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The technical and legal aspects of trust deed landing
(USC Thesis Other)
The technical and legal aspects of trust deed landing
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Content
THE TECHNICAL AND LEGAL ASPECTS OF
TRUST DEED LENDING
A T h e s is
P r e s e n te d to
th e F a c u lty o f th e D ep artm en t o f F in a n c e
The U n iv e r s it y o f S o u th e r n C a lif o r n ia
I n P a r t i a l F u l f il l m e n t
o f th e R eq u irem en ts f o r th e D eg ree
M a ster of* B u s in e s s A d m in is tr a tio n
by
T e r r e n c e R • W h ite
J u n e , 1 9 5 3
UMI Number: EP43373
All rights reserved
INFORMATION TO ALL USERS
The quality of this reproduction is dependent upon the quality of the copy submitted.
In the unlikely event that the author did not send a complete manuscript
and there are missing pages, these will be noted. Also, if material had to be removed,
a note will indicate the deletion.
Dissertation Publishing
UMI EP43373
Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author.
Microform Edition © ProQuest LLC.
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unauthorized copying under Title 17, United States Code
ProQuest'
ProQuest LLC.
789 East Eisenhower Parkway
P.O. Box 1346
Ann Arbor, Ml 4 81 0 6- 1346
tom M 8A *5*3 Wsse
This thesis, written by
T errence K. White
under the guidance of h.JLs...Faculty Committee,
and approved by all its members, has been
presented to and accepted by the Council on
Graduate Study and Research in partial fullfill-
ment of the requirements for the degree of
M aster o f B usiness A d m in istratio n
2 * *
Date tae.26*..195l
Faculty Committee
TABLE OF C O NTENTS
CHAPTER PAGE
I . INTRODUCTION................................................................................. 1
PURPOSE OF THE STUDY......................................................... 1
EXPLANATION OF TERMINOLOGY. . . .............................. 2
SCOPE AND LIMITATIONS OF STUDY.................................. 3
USE OF PAPER. .......................... . ................................... 7
ORGANIZATION AND PROCEDURE OF STUDY . . . . 8
I I . ESCROWS....................................... 9
I I I . PRELIMINARY R E P O R T ................................... 21
IV . MORTGAGES...................................................................................... 33
V . TRUST D E E D S ................................................................................. 44
V I . TITLE INSURANCE........................... ........................................... 54
j BIBLIOGRAPHY ................................................................................. 75
: APPENDIX ............................................. . 78
CHAPTER I
INTRODUCTION
The s u b j e c t m a tte r o f t h i s t h e s i s i s th e t e c h n i c a l
and l e g a l a s p e e t s o f t r u s t d eed le n d in g * The t h e s i s i s
d e s ig n e d t o p r e s e n t b r i e f l y some o f th e m o st im p o r ta n t
r u l e s and r e g u la t i o n s o f m o rtg a g e le n d in g and p e r t i n e n t
in fo r m a tio n r e g a r d in g th e e x a m in a tio n o f and a c c e p ta n c e o f
t i t l e to th e la n d h y p o th e c a te d as s e c u r i t y f o r a d e b t* The
t h e s i s w i l l a l s o p r e s e n t th o s e p r o c e d u r e s n e c e s s a r y t o
!
o b t a in in g a v a l i d l i e n .
T h is t h e s i s was p r e p a r ed f o r th e g u id a n c e o f i n d i
v id u a ls i n t e r e s t e d i n i n v e s t i n g money i n r e a l e s t a t e l o a n s ,
and o t h e r s w hose a c t i v i t i e s c e n te r on r e a l e s t a t e le n d in g *
As su c h i t may s e r v e a s a b a s i c r e f e r e n c e to th o s e i n t e r
e s t e d i n th e p r o p e r b a s i s on w h ich to ad van ce money se c u r e d
by r e a l p r o p e r t y .
Home m o rtg a g e le n d in g h a s b e e n an im p o r ta n t
a c t i v i t y o f banks and f i n a n c i a l i n s t i t u t i o n s f o r many
y e a r s • I t h a s assum ed a v e r y s i g n i f i c a n t p la c e i n econ om ic
l i f e o f th e U n ite d S t a t e s . Much m a t e r ia l i s a v a i la b l e |
I . PURPOSE OP THE STUDY
c o n c e r n in g r e a l e s t a t e l e n d i n g , b u t i n th e m a in , t h i s
m a t e r ia l d e a ls w ith a p p r a is a l t e c h n iq u e s , eco n o m ic c o n d i
t i o n s , and c r e d i t a n a l y s i s . I t i s p r a c t i c a l l y im p o s s ib le
f o r a p r o s p e c t iv e i n d iv i d u a l i n v e s t o r i n r e a l e s t a t e m o r t
g a g e s to f in d any in f o r m a tio n d e a lin g w ith th e t e c h n i c a l
and l e g a l a s p e c t s . Many i n v e s t o r s m ig h t f in d t h a t i n v e s t
m ent i n sound r e a l e s t a t e m o rtg a g e s o f f e r s an e x c e l l e n t
o p p o r tu n ity f o r a s a f e , g o o d - y ie ld in g in v e s t m e n t . The n o n
p r o f e s s i o n a l i n v e s t o r i s , i n need o f a b r i e f summary o f th e
s a fe g u a r d s and p r o c e d u r e s to be fo llo w e d i n m aking s a f e
in v e s tm e n ts i n m o rtg a g e l o a n s .
I I . EXPLANATION OF TERMINOLOGY
The l e g a l a s p e c t s o f m o rtg a g e le n d in g a s c o n s id e r e d
i n t h i s p a p er encom pass an e x a m in a tio n o f some o f th e m ore
im p o r ta n t s e c t i o n s o f th e C a lif o r n ia C i v i l Code p e r t a in in g
t o r e a l e s t a t e , th e l e g a l r e q u ir e m e n ts o f th e c r e d i t i n
s tr u m e n t, th e s t a t u t o r y r e q u ir e m e n t p e r t a in in g to f o r e
c lo s u r e p r o c e d u r e s , th e a p p l i c a t i o n o f la w s r e l a t i n g t o
th e e se r o w and f i n a l l y t h e l i a b i l i t y o f th e t i t l e in s u r e r
u n d er th e p o l i c y o f t i t l e in s u r a n c e . The term "t e c h n i c a l ' *
i
p e r t a in s t o th e c o n s id e r a t io n and i n t e r p r e t a t i o n o f th e I
v a r io u s d ocu m en ts r e g a r d in g th e r e a l e s t a t e t r a n s a c t i o n .
Under t h i s g e n e r a l c a te g o r y a l s o com es th e d i s c u s s i o n o f
3
th e minimum r e q u ir e m e n ts and s a fe g u a r d s w h ich sh o u ld be
im posed b y th e p r u d e n t i n v e s t o r .
I I I . SCOPE AND LIMITATIONS OF THE STUDY
A c o m p le te s tu d y o f home m o rtg a g e le n d in g w ould em
b r a c e h o m es, f a m i l i e s and in c o m e s , t h e i r i n t e r r e l a t i o n s and
th e v a r io u s f a c t o r s t h a t a f f e c t th em . C o m p reh en siv e,
s t a t i s t i c a l in fo r m a tio n a b o u t d w e llin g s i s r e a d i l y a v a i l
a b le i n govern m en t p u b l i c a t i o n s , p u b l i c a t i o n s o f th e F ed
e r a l H ou sin g A d m in is t r a t io n , sum m aries p u b lis h e d by
f i n a n c i a l i n s t i t u t i o n s , and p u b l i c a t i o n s by o t h e r s who
d e a l i n th e f i e l d o f r e a l e s t a t e . S in c e t h i s in fo r m a tio n
I s e a s i l y a c c e s s i b l e , i t i s n o t d is c u s s e d h e r e .
The le n d e r on r e a l e s t a t e s e c u r i t y i s i n t e r e s t e d
♦
i n th e v a lu e o f th e la n d and th e v a lu e o f th e im p ro v em en t.
