule F and the discharge is still at least a month away.
From what I have learned, apparently the lender was trying to substitute
themselves in as the trustee of the deed of trust and instead issued a fullreconveyance. It is my understanding this happened regarding numerous loans it
issued. I learned yesterday that the lender after receiving notice of the
bankruptcy filing prepared and recorded postpetition a cancellation of thereconveyance in violation of bankruptcy code 362(a)(4), so I will have the
pleasure of addressing that matter too. Said cancellation was signed by the same
officer that signed the reconveyance 5 1/2 years ago.
The first question is whether or not the lender currently still possesses an
interest in the collateral after the full reconveyance was allegedly recorded in
error? If the reconveyance is void because it was issued in error, then thelender still has an interest. If the reconveyance is merely voidable then I am
not sure it currently holds an interest in the property. The California Court of
Appeal found in DULEY V. WESTINGHOUSE ELECTRIC CORPORATION 97 Cal.App.3d 430
(1979) that a mistakenly recorded reconveyance is voidable, but I need to
research the issue a bit more to be confident of the current state of CA law. I
found bankruptcy cases relating to state laws other than CA finding such
reconveyances to be void rather than voidable.
Does CCP 338(d) 3 year statute of limitations apply? As Ken Schwartz pointed
out CCP 338(d) provides a 3 year statute of limitation for fraud or mistake.
Without yet delving into research on it, I wonder whether it is applicable as
the chapter it falls under is for actions other than for the recovery of real
property? However, since CCP 338(d) includes slander of title and actions to
challenge certain tax liens, on the surface it seems reasonable to conclude CCP
whether or
not the lender currently still possesses an interest in the collateral after the
full reconveyance was recorded in error? If the allegedly mistaken reconveyance
is voidable, CCP 338(d) would appear to time bar any action by the lender as
the facts where known to the lender all along (even if it did not realize the
consequences of its action). The clock would start ticking the moment the
reconveyance was recorded, not when the lender realized the legal ramifications
of its reconveyance of title to the debtor. On the other hand, if DULEY is not
the current state of the law and the allegedly mistaken reconveyance is void I
do not think the clock under CCP 338(d) ever starts ticking.
If the reconveyance is voidable as set forth in DULEY and assuming CCP applies, then I think the lender is time barred from pursuing a court ordervoiding the reconveyance in accords with CA Civil Code 3412. If the
reconveyance is void I do not see anything in 524(a) preventing the lender from
pursuing a court order cancelling the reconveyance in accords with CA Civil Code
What if CCP 338(d) does not apply or the 3 year period has not elapsed and the
reconveyance is voidable? Once the underlying obligation is discharged, can the
lender revive the lien after discharge by obtaining a court order cancelling the
reconveyance in accords with CA Civil Code 3412 and be in compliance with
recover
or offset a debt as a personal liability of the debtor? I could not find any
case law addressing that issue.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
On Sat, 10 Dec 2011 16:09:40 -0800, "Steven B. Lever"
wrote:
>Killer find, Kenneth. Steve
>
>From:
cdcbaa@yahoogroups.com [mailto:
cdcbaa@yahoogroups.com] On Behalf Of Kenneth
>Jay Schwartz
>Sent: Saturday, December 10, 2011 3:47 PM
>To:
cdcbaa@yahoogroups.com
>Subject: Re: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition
>trust deed reconveyance?
>
>
>CCP 338(d) SOL is 3 years for mistake
>
>Kenneth Jay Schwartz, Esq.
>LAW OFFICE OF KENNETH JAY SCHWARTZ
>21031 Ventura Boulevard, Suite 640
>Woodland Hills, California 91364-2226
>Telephone: (818) 226-1205
>Facsimile : (818) 226-1213
>
>
>THE INFORMATION CONTAINED IN THIS E-MAIL IS INTENDED ONLY FOR THE PERSONAL AND
>CONFIDENTIAL USE OF THE DESIGNATED RECIPIENT(S) NAMED ABOVE. THIS MESSAGE MAY BE
>AN ATTORNEY-CLIENT COMMUNICATION, AND, AS SUCH, IS PRIVILEGED AND CONFIDENTIAL.
>IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT OR AN AGENT
>RESPONSIBLE FOR DELIVERING IT TO THE DESIGNATED RECIPIENT, YOU ARE HEREBY>NOTIFIED THAT YOU HAVE RECEIVED THIS E-MAIL IN ERROR, AND THAT ANY REVIEW,>DISSEMINATION, DISTRIBUTION OR COPYING OF THIS MESSAGE IS STRICTLY PROHIBITED.
>IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY.
>THANK YOU.
>
>
>
________________________________
>From:Kenneth Jay Schwartz
>To:
cdcbaa@yahoogroups.com
>Sent: Sat, December 10, 2011 3:37:43 PM
>Subject: Re: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition
>trust deed reconveyance?
>
>
>Might there also be a 4 year SOL for actions based upon mistake [i.e., even
>without the BK issues, is it too late for the former lender to assert a
>successful cause of action]?
>
>Kenneth Jay Schwartz, Esq.
