Henry is selling his home in Marin County, California. The buyer's title company issues a preliminary title report showing an old deed of trust that Henry already paid off seven years ago. Henry contacts his former lender, but the company has gone out of business. How can Henry clear this title defect in California?
Correct Answer
D) Record a declaration of satisfaction with a surety bond under Civil Code 2941.7, which lets the trustee record a reconveyance
A recorded deed of trust stays on the record until a reconveyance or release is recorded, so a paid-off loan whose lender has vanished needs an instrument, not time. Civil Code section 2941.7 supplies the route: the owner records a declaration that the obligation is satisfied and that the beneficiary cannot be located after a diligent search, accompanied by a surety bond in the statutory amount, and if no objection is recorded within 30 days the trustee executes and records the full reconveyance. The diligent search the declaration must describe includes mailing notice to the last known addresses and checking the lender's status with the California Secretary of State. Civil Code section 2941(b)(3) gives a second route: once 75 days have passed since satisfaction with no reconveyance recorded, a title insurance company may prepare and record a release of the obligation after giving 10 days' notice to the trustor, trustee, and beneficiary of record.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Constructive notice is the legal presumption that a person has knowledge of information that is available through public records or visible inspection of the property, regardless of whether they actually knew about it.
A deed is a written legal document that conveys (transfers) ownership of real property from one party to another. It must be delivered to and accepted by the grantee to be effective.
For a deed to be valid, it must contain several essential elements including a competent grantor, identifiable grantee, consideration, legal description, granting clause, signature of the grantor, and delivery and acceptance.
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A California preliminary title report is issued in connection with a residential sale. Which of the following items would MOST likely appear as a standard exception in that report?
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A California court enters a quiet title judgment declaring that Smith is the rightful owner of a disputed parcel. Smith then sells the property to Jones via grant deed, and Jones obtains an ALTA extended title insurance policy. Subsequently, a third party produces a deed predating Smith's chain of title, claiming that the quiet title action had a jurisdictional defect because proper service was not made. Under California law, which of the following BEST describes Jones's position?