I
He i s a l s o i n t e r e s t e d i n th e c a p i t a l and th e incom e o f th e
b orrow er • The le n d e r w a n ts to know w h at h e can r e a l i z e
on th e s e c u r i t y i f a fo r c e d s a l e i s n e c e s s a r y . He a l s o
w a n ts to f e e l c o n f id e n t a t th e o u t s e t t h a t h i s b orrow er
h a s th e b a s i c a b i l i t y and th e m o ra l i n t e g r i t y to m eet h i s
j o b l i g a t i o n s •
i
The v a lu e o f th e la n d and o f th e h o u se a r e d e t e r
m ined th ro u g h a p r o c e s s o f r e a l e s t a t e a p p r a i s in g . To
d e te r m in e th e v a lu e o f a p r o p e r ty th e a p p r a is e r c o n s id e r s
4
th e s o c i a l , e c o n o m ic , and i n d u s t r i a l tr e n d s i n a g iv e n
a r e a t o g e t h e r w ith i t s l o c a t i o n , s i z e , u s e , to p o g r a p h y ,
a v a i l a b i l i t y o f t r a n s p o r t a t i o n , m a rk et p r i c e s , and a
m u ltit u d e o f o th e r f a c t o r s # The a p p r a is e r m u st be c o g n i
z a n t o f th e f a c t t h a t v a lu e i s d e p e n d e n t upon p e o p l e . The
more la n d v a lu e f a c t o r s a r e a n a ly z e d , th e m ore p r o m in e n tly
th e human f a c t o r s ta n d s o u t# The F e d e r a l H o u sin g A d m in is
t r a t i o n , w h ich h as c o n t r ib u t e d * s o g r e a t l y to b e t t e r h o u sin g ,
r e c o g n iz e s th e human f a c t o r i n home v a lu e s # T h e ir r a t i n g
c h a r ts ta k e p e o p le in t o a c c o u n t i n d e te r m in in g b o th th e
r e l a t i v e eco n o m ic s t a b i l i t y o f an a r e a and th e p r o t e c t i o n
t
i t e n v o y s from a d v e r s e i n f l u e n c e s . S in c e t h e r e a r e many
e x c e l l e n t b ook s p u b lis h e d and a r t i c l e s w r i t t e n on th e
s u b j e c t o f a p p r a is in g and p r o p e r ty e v a l u a t i o n s , t h i s p a p er
w i l l n o t c o n s id e r any o f th e a s p e c t s o f la n d o r im p r o v e -
; m ent e v a lu a t io n or any o f th e c r i t e r i a o f a p p r a is in g *
H ea l e s t a t e le n d in g p o s e s s e v e r a l q u e s t io n s c o n c e r n
in g th e b orrow er# I s th e lo a n good f o r him ? What m o t i
v a t e s th e a p p lic a t io n ? Why a r e p e o p le w i l l i n g to r^isk
t h e i r f i n a n c i a l f u t u r e t o o b t a in homes w h ich o b l i g a t e them
f a r i n t o th e unknown f u t u r e ? The a n sw ers to t h e s e q u e s -
t
t i o n s w ould le a d u s i n t o some v e r y i n t e r e s t i n g p s y c h o l o g i- j
i
c a l a n a ly s e s o f human m o t i v a t i o n . To m o st p e o p le a home I
!
i s t h e i r l a r g e s t , m o st d e s i r a b l e , and m o st s a t i s f y i n g I
■ 1 : 1
5
m a t e r ia l p o s s e s s i o n . To th e g r e a t m a j o r it y o f n o rm a l,
a v e r a g e p e o p le th e home i s th e m o st v a lu e d p o s s e s s i o n , and
th u s th e y a r e w i l l i n g to borrow i n o r d e r to h ave i t and
w i l l w ork t o k eep i t . T h is f a c t o r i s on e o f th e r e a s o n s
why t r u s t d e e d s o f f e r a good s a f e in v e s t m e n t .
The b orrow er on r e a l e s t a t e assu m es a lo n g -te r m
o b l i g a t i o n . He s h o u ld b e th o r o u g h ly a n a ly z e d as a c r e d i t
r i s k , f o r r e g a r d le s s o f th e s e c u r i t y , i t i s p r im a r ily th e
b orrow er to whom we lo o k f o r p a y m en t. I t i s u s u a l l y an
e x p e n s iv e and u n s a t i s f a c t o r y e x p e r ie n c e to h ave to f o r e
c l o s e on th e s e c u r i t y b eh in d th e l o a n . T h is i s tr u e e v e n
th ou gh i n th e lo n g r u n th e le n d e r may b e f u l l y r e im b u r s e d .
I n t e n t i o n s , h o n e s t y , c h a r a c t e r , a b i l i t y and c a p a c it y a r e
im p o r ta n t f a c t o r s i n r e a l e s t a t e le n d in g j u s t a s th e y
a r e i n any o t h e r ty p e o f c r e d i t e x t e n s i o n . The i n t e g r i t y
o f th e b orrow er and h i s i n t e n t i o n s tow ard th e home a r e
p a r t i c u l a r l y im p o r ta n t i n p e r io d s o f d e c l i n i n g p r o p e r ty
v a lu e s «
T here i s a te n d e n c y on th e p a r t o f many le n d e r s to
l e t th e s e c u r i t y o v ersh a d o w th e b o r r o w e r . Thus many lo a n s
a r e made to b o rro w ers who a r e th e m s e lv e s p o o r c r e d i t \
r i s k s . T h is in d e e d was th e p r a c t i c e d u r in g th e e a r l y
d a y s o f r e a l e s t a t e l e n d i n g . Out o f th e w id e sp r e a d f o r e -
c lo s u r e and d e lin q u e n c y e x p e r ie n c e s o f th e 1 9 5 0 s and t h e L
6
u s e o f lo n g te r m , a m o r tiz e d r e a l e s t a t e lo a n s came a
r e c o g n i t io n o f th e need f o r more c a r e f u l c r e d i t c o n s id e r a
tio n # ^ A co m p re h e n siv e c r e d i t a n a l y s is sh o u ld be made o f
e a c h p r o s p e c t iv e r e a l e s t a t e b orrow er# S in c e th e c r e d i t
a n a l y s i s i s e s s e n t i a l l y th e same a s th e c r e d i t i n v e s t i g a
t i o n u n d e r ta k e n i n any ty p e o f lo a n , t h e r e i s a m p le, g o o d ,
r e l i a b l e m a t e r ia l p u b lis h e d c o n c e r n in g c r e d i t e x t e n s io n
t e c h n iq u e s • T h e r e f o r e , i t i s n o t n e c e s s a r y i n t h i s p a p er
to r e v ie w any c r e d i t c o n s id e r a t io n s #
The c o l l e c t i o n p ro b lem s i n c o n n e c tio n w ith r e a l
e s t a t e lo a n s a r e th e same a s th o s e e n c o u n te r e d when a
d e lin q u e n c y e x i s t s i n any o t h e r ty p e o f d e b t o r - c r e d i t o r
t r a n s a c t io n * T here a r e many books w r i t t e n on c r e d i t and
c o l l e c t i o n p r o c e d u r e s . T h ese b ook s g iv e form s f o r
c o l l e c t i o n l e t t e r s and h i n t s r e g a r d in g c o l l e c t i o n p r o e e d -
i u r e # As am ple m a t e r ia l i s a l s o a v a i l a b l e c o n c e r n in g
c o l l e c t i o n s , t h i s p rob lem w i l l n o t b e c o n s id e r e d e x c e p t
in s o f a r a s a g e n e r a l d i s c u s s i o n o f th e p r o c e d u r e to be
fo llo w e d i n c a s e o f f o r e c l o s u r e . I t sh o u ld be rem em bered
h o w ev e r, t h a t a r e c e n t c o u r t r u l in g h e ld t h a t ;
When th e ow ner o f a t r u s t d e e d n o t e h a s b e e n a
“good f e l l o w 1 1 and p e r m itte d th e home ow ner to be
I c o n s i s t e n t l y l a t e i n h i s paym ents o v e r a p e r io d o f
I t im e , h e c a n n o t a b o u t f a e e and “g e t to u g h ” a l l o f a
t su d d e n . He m u st g iv e th e home owner r e a s o n a b le tim e
to make good any d e f a u l t un d er t h e s e c o n d i t i o n s •
7
An A p p e lla t e C ou rt so r u le d i n th e r e c e n t c a s e o f
Edelm an v s . D e a v e l. and p e r m itte d th e home owner a
r e a s o n a b le tim e to b r in g th e lo a n i n good s ta n d in g -
b e fo r e p e r m it t in g f o r e c l o s u r e p r o c e e d in g s to p r o g r e s s .
