In Ram v. OneWest Bank, FSB, a California Appellate Court permitted an entity to substitute as the trustee for a lender on a deed of trust even if the substitution was not recorded. In Ram, plaintiffs borrowed money to purchase a home. A deed of trust was recorded against the property. They defaulted on the loan and a foreclosure was initiated. The beneficiary of the deed of trust was defendant, OneWest Bank. OneWest purchased the property at a foreclosure sale. Plaintiff sued OneWest alleging that the sale was void due to irregularities in the foreclosure proceedings. They alleged that the trustee had executed and recorded the notice of default several weeks before OneWest signed and recorded the documents designating the trustee. The trial court sustained the lender’s demurrer with leave to amend. When plaintiffs failed to amend their complaint, the trial court dismissed the case. The court of appeals affirmed, holding that the borrowers’ claim of procedural irregularity was without merit.
The appellate court found there was no defect in the timing of the trustee’s substitution. The court noted that an entity may be substituted as a trustee even where the substitution was not recorded until after the notice of default was recorded, so long as notice was given to the borrowers. The court found that even if there was such a defect, it was harmless.
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