California Commercial Code section 3-309 and the show me the note defense

California Commercial Code section 3-309 and the show me the note foreclosure defense strategy is the topic of this blog post.

Uniform Commercial Code Article 3, section 3-309, which has been adopted in California as Commercial Code section 3-309 states that, “ (a) A person not in possession of an instrument is entitled to enforce the instrument if (1) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (2) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(b) A person seeking enforcement of an instrument under subdivision (a) shall prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, Section 3308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.”

So the law in California supports a lender or loan servicer not needing to have the original note to conduct a trustee’s sale. They can simply bond around a lost note.

Most Judges are not inclined to show much sympathy for technical challenges to a foreclosure, particularly when it is clear from the complaint and other documents filed with the Court that the borrower is in default under the loan.

Anyone using the show me the note defense is blowing their chances of actually showing some kind of valid defense to the Judge that might convince them to at least delay the foreclosure sale.

In later blog posts I will cover some valid claims that if used in the right situations should convince a Judge to grant a request for a temporary restraining order to enjoin the trustee foreclosure sale. These claims will be based on legal research, in particular my review of published decisions from the California Courts of Appeal and the California Supreme Court.

Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.

View this document on Scribd

 

To view over 300 sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 300 sample legal documents for sale

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author’s weekly California and Federal legal newsletter by visiting the following link: http://www.legaldocspro.net/newsletter.htm

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Produce the note foreclosure defense in California

Does demanding that a lender or loan servicer produce the original note as a foreclosure defense strategy work is the topic of this blog post. The answer so far is mostly NO, although some people claim otherwise, the California Courts, and most Federal Courts in California have not accepted that defense. A major problem with the produce the note foreclosure defense is that all a lender or loan servicer needs do is post a bond in the amount of the fair market value of the property, or any other amount that a Court may order, and the defense is moot.

While this blog post is not intended as legal advice the main reason that production of the original note is not required is that California is a non-judicial foreclosure state.

Non-judicial foreclosure under a deed of trust is governed by California Civil Code Section 2924 which states in relevant part that a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process.”

California courts have held that the Civil Code provisions “cover every aspect” of the foreclosure process, and are “intended to be exhaustive,”

Any person who is under the impression that the “show me the note” defense will work in California is sadly mistaken. You can debate all you want. The cold hard fact is that the Courts do NOT agree with the show me the note defense.

In California, the lender is not required to produce a Promissory Note to conduct a non-judicial foreclosure which is also known as a Trustee’s Sale. This is due to the fact that the power of sale comes from the Deed of Trust, NOT the Promissory Note.

Anyone using the show me that note defense runs the risk of not only losing in Court, but also blowing their chance to actually show some kind of valid defense to the Judge that might convince them to at least delay the foreclosure sale.

Several recent cases have stated that there is NO requirement under California law to produce the original note to proceed with a non-judicial foreclosure.

Putkkuri v. ReconTrust Co., 2009 WL 32567, *2 (S.D.Cal. Jan.5, 2009) (“Production of the original note is not required to proceed with a non-judicial foreclosure.”); see also Phillips v. MERS Mortgage Electronic Registration Systems, 2009 WL 3233865, 9 (E.D.Cal.2009); Vargas v. Reconstruction Co., 2008 U.S. Dist. LEXIS 100115, at *8-9 (E.D.Cal. Dec. 1, 2008).

Later blog posts will cover some valid claims that may convince a Judge to grant a request for a temporary restraining order to enjoin the trustee foreclosure sale.

Attorneys or parties in California who would like to view a portion of a 22 page sample complaint to stop a trustee foreclosure sale that includes a verified complaint, ex-parte application for temporary restraining order with points and authorities, sample declarations, and a proposed order sold by the author can see below.

View this document on Scribd

 

To view over 300 sample legal documents for use in California and Federal Courts sold by the author of this blog post visit View over 300 sample legal documents for sale

The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

If you enjoy this blog post, tell others about it. They can subscribe to the author’s weekly California and Federal legal newsletter by visiting the following link: http://www.legaldocspro.net/newsletter.htm

Copyright 2013 Stan Burman. All rights reserved.

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

These materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.