IV . USE OF THE PAPER
T h is p a p er i s d e s ig n e d f o r th e u s e o f t h o s e who
c o n te m p la te lo a n s on r e a l e s t a t e l o c a t e d i n C a l i f o r n i a .
T h is g e o g r a p h ic a l d e l i m i t a t i o n i s n e c e s s a r y s i n c e th e
r u l e s and la w s g o v e r n in g r e a l e s t a t e t r a n s a c t io n s h ave
c o n s id e r a b le v a r ia n c e b e tw e e n th e s t a t e s • The u s e o f th e
t i t l e company and t h e t i t l e p o l i c y i s a lm o s t e x c l u s i v e l y
a C a l i f o r n ia i n s t i t u t i o n . I n m o st o f th e U n ite d S t a t e s
a b s t r a c t s o f t i t l e a r e u se d t o g e t h e r w it h a t t o r n e y s '
o p i n i o n s . The u s e o f th e t r u s t d eed i s e x t e n s i v e i n
C a l i f o r n i a . M ost r e a l e s t a t e lo a n s a r e s e c u r e d by m o r t
g a g e s i n th e o th e r s t a t e s • S in c e th e r e i s an e n t i r e l y
d i f f e r e n t o u t lo o k and p r o c e d u r e b e tw een m o r tg a g e s and
t r u s t d e e d s , o n ly th o s e p r o c e d u r e s a p p lic a b le to C a lif o r n ia
w i l l be c o n s id e r e d . T here i s , h o w ev e r, a c e r t a i n am ount
o f m a t e r ia l p r e s e n te d by way o f c o m p a riso n w h ich a p p l ie s
to th e m eth od s o f s e c u r in g r e a l e s t a t e t r a n s a c t io n s i n
o th e r p a r t s o f th e U n ite d S t a t e s •
^ The R e a l E s t a t e B u l l e t i n . M arch, 1 9 5 2 , O f f i c i a l
P u b li c a t i o n o f The D i v i s i o n o f R e a l E s t a t e , S t a t e o f
[ C a l i f o r n i a , P age 3 3 .
8
S in c e a l l a p p r a i s a l , e v a lu a t io n , and c r e d i t c o n s i
d e r a t io n s a r e o u t s id e th e sc o p e o f t h i s t h e s i s i t i s
assum ed t h a t th e p r o s p e c t iv e le n d e r h a s a n a ly z e d t h e s e
f a c t o r s i n c o n n e c tio n w ith a p a r t i c u l a r lo a n and h a s d e
term in ed h i s w i l l i n g n e s s to make a lo n g term lo a n t o a
p a r t i c u la r I n d iv id u a l s e c u r e d by a c e r t a i n p r o p e r ty , i f
a s a t i s f a c t o r y l i e n can be o b ta in e d * I t i s a t t h i s p o i n t
t h a t ou r c o n s id e r a t io n o f th e r e a l e s t a t e lo a n t r a n s a c
t i o n b e g in s •
V * ORGANIZATION AND PROCEDURE OF STUDY
The e n s u in g p a g e s d e a l w ith home lo a n s o n ly and t h i s
m ust be k e p t i n mind th r o u g h o u t th e d i s c u s s i o n s * The
p r i n c i p l e s u n d e r ly in g a lo a n on r e s i d e n t i a l p r o p e r ty
a p p ly to lo a n s on o t h e r ty p e s o f p r o p e r ty su ch a s I n d u s -
, t r i a l , h o t e l a p a r tm e n ts , and com m ercial*
The f o l lo w in g d i s c u s s i o n p r e s e n t s th e e s s e n t i a l s
o f th e lo a n t r a n s a c t io n and th e norm al se q u e n c e th e y
f o l l o w i n an a c t u a l lo a n s i t u a t i o n . Each p h a se o r d o c u
m ent i s c o n s id e r e d and th e e s s e n t i a l e le m e n ts o f ea ch
a r e r e v ie w e d *
The p r o c e d u r e o f t h i s s tu d y i s to exam in e escro w ^ ,
p r e lim in a r y t i t l e r e p o r t s , t i t l e e x c e p t i o n s , m o rtg a g e s
and t r u s t d e e d s , t i t l e p o l i c i e s and t i t l e c o m p a n ie s.
CHAPTER I I
ESCROWS
The term " escro w ” p r o v id e s p r o t e c t i o n f o r th e
p a r t i e s in v o lv e d i n any r e a l e s t a t e t r a n s a c t io n * / I t i s
now (1 9 5 3 ) cu sto m a ry and p r u d e n t f o r a b u y er and s e l l e r
o r b orrow er and le n d e r t o r e q u e s t a t h i r d , d i s i n t e r e s t e d
p a r t y to a s s i s t them i n c a r r y in g o u t th e term s o f t h e i r
a g reem en t to b u y , s e l l , ex ch a n g e o r make a lo a n on r e a l
and so m etim es on p e r s o n a l p r o p e r ty ; t h i s p r o c e d u r e i s
known a s an e sc r o w and th e t h ir d p a r t y i s known a s th e
" e s c r o w -h o ld e r *tt
*
S in c e b o th p a r t i e s to a r e a l e s t a t e t r a n s a c t io n
d e s i r e t o p r o t e c t f u l l y t h e i r own i n t e r e s t s , th e y a re
u n w illin g t o p a y t h e i r money o r t r a n s f e r t h e i r p r o p e r ty
u n t i l th e y h a v e d e f i n i t e a ss u r a n c e t h a t t h e i r a s s e t s w i l l
be d e l iv e r e d when c e r t a i n c o n d it io n s h a v e b e e n co m p lied
w ith * E scrow i s th e m eans by w h ich th e le n d e r s e t s f o r t h
th e c o n d it io n s u n d er w h ich h e w i l l le n d h i s money* The
e sc r o w h o ld e r g u a r a n te e s t o th e le n d e r t h a t h i s fu n d s w i l l
be d is b u r s e d o n ly when a l l o f th e c o n d it io n s and i n s t r u c
t i o n s h ave b e e n f u l l y c o m p lie d w ith *
The w ork and r e s p o n s i b i l i t y o f d o in g th e m yriad o f
1
10
d e t a i l s n e c e s s a r y t o c o m p le te th e t r a n s a c t io n i s t r a n s
f e r r e d t o a d i s i n t e r e s t e d t h ir d p a r t y who m akes a s p e c i a l
t y o f d e a lin g i n r e a l e s t a t e t r a n s a c t i o n s .
Vj'-W V i
The le n d e r d e p o s i t s h i s money w ith th e e scr o w
h o ld e r and g i v e s h i s i n s t r u c t i o n s t h a t th e m oney i s t o be
p a id t o th e b orrow er when th e e sc r o w a g e n t h o ld s f o r th e
le n d e r a v a l i d t r u s t d eed and a p o l i c y o f t i t l e in s u r a n c e
w h ich show s th e p r o p e r ty f r e e from a l l e n c u m b e ra n ee s, and
o t h e r m a t t e r s , e x c e p t th o s e s p e c i f i c a l l y app roved •
The b orrow er d e l i v e r s a t r u s t d eed t o th e e sc r o w
a g e n t w it h I n s t r u c t io n s t h a t i t i s t o be r e c o r d e d when
th e e sc r o w a g e n t h o ld s a c e r t a i n sum o f m oney i n th e
b orrow er * s name *
An e sc r o w h o ld e r i s on e who a c t s upon th e w r i t t e n
! i n s t r u c t i o n s o f h i s p r i n c i p a l s and i s , t h e r e f o r e , th e
a g e n t o f b o th b u yer and s e l l e r (o r b orrow er and l e n d e r ,
i n th e c a s e o f a lo a n ) d u r in g th e c o n d u ct o f an e s c r o w .