>LAW OFFICE OF KENNETH JAY SCHWARTZ
>21031 Ventura Boulevard, Suite 640
>Woodland Hills, California 91364-2226
>Telephone: (818) 226-1205
>Facsimile : (818) 226-1213
>
>
>THE INFORMATION CONTAINED IN THIS E-MAIL IS INTENDED ONLY FOR THE PERSONAL AND
>CONFIDENTIAL USE OF THE DESIGNATED RECIPIENT(S) NAMED ABOVE. THIS MESSAGE MAY BE
>AN ATTORNEY-CLIENT COMMUNICATION, AND, AS SUCH, IS PRIVILEGED AND CONFIDENTIAL.
>IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT OR AN AGENT
>RESPONSIBLE FOR DELIVERING IT TO THE DESIGNATED RECIPIENT, YOU ARE HEREBY>NOTIFIED THAT YOU HAVE RECEIVED THIS E-MAIL IN ERROR, AND THAT ANY REVIEW,>DISSEMINATION, DISTRIBUTION OR COPYING OF THIS MESSAGE IS STRICTLY PROHIBITED.
>IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY.
>THANK YOU.
>
>
>
________________________________
>From:Steven B. Lever
>To:
cdcbaa@yahoogroups.com
>Sent: Sat, December 10, 2011 3:08:47 PM
>Subject: RE: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition
>trust deed reconveyance?
>
>
>Mark:
>
>Were missing some facts here I think: what position was the reconveyed deed of
>trust before it was reconveyed? What are the timelines, e.g., is the bankruptcy
>filed yet, is it over? I take it no cancelation has been recorded yet. Also,
>what are the values of the property, the balances on the deeds of trust? Im
>just not getting a complete picture here, although it sure seems like an
>interesting problem.
>
>Speaking in general: There are no relief from stay issues if they just wait for
>the bankruptcy to be over. Then the discharge injunction applies as to
>collecting the debt, but not on the enforcement of its property interest in the
>collateral. That can all be addressed in state court. The collateral is no
>longer property of the estate.
>
>
>If there is equity in the property sufficient to fight with them, I>can get a great deal for your client even if you cannot completely capitalize on
>their mistake. That depends to some degree whether the reconveyance was covered
>by title insurance.
>
>Steve Lever
>
>From:
cdcbaa@yahoogroups.com [mailto:
cdcbaa@yahoogroups.com] On Behalf Of Mark
>Jessee
>Sent: Friday, December 09, 2011 11:40 PM
>To:
cdcbaa@yahoogroups.com
>Subject: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition trust
>deed reconveyance?
>
>
>Lender (acting as both trustee and beneficiary of the deed of trust) recorded a
>full reconveyance of security interest 5 years prior to chap 7 petition being
>filed. There were no subsequent recorded liens. Postpetition, lender claims this
>reconveyance was executed and recorded in error. The property is underwater
>related to the first trust deed so a trustee is not interested in administering
>it. While recording a cancellation of the full reconveyance pursuant to CA Civil
>Code 3412 and Duley v. Westinghouse Electric Corp. 97 Cal.App.3d 430 (1979) may
>have been an available option prepetition, doing so postpetition violates>bankruptcy code 362(a)(4) and the 362(b)(3) exception does not apply. Does the
>lender have an equitable remedy under the bankruptcy code to somehow cancel the
>reconveyance and revive the erstwhile unenforceable trust deed security
>interest?
>
>
>Can the lender successfully file an adversary complaint or a motion for relief
>from the automatic stay allowing it to seek an order in state court, allowing it
>to record a cancellation of the full reconveyance based upon equitable grounds?
>I cannot find any bankruptcy case law addressing the issue of a creditor's>postpetition right to seek cancellation of a prepetition mistakenly recorded
>reconveyance in a no asset case.
>
>
>Mark Jessee
>
________________________________
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I think that fact situation can be distinguished: In Mark's situation, the lender took the affirmative step of defeasing itself of its property interest. It no longer has a property interest, although, were there not an issue with the SOL, it could seek judicial intervention to void its mistake. In Stella's situation, the lender still had a property interest, although unperfected. Kenneth Jay Schwartz, Esq.LAW OFFICE OF KENNETH JAY SCHWARTZ21031 Ventura Boulevard, Suite 640Woodland Hills, California 91364-2226Telephone: (818) 226-1205Facsimile : (818) 226-1213THE INFORMATION CONTAINED IN THIS E-MAIL IS INTENDED ONLY FOR THE PERSONAL AND CONFIDENTIAL USE OF THE DESIGNATED RECIPIENT(S) NAMED ABOVE. THIS MESSAGE MAY
BE AN ATTORNEY-CLIENT COMMUNICATION, AND, AS SUCH, IS PRIVILEGED AND CONFIDENTIAL. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT OR AN AGENT RESPONSIBLE FOR DELIVERING IT TO THE DESIGNATED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT YOU HAVE RECEIVED THIS E-MAIL IN ERROR, AND THAT ANY REVIEW, DISSEMINATION, DISTRIBUTION OR COPYING OF THIS MESSAGE IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY. THANK YOU.From: Stella Havkin <
havkinlaw@earthlink.net>To:
cdcbaa@yahoogroups.comSent: Sun, December 11, 2011 8:08:06 AMSubject: RE: [cdcbaa] Postpetition rights of Lender re: mistaken prepetition trust deed reconveyance? [2 Attachments]
The post was migrated from Yahoo.