The a g e n c y i s a l im i t e d o n e , c o n fin e d to th e s p e c i f i c
w r i t t e n i n s t r u c t i o n s g iv e n by th e p a r t i e s t o th e e s c r o w .
The common la w d e f i n i t i o n o f an e sc r o w i s c o d i f ie d
i n C a l i f o r n ia a s f o l l o w s :
A g r a n t may be d e p o s it e d by th e g r a n to r w ith a
t h ir d p e r s o n , t o be d e l iv e r e d on p erfo rm a n ce o f a
c o n d i t i o n , an d , o n d e l i v e r y by th e d e p o s i t o r y , i t w i l l
ta k e e f f e c t . W h ile i n p o s s e s s io n o f th e t h ir d p a r t y ,
and s u b j e c t to c o n d i t i o n , i t i s c a l l e d an e s c r o w ,1
T h is t e c h n i c a l d e f i n i t i o n o f an e sc r o w a s d e n o t in g
th e in s tr u m e n t t h a t i s c o n d i t i o n a l l y d e l iv e r e d d o e s n o t
e n t i r e l y r e f l e c t i t s m ean in g i n m odern u s a g e * Today when
p a r t i e s sp e a k o f an e sc r o w o r M g o in g i n t o e sc r o w ” th e y
a r e m o st l i k e l y t o th in k o f th e e sc r o w a s a t r a n s a c t io n •
w h e r e in in s t r u m e n t s , m oney, o r o th e r t h in g s o f value a r e
d e liv e r e d to an e sc r o w h o ld e r f o r f u r t h e r d e l i v e r y upon
p erfo rm a n ce o f p r e s c r ib e d c o n d i t i o n s . T h is m ean ing o f
e sc r o w i s r e c o g n iz e d and i s s e t f o r t h i n th e a c t r e g u la t i n g
e sc r o w a g e n c ie s i n th e S t a t e o f C a lif o r n ia /a n d t h i s b r o a d e r
i n t e r p r e t a t i o n i s th e on e w h ich i s u sed th r o u g h o u t t h i s
p a p er *
I n o r d e r f o r an in s tr u m e n t t o o p e r a te a s a t r a n s -
a c t i o n t h e r e m u st be a v a l i d c o n t r a c t b e tw e e n th e p a r t i e s •
An e sc r o w c o n t r a c t may r e s u l t from m u tu a l i n s t r u c t i o n s
g iv e n to th e e sc r o w h o l d e r . I n th e S t a t e o f C a lif o r n ia
i n s t r u c t i o n s g iv e n an e sc r o w a g e n t a r e r e c o g n iz e d a s a
1 C i v i l Code 1 0 5 7 .
2
T h is c o n t r a c t m u st m eet th e r e q u ir e m e n ts o f any
v a l i d c o n t r a c t ; co m p ete n t p a r t i e s , p r o p e r s u b j e c t m a tte r ;
m a n if e s t a t io n o f m u tu a l a s s e n t as to s u b j e c t m a t t e r , te r m s ,
and c o n d it io n s o f th e c o n t r a c t ; c o n s id e r a t io n s ; and i f
p e r t a in in g to a la n d t r a n s a c t io n m u st b e i n w r i t i n g .
i s
v a l i d c o n t r a c t b etw een th e p a r t i e s and t h e r e f o r e c a r e m ust
be e x e r c is e d i n s e t t i n g o u t t h e s e i n s t r u c t i o n s s o t h a t th e y
em brace a l l o f th e e s s e n t i a l s o f th e t r a n s a c t i o n . I f com
p l e t e , d e f i n i t e i n s t r u c t i o n s a re n o t g i v e n , m isu n d e r s ta n d
in g and l i t i g a t i o n may r e s u l t .
W h ile an e sc r o w h o ld e r i s c o n s id e r e d to be an a g e n t
f o r a l l p a r t i e s , i t h a s b e e n r e c o g n iz e d t h a t th e p r i n c i p l e s
a p p lie d to a g e n e r a l a g e n c y c o u ld n o t be fo llo w e d i n
r eg a r d to e s c r o w s • I n C a lif o r n ia th e g e n e r a l th e o r y i s
fo llo w e d t h a t th e e sc r o w i s a l im i t e d a g e n c y s i t u a t i o n
u n d er w h ich th e o b l i g a t i o n s o f th e e scr o w h o ld e r to e a c h
p a r ty i n th e e sc r o w a r e l im i t e d to th o s e s e t f o r t h in i h e
~ed by an e sc r o w th e le n d e r sh o u ld be aw are o f th e d u t i e s
and r e s p o n s i b i l i t i e s o f th e e sc r o w a g e n t . The le n d e r m ust
know th e l i m i t s o f th e l i a b i l i t y assum ed by th e e scr o w
a g e n t and th e s p e c i f i c d u t i e s r e q u ir e d o f h im . F or t h i s
r e a s o n th e d u t i e s and r e s p o n s i b i l i t i e s o f an escro w a g e n t
3 I n th e c a s e o f B la ck b u rn v s . McCoy, 1 C .A . (2 d )
6 4 8 , i t was h e ld t h a t an e sc r o w h o ld e r i n an e sc r o w f o r
th e s a l e o f la n d w as u n d er no d u ty to d i s c l o s e to th e
b u y er th e f a c t t h a t th e s e l l e r was p u r c h a s in g th e la n d
from th e r e c o r d ow ner i n th e same e sc r o w and r e s e l l i n g to
th e b u y er a t a p r o f i t #
I n o r d e r to u n d e r sta n d f u l l y th e p r o t e c t i o n a f f o r d
13
a r e d is c u s s e d b r i e f l y i n th e f o l lo w in g p a r a g r a p h s •
The e sc r o w h o ld e r may n o t d e l i v e r fu n d s o r d o c u
m en ts u n l e s s t h e r e h a s b e e n a s t r i c t c o m p lia n c e w ith th e
i
c o n d it io n s o f th e e s c r o w . I t i s h i s d u ty to s e e t h a t th e
fu n d s o r d ocu m en ts rem ain i n h i s hands u n t i l e x p i r a t i o n
o f th e f u l l tim e f i x e d by th e i n s t r u c t i o n s f o r p e r fo r m a n c e .
A f t e r th e tim e l i m i t s e t i n th e e sc r o w h a s e x p ir e d he may
n o t p e r m it one o f th e p a r t i e s to p erfo rm u n le s s h e h o ld s
s p e c i f i c i n s t r u c t i o n s r e g a r d in g an e x t e n s i o n . An e sc r o w
h o ld e r i s n o t r e q u ir e d t o assum e th e r e s p o n s i b i l i t y o f
d e c id in g a c o n tr o v e r s y b e tw e en p a r t i e s . I n th e c a s e o f
su ch c o n t r o v e r s i e s th e e sc r o w h o ld e r may b r in g a c t i o n
a g a i n s t th e c o n f l i c t i n g c la im a n ts to com p el them to
l i t i g a t e t h e i r c l a i m s • E scrow i n s t r u c t i o n s a r e c o n f id e n
t i a l . R e l i a b l e e sc r o w com p an ies w i l l n o t g i v e in fo r m a tio n
c o n c e r n in g th e e x i s t e n c e o r term s o f an e sc r o w to p e r s o n s
n o t a p a r t y t o th e e s c r o w . E ach o f th e p r i n c i p l e s to an
e sc r o w h a s th e r i g h t to s e e th o s e i n s t r u c t i o n s o f th e
o th e r p a r t y w h ic h , when m atch ed a g a i n s t h i s , c o n s t i t u t e
th e e sc r o w c o n t r a c t . T h is d o e s n o t m ean, h o w ev e r, t h a t
e v e r y o n e i n an e sc r o w h a s th e r i g h t to s e e th e i n s t r u c
t i o n s o f e v e r y o th e r p e r s o n .
Up t o t h i s p o i n t th e g e n e r a l t h e o r y o f e sc r o w s
and t h e i r e f f e c t h a s b e e n d i s c u s s e d . S in c e t h i s t h e s i s
d e a l s w it h th e l e g a l and t e e h n i e a l a s p e c t s o f th e v a r io u s
d ocu m en ts and p r o c e d u r e s i n c o n n e c tio n w ith r e a l e s t a t e
lo a n s from th e s t a n d p o in t o f th e le n d e r , th e f o l lo w in g
p a g e s w i l l be d e v e lo p e d s t r i c t l y from t h i s v ie w p o in t#
The minimum e s s e n t i a l s t o an e sc r o w from th e l e n d e r f s
s t a n d p o in t a r e r e v ie w e d .
S in c e th e e sc r o w h o ld e r becom es th e a g e n t o f th e
le n d e r and i s e n tr u s te d w ith c a r r y in g o u t h i s i n s t r u c t i o n s
and p r o t e c t i n g h i s f u n d s , i t i s e s s e n t i a l t h a t a c o m p ete n t
and r e l i a b l e e sc r o w a g e n t be s e l e c t e d . The f i n a n c i a l
r e s p o n s i b i l i t y and th e m o ra l i n t e g r i t y o f th e e scr o w
h o ld e r sh o u ld b e ab ove r e p r o a c h . T here a r e l i t e r a l l y
h u n d red s o f com p an ies w h ich c o n d u c t e sc r o w b u s in e s s e s #
The w is e le n d e r e s t a b l i s h e s h im s e lf w ith on e o f t h e s e
e sc r o w co m p a n ies and t h e r e a f t e r c o n d u c ts a l l o f h i s b u s i -
/
n e s s w it h th em . S in c e i n many e a s e s , la r g e sums o f m oney
a r e e n t r u s t e d to th e e sc r o w h o ld e r by th e le n d e r i t i s
w is e t o c o n d u c t th e e sc r o w b u s in e s s w it h a bank o r t i t l e
in s u r a n c e company s i n c e th e f i n a n c i a l r e s p o n s i b i l i t y o f
t h e s e i n s t i t u t i o n s i s u s u a l l y u n q u e s t io n a b le . I t sh o u ld
n o t be in f e r r e d t h a t t h e r e a r e n o t any r e s p o n s ib le p r i v a t e
e sc r o w c o m p a n ie s. I f , h o w e v e r , th e le n d e r u s e s on e o f th e
o th e r e sc r o w a g e n ts he sh o u ld a s s u r e h im s e lf o f t h e i r
a b i l i t y t o m a in ta in h i s fu n d s and p r o t e c t him a g a in s t I o j
I ------------------------- — ----------------------------------- 1
151
I
i
w h ich m ig h t be o c c a s io n e d by th e d is h o n e s t y op c a r e l e s s
n e s s o f an e m p lo y e e *
S in c e th e e sc r o w h o ld e r i s th e a g e n t o f th e le n d e r
i n a l im i t e d s e n s e o n ly h e w i l l do n o th in g m ore th a n h e
i s a c t u a l l y in s t r u c t e d t o d o* I t i s t h e r e f o r e e s s e n t i a l
t h a t th e l e n d e r ' s i n s t r u c t i o n s to th e e se r o w a g e n t c o n
t a i n a l l o f th e p o in t s w h ich h e w is h e s c o v e r e d and t h a t
e v e r y one o f h i s w is h e s i s s e t f o r t h w it h e x a c t in g c l a r i t y .
I f t h i s i s n o t don e th e le n d e r may f in d t h a t th e lo a n i s
made and th e fu n d s d is b u r s e d w ith o u t th e t r a n s a c t io n
b e in g e n t i r e l y t o h i s s a t i s f a c t i o n * F or e x a m p le , i f th e
i n s t r u c t i o n s do n o t s p e c i f i c a l l y s t a t e t h a t a l l t a x e s
due a r e t o be p a id b e f o r e r e c o r d a t io n o f th e t r u s t d e e d ,
he may f i n d when h i s t r a n s a c t io n i s co m p lete d t h a t t h e r e
a r e s e v e r a l y e a r s a c cr u e d t a x e s d u e* (T h e se t a x e s o f course
t
w i l l be a l i e n p r io r to th e t r u s t d e e d * ) I f th e le n d e r
f a i l s to in c lu d e i n s t r u c t i o n s f o r an in s u r a n c e p o l i c y o r
a t a x s e r v i c e c o n t r a c t h e may f in d t h a t th e t r a n s a c t io n i s
co m p leted and th e fu n d s d is b u r s e d and h e d o e s n o t h ave th e
p r o t e c t i o n a ffo r d e d by t h e s e c o n t r a c t s •
E v ery e sc r o w company h a s i t s own " stan d ard " form
o f e sc r o w i n s t r u c t i o n s from w h ich i t w orks • T h is
"standard*1 form c o n ta in s th e w o rd in g t h a t t h e e scr o w
h o ld e r d e e ms e s s e n t l a l t o p r o t e c t h i s I n t e r e s t , The_________
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1 6 !
i
le n d e r sh o u ld be th o r o u g h ly f a m i l i a r w ith th e e sc r o w
i n s t r u c t i o n form u sed by th e e scr o w company h e s e l e c t s .
S in c e t h e r e a r e a s many form s a s t h e r e a r e c o m p a n ie s, i t
i s n o t p o s s i b l e to d i s c u s s e a ch form i n d i v i d u a l l y . The
p r o v i s i o n s c o n ta in e d i n th e e scr o w i n s t r u c t i o n s u sed by
th e Bank o f A m erica w i l l be r e v ie w e d s i n c e I f e e l t h a t i t
i s r e p r e s e n t a t iv e o f th e e sc r o w i n s t r u c t i o n s o f banks and
t i t l e in s u r a n c e c o m p a n ie s. (S e e A p p en d ix f o r sa m p le ) .A
The f i r s t s e c t i o n r e a d s a s f o l l o w s :
I n c o n s id e r a t io n o f y o u r a c t i n g a s e sc r o w h o ld e r
h e r e i n , i t i s a g r e e d t h a t you s h a l l i n no c a s e o r
e v e n t be l i a b l e f o r f o r g e r i e s o r f a l s e p e r s o n a t io n s
i n c o n n e c tio n w it h t h e s e i n s t r u c t i o n s , in s tr u m e n ts
o f r e c o r d , o r th o s e h a n d le d i n t h i s e sc r o w -
I t i s f u r t h e r a g r e e d t h a t i f any c o n t r o v e r s y a r i s e s
b e tw e en th e p a r t i e s h e r e t o o r w ith an y t h ir d p e r s o n ,
you s h a l l n o t b e r e q u ir e d to d e te r m in e th e same
o r ta k e any a c t i o n i n th e p r e m is e s , b u t you may a w a it
th e s e t t le m e n t o f an y su ch c o n tr o v e r s y by f i n a l
a p p r o p r ia te l e g a l p r o c e e d in g s o r o t h e r w is e a s you may
r e q u i r e , n o tw it h s ta n d in g a n y th in g i n th e f o llo w in g
i n s t r u c t i o n s to th e c o n t r a r y , and i n su c h e v e n t you
s h a l l n o t be l i a b l e f o r i n t e r e s t o r d a m a g e.
T h is s e c t i o n m ig h t be c o n s id e r e d a s t h e "escape*1
s e c t i o n i n s o f a r a s th e e sc r o w h o ld e r i s c o n c e r n e d . I t
r e l i e v e s th e e sc r o w a g e n t o f l i a b i l i t y i n t h e c a s e o f
f o r g e r i e s and f a l s i f i c a t i o n s . I t f u r t h e r p r o v id e s t h a t
th e e sc r o w a g e n t s h a l l n o t h ave to make any d e te r m in a tio n s
o r ta k e a c t i o n s i f any c o n t r o v e r s y a r i s e s no m a tte r w h at
th e i n s t r u e t l o n s o f th e p a r t i e s » By t h i s p r o t e c t i v e _________
17
p r o v i s i o n th e e sc r o w h o ld e r p r o v id e s a m eans by w h ich he
may r e q u ir e c o u r t i n s t r u c t i o n s a s to how to p r o c e e d i n th e
e v e n t he f e e l s t h a t t h e r e i s a p o s s i b i l i t y o f l i t i g a t i o n
o r l i a b i l i t y on h i s p a r t* Thus an e sc r o w h o ld e r may s t o p
th e e sc r o w p r o c e e d in g s a t a g iv e n tim e and r e q u ir e t h a t
th e p a r t i e s g e t a c o u r t o r d e r o r r e a c h an a g reem en t
t h a t i s s a t i s f a c t o r y to th e e sc r o w h o ld e r b e f o r e any fu n d s
a r e d is b u r s e d o r o th e r a c t i o n s ta k e n * I t i s w e l l , t h e r e
f o r e , f o r th e le n d e r to remem ber t h a t th e e sc r o w a g e n t i s
u n d er no o b l i g a t i o n to a c t i n c o n t r o v e r s i a l m a tte r s and he
may t h e r e f o r e a t any tim e s t o p th e p r o c e e d in g s and f o r c e
th e p a r t i e s t o th e e sc r o w to ta k e a c t io n * The d e la y and
th e l o s s o f u s e o f th e fin d s t h a t may h a v e b e e n d e p o s it e d
i n t o th e e sc r o w can be v e r y s e r i o u s • F or t h i s r e a s o n i t
i s a lw a y s w is e f o r th e le n d e r t o w ith h o ld th e d e p o s i t o f
i
any fu n d s u n t i l su ch tim e a s th e e sc r o w i s a c t u a l l y r e a d y
to c l o s e *
The r e s t o f th e p r o v is io n s i n th e e sc r o w i n s t r u c
t i o n s m e r e ly s e t f o r t h th o s e ite m s w h ic h a r e u s u a l to
e v e r y e s c r o w , su ch a s d e l i v e r y i n s t r u c t i o n s , t i t l e
in s u r a n c e i n s t r u c t i o n s , t i t l e v e s t i n g , t a x e s , e t c * I n
th e Bank o f A m erica e sc r o w I n s t r u c t io n s o f 195 1 under
c o n s id e r a t io n (S e e A p p en d ix A) t h e r e i s th e s ta te m e n t
t h a t th e e sc r o w a g e n t i s t o assum e t h a t a l l in s u r a n c e
______ — ,
1 8
prem ium s a r e p a id and t h e r e i s a f u r t h e r i n s t r u c t i o n
t h a t no e x a m in a tio n o r r e p o r t i s to be made on t a x e s •
The p r u d e n t le n d e r w ou ld r e q u ir e e v id e n c e t h a t th e f i r e
in s u r a n c e prem ium s had b e e n p a id and t h a t h e w ould a l s o
w ant to know t h a t t h e r e w ere no t a x l i e n s o f r e c o r d s He
s h o u ld , t h e r e f o r e , by amendment d e l e t e t h e s e two i n s t r u c
t i o n s and r e q u ir e a s e a r c h o f th e t a x r e c o r d s and e v id e n c e
o f paym ent o f in s u r a n c e prem ium s* S in c e e a c h in d iv i d u a l
e sc r o w com pany’ s e sc r o w i n s t r u c t i o n s may c o n t a in some
g e n e r a l p r o v is io n s o f t h i s n a tu r e th e le n d e r sh o u ld be
f a m i l i a r w ith th e i n s t r u c t i o n s , so t h a t h e may make th e
p r o p e r am endm ents i n o r d e r to p r o t e c t f u l l y h i s i n t e r e s t s .
I n o r d e r to p r o t e c t h i s i n t e r e s t s th e w is e le n d e r
w i l l p r o v id e f o r any c o n t in g e n c ie s i n th e e sc r o w i n s t r u c
t i o n s » A t a minimum h e sh o u ld make p r o v i s i o n s f o r th e
f o l lo w in g t e n ite m s :
1 . The ty p e o f p o l i c y o f t i t l e in s u r a n c e r e q u ir e d
and th e name o f th e company w h ich i s t o i s s u e th e p o l i c y ,
t o g e t h e r w ith a s t a te m e n t o f th e l i m i t o f l i a b i l i t y . The
t i t l e v e s t i n g a s shown i n th e p o l i c y s h o u ld be s t i p u l a t e d
a lo n g w ith th e name o f t h e p a r t y to be in s u r e d .
2 . A p r e lim in a r y r e p o r t ( d is c u s s e d i n th e n e x t
c h a p te r ) m u st be p r o v id e d f o r . The le n d e r sh o u ld a lw a y s
make an ir o n c la d r e q u ir e m e n t t h a t th e e sc r o w i s c o n t in g e n t
upon h i s a c c e p ta n c e and a p p r o v a l o f t h i s p r e lim in a r y
r e p o r t •
3 . A t e r m it e r e p o r t from a l i c e n s e d t e r m ite i n
s p e c t o r * The le n d e r sh o u ld p r o v id e f o r h i s a p p r o v a l o f
th e t e r m it e r e p o r t and he sh o u ld f u r t h e r p r o v id e t h a t th e
e sc r o w i s c o n t in g e n t upon t h i s a p p r o v a l*
4* A s ta te m e n t o f th e f i r e in s u r a n c e c o v e r a g e
r e q u ir e d t o g e t h e r w ith a r e q u ir e m e n t t h a t th e f i r e i n
su r a n c e he ap p roved by th e le n d e r sh o u ld be in c lu d e d •
5 * A r e q u ir e m e n t t h a t a l l t a x e s be p a i d •
6* A s ta te m e n t a s to th e t e r m in a t io n d a te o f th e
e sc r o w I n s t r u c t io n s * T h is t e r m in a tio n d a t e p r o v is io n
a llo w s th e le n d e r to l i m i t h i s lo a n com m itm ent to a
s p e c i f i c number o f d a y s and p r o v id e s f o r th e co m p lete
c a n c e l l a t i o n o f th e d e a l i n th e e v e n t i t i s n o t consum m ated
a s p la n n e d .
7 . S in c e th e le n d e r n o r m a lly p a y s no f e e s i n
c o n n e c tio n w ith th e m aking o f a r e a l e s t a t e lo a n , he
sh o u ld p r o v id e i n th e e sc r o w t h a t he i s to b e a t no e x
p e n se and t h a t th e b orrow er i s to p ay any and a l l f e e s t h a t
may be in c u r r e d *
8 . P r o v i s i o n sh o u ld be made f o r a t a x l i e n s e r v i c e
to be p a id f o r by b o rro w er* T h is s e r v i c e a t a minimum o f
e x p e n se ( u s u a l l y $ 7 .5 0 t o $ 1 0 .0 0 ) p r o v id e s th e le n d e r w ith
20 !
]
a n o t i f i c a t i o n o f any t a x e s o r l i e n s w h ich go a g a i n s t
th e p r o p e r ty w h ich I s s e c u r i t y f o r h i s l o a n ,
9 . The ty p e o f m o rtg a g e In str u m e n t r e q u ir e d sh o u ld
be s e t f o r t h t o g e t h e r w it h a s ta te m e n t o f th e term s o f th e
n o te •
10 • P r o v is io n s sh o u ld be s e t o u t a s t o when th e
docu m en ts may be r e c o r d e d and th e fu n d s ad van ced *
T h ese minimum e s s e n t i a l s o f e v e r y e se r o w sh o u ld be
s t r i c t l y a d h ered to * The e li m in a t i o n o f an y one o f t h e s e
p r o v is io n s m a k e s 'th e le n d e r * s p o s i t i o n l e s s s e c u r e and
d o e s '•not- a llo w him th e f u l l p r o t e c t i o n and c o n t r o l he \
sh o u ld h a v e i n c o n n e c tio n w it h th e lo a n t r a n s a c t io n #
I n s p e c i f i c s i t u a t i o n s many a d d i t io n a l p r o v is io n s may be
d e s i r a b l e *
T i t l e In su r a n c e p o l i c i e s , p r e lim in a r y r e p o r t s ,
and m o rtg a g e in s tr u m e n ts a r e d is c u s s e d i n s u c c e e d in g
c h a p te r s o f t h i s t h e s i s * The p r i n c i p l e s s e t f o r t h and th e
.recom m en d ation s d e v e lo p e d i n c o n n e c tio n w ith t h e s e d i s
c u s s io n s sh o u ld be in c o r p o r a te d i n th e e se r o w i n s t r u c t i o n s .
CHAPTER I I I
PRELIMINARY REPORT
A p r e lim in a r y r e p o r t i s th e w r i t t e n e v id e n c e f u r
n is h e d b y a t i t l e company c o n c e r n in g th e c o n d it io n o f th e
t i t l e to r e a l p r o p e r t y . T h is r e p o r t s e t s f o r t h a l l o f
t h o s e m a tte r s w h ich c o n c e r n th e p a r t i c u l a r p i e c e o f p r o
p e r t y on w h ich th e r e p o r t was w r i t t e n , The l e g a l d e s c r i p
t i o n , a l l l i e n s o f r e c o r d , e a s e m e n ts , r e s t r i c t i o n s , r e s e r
v a t i o n s , and r i g h t s a r e in c lu d e d e i t h e r by d e s c r i p t i o n o r
by r e f e r e n c e . Thus a p r e lim in a r y t i t l e r e p o r t c o n t a in s
th e l e g a l d e s c r i p t i o n o f th e la n d t o g e t h e r w ith a r e f e r e n c e
to th e r e c o r d in g d a t a on a l l m a tte r s o f r e c o r d a g a in s t
th e l a n d , T h is docum ent i s th e t i t l e com pany*s r e p o r t t o
th e ow n er, b u yer o r p r o s p e c t iv e le n d e r a s to w hat th e
t i t l e p o l i c y w i l l c o n t a in i n th e way o f e x c e p t i o n s , and
a s t o w h at I n t e r e s t s a tta c h e d to th e la n d i n th e t r a n s a c
t i o n , S in c e a l l t i t l e p o l i c i e s c o n t a in c e r t a i n s p e c i f i c
c o n d it io n s and e x c e p t io n s (w h ich a r e d is c u s s e d i n l a t e r
c h a p te r s ) we w i l l c o n s id e r h e r e o n ly t h o s e m a tte r s w h ich
I
do n o t a p p ea r i n th e sta n d a r d p r in t e d p o r t io n o f th e j
p o l i c y b u t r a th e r a s e x c e p t io n s on a s p e c i f i c p a r c e l o f 1
l a n d • A l l o f t h e s e m a tte r s w i l l be r e f e r r e d to i n th e
p r e lim in a r y r e p o r t .
82
The le n d e r i s c o n c e r n e d w ith th o s e t h in g s a b o u t th e
p r o p e r ty o f f e r e d a s s e c u r i t y w h ich m ig h t a d v e r s e ly a f f e c t
h i s i n t e r e s t . I t i s t h e r e f o r e e x tr e m e ly im p o r ta n t t h a t he
c a r e f u l l y exam in e th e p r e lim in a r y r e p o r t and f u l l y u n d e r
sta n d th e e f f e c t o f th e e x c e p t io n s sh o w n . I n some c a s e s j
th e m a tte r s o f r e c o r d on a s p e c i f i c p ie c e o f p r o p e r ty may !
i
consum e p age a f t e r p age o f m a t e r ia l* F o r t u n a t e ly , h o w e v e r ,!
from th e l e n d e r ’ s s t a n d p o in t many o f th e d e c l a r a t io n s o f !
c o v e n a n c e s , c o n d it io n s and r e s t r i c t i o n s f i l e d c o n t a in
I
c e r t a i n p r o t e c t i v e w o rd in g w h ich i n e s s e n c e s t a t e s t h a t j
th e p r o v is io n s t h e r e o f w i l l n o t a d v e r s e ly a f f e c t th e j
I
i n t e r e s t s o f a m o r tg a g o r . s u ch a p r o v i s i o n i s g e n e r a l ly |
i
r e f e r r e d to as a “s a v in g s c l a u s e . ” I f su ch a c la u s e i s j
j
c o n ta in e d i n th e r e p o r te d d o c u m e n ts, th e t i t l e company
w i l l s e t t h a t f a c t o u t i n th e p r e lim in a r y r e p o r t .
I n many c a s e s th e p r e lim in a r y r e p o r t w i l l g iv e a
v e r y b r i e f resum e o f th e m a t te r s c o v e r e d by d ocu m en ts o f
r e c o r d . T h is resum e w i l l a lw a y s s e t f o r t h th e r e c o r d in g |
i
r e f e r e n c e . Upon r e q u e s t , th e t i t l e company w i l l p r o v id e
a p h o t o s t a t i c co p y o f th e r e c o r d e d d ocu m en ts . In any c a s e j
w h ere th e t i t l e company d o e s n o t r e p o r t a “s a v in g s c l a u s e ” !
th e le n d e r sh o u ld r e q u ir e a p h o t o s t a t i c cop y o f th e j
r e c o r d e d d ocu m en ts • ^he p h o t o s t a t sh o u ld be c a r e f u l l y !
s c r u t i n i z e d and c o n s id e r a t io n sh o u ld be g iv e n by th e
i
le n d e r t o th e e f f e c t o f a l l s t i p u l a t i o n s and c o n d it io n s
c o n ta in e d t h e r e i n . S in c e th e v a r i e t y and number o f c o n d i
t i o n s w h ich m ig h t be im posed upon u s e , o ccu p a n cy o r ow n er
s h ip a r e l i m i t l e s s , i t i s im p o s s ib le t o do m ore th a n d i s -
e u s s a fe w o f th e more common ite m s .
The le n d e r sh o u ld be on th e lo o k o u t f o r any r e
s t r i c t i o n t h a t p r o v id e s t h a t a v i o l a t i o n t h e r e o f w i l l
c a u se th e la n d to r e v e r t t o a fo rm er o w n e r . T h is ty p e o f
c l a u s e , commonly known a s th e “r e v e r s i o n c l a u s e ," i s s e t
o u t a f t e r a l i m i t a t i o n o r a s e r i e s o f l i m i t a t i o n s upon
th e u se o f o c cu p a n c y o f th e p r o p e r t y . The r e v e r s i o n
c la u s e p r o v id e s t h a t i f any o f th e r e s t r i c t i o n s o r l i m i t
a t i o n s a r e v i o l a t e d th e t i t l e to th e p r o p e r ty s h a l l be
v e s t e d i n a c e r t a i n p a r t y . I t can be e a s i l y s e e n t h a t
t h i s ty p e o f c la u s e m ig h t o f f e r a g r e a t d a n g e r to a
l e n d e r , s i n e e a v i o l a t i o n o f any o f th e p r o v is io n s m ig h t
v e s t th e t i t l e i n p a r t i e s o th e r th a n th e r e c o r d o w n er .
I f a “s a v in g s c la u s e " i s in c lu d e d i n th e r e s t r i c t i o n s ,
th e n o f c o u r s e t h e r e i s no c o n c e r n . I f su c h a p r o t e c t i v e
c o v e n a n t d o e s n o t a p p e a r , th e le n d e r sh o u ld be v e r y
c o g n iz a n t o f th e f a c t t h a t h i s t i t l e t o th e p r o p e r ty may
be je o p a r d iz e d by a v i o l a t i o n o f on e o f th e p r o v is io n s
o f th e r e c o r d e d r e s t r i c t i o n s • I n s t i t u t i o n a l le n d e r s w i l l
n o t a c c e p t p r o p e r ty a s s e c u r i t y p r o p e r ty on w h ich
2 4
r e s t r i c t i o n s a r e r e c o r d e d w h ich p r o v id e f o r r e v e r s io n
u n le s s th e r e s t r i c t i o n a l s o c o n t a in s th e " s a v in g s c la u s e * 1 1
R ecord ed r e s t r i c t i o n s many tim e s l i m i t th e u s e ,
ty p e o f s t r u c t u r e , number o f sq u a r e f e e t , s e t - b a c k , k e e p in g
o f a n im a ls , and many o t h e r t h in g s * The le n d e r m u st exam in e
a l l o f th e r e s t r i c t i o n s t o s e e t h a t th e y do n o t u n d u ly
b u rd en th e p r o p e r ty and h e m u st a s s u r e h im s e lf t h a t t h e s e
r e s t r i c t i o n s a r e n o t d e t r im e n t a l t o h i s i n t e r e s t s * Thus
a le n d e r who w as c o n te m p la tin g a lo a n s e c u r e d by r e a l
p r o p e r ty , th e p r o c e e d s o f w h ich w ere t o be u sed t o b u ild
a sh op b u ild in g on th e p r o p e r t y , w ould be u n w illin g t o
ad van ce th e fu n d s i f he fou n d d eed r e s t r i c t i o n s w h ich
p r o h ib it e d th e e r e c t i o n o f any b u ild in g f o r n o n - r e s i d e n t i a l
u s e * He w ou ld be u n w illin g to le n d i f h e d is c o v e r e d t h a t
th e r e s t r i c t i o n s demanded an a c c e p ta n c e o f p la n s f o r a l l
p r o p o sed b u ild in g s by an a r c h i t e c t u r a l c o m m itte e , i f h i s
b orrow er had n o t p r e s e n t e d and r e c e iv e d a p p r o v a l o f h i s
p la n s •
Many la n d p a r c e ls h a v e r e c o r d e d e a se m e n ts *^ S in c e
^ An e a se m e n t i s an i n t e r e s t i n th e la n d o f
a n o th e r w h ich e n t i t l e s th e owner o f su c h i n t e r e s t to a
l im i t e d u s e o r en jo y m en t o f th e la n d i n w h ich th e i n t e r e s t
e x i s t s . I t i s a l s o d e f in e d a s a l i b e r t y , p r i v i l e g e or
a d v a n ta g e i n la n d e x i s t i n g d i s t i n c t from th e o w n ersh ip
o f t h e s o i l .
25
th e s e t h in g s may g r e a t l y a f f e c t th e v a lu e o f th e p r o p e r ty ,
th e w is e le n d e r c a r e f u l l y c o n s id e r s th e e f f e c t o f su ch
m a tte r s o n p r o p e r ty h e p r o p o s e s to ta k e a s c o l l a t e r a l * An
ea sem e n t i s g e n e r a l ly c r e a te d by g r a n t o r a g reem en t and i s
g e n e r a l ly t r a n s f e r r e d and e n jo y e d s u b j e c t t o th e r u le s
g o v e r n in g r e a l p r o p e r ty * I t i s an i n t e r e s t i n th e la n d o f
a n o th e r and one c a n n o t a s a r u le h a v e an e a se m e n t i n h i s
own la n d * I t i s a n o n - p o s s e s s o r y i n t e r e s t i n th e l a n d .
The owner o f th e e a se m e n t i s n o t e n t i t l e d t o th e p r o t e c t i o n
g iv e n to th o s e h a v in g p o s s e s s o r y i n t e r e s t s • The owner o f
a p o s s e s s o r y I n t e r e s t I n la n d may e x c lu d e o t h e r p e r so n s
from th e u s e o r p o s s e s s i o n o f th e la n d w h e th e r h e i s i n
a c t u a l p o s s e s s i o n o f th e la n d o r n o t: b u t t h e owner o f an
e a sem e n t h a s o n ly su c h c o n t r o l on th e la n d a s i s n e c e s s a r y
to e n a b le him to u s e th e e a sem e n t* O r d in a r ily he h as no
su ch c o n t r o l a s to e n a b le him to e x c lu d e o t h e r s from
m aking any u s e o f th e la n d w h ich d o e s n o t i n t e r f e r e w it h
h i s e n jo y m en t o f th e e a sem e n t* An e a se m e n t in v o lv e s
p r im a r ily th e p r i v i l e g e o f d o in g a c e r t a i n c l a s s o f a c t i o n
to th e d e t r im e n t o f a n o th e r * s l a n d .
I t i s v e r y common, e s p e c i a l l y i n u rb an a r e a s , f o r
s o - c a l l e d ”p u b lic u t i l i t i e s * 1 1 e a se m e n ts to be g r a n te d a t
i
th e tim e a p a r c e l o f la n d i s s u b d iv id e d . I n th e m ain
th e s e e a se m e n ts w i l l i n no way a f f e c t th e v a lu e o f th e
26 i
i
p r o p e r ty n o r w i l l th e y be o f any c o n c e r n to th e le n d e r *
H ow ever, I n e a c h c a s e , th e le n d e r m u st a s s u r e h im s e lf t h a t
i
th e e a se m e n ts on a p a r c e l do n o t a d v e r s e ly a f f e c t th e
v a lu e o r o f f e r a p o t e n t i a l c a u se o f damage o r e x p e n se t o
th e p r o p e r t y . G e n e r a lly th e “p u b lic u t i l i t y " ea sem en t
i s l i m i t e d to a s p e c i f i c p o r t io n o f th e l o t , su ch a s th e
r e a r f i v e f e e t , and p r o v id e s f o r su c h t h in g s a s th e
e r e c t i o n , m a in te n a n c e and r e p a ir s o f p o l e s , l i n e s and
c o n d u it s , e t c . An e a se m e n t o f t h i s ty p e w h ich i s lo c a t e d
( s p e c i f i c a s t o i t s l i m i t s ) o f f e r s no o b j e c t i o n a s lo n g a s
th e le n d e r a s s u r e s h im s e lf t h a t th e l o c a t i o n i s n o t d e t r i
m e n ta l to th e s t r u c t u r e s on th e p r o p e r ty o r th e u s e o f th e
l a n d . I f , h o w e v e r , th e e a se m e n ts a r e u n lo c a te d o r
" w a n d er in g , lt th e n th e le n d e r m u st a s s u r e h im s e lf t h a t th e
e a sem e n t w i l l n o t be e x e r c i s e d o r h e m u st s e e k in d e m n ity
, a g a i n s t p o s s i b l e l o s s d u e to th e e x i s t e n c e o f th e e a s e m e n t.
f
An u n lo c a te d o r “w an d erin g" e a se m e n t i s one i n w h ich i t
i s s im p ly r e c i t e d t h a t c e r t a i n t h in g s may be e r e c t e d o n ,
o v e r , o r u n d er th e la n d w it h o u t d e s ig n a t in g s p e c i f i c a l l y
th e c o n f in e s o r l i m i t s w it h in w h ich t h i s w ork m ig h t be
d o n e . I f t h i s ty p e o f e a se m e n t e x i s t s , i t m ig h t be
p o s s i b l e t h a t a p o le c o u ld be e r e c t e d i n th e m id d le o f
th e f r o n t o r b a ck y a r d , an i r r i g a t i o n d i t c h m ig h t be dug
b e s id e o r u n d er th e h o u s e , h ig h t e n s i o n w ir e s m ig h t be
e x te n d e d d i r e c t l y o v e r t h e s t r u c t u r e o r any one o f a
number o f s i m i l a r p r o j e c t s m ig h t b e u n d e r ta k e n . I t ca n
e a s i l y be s e e n t h a t any u n d e r ta k in g o f t h i s ty p e m ig h t
s e r i o u s l y a f f e c t th e v a lu e o f th e c o l l a t e r a l •
R ig h t - o f - w a y s sh o u ld be c o n s id e r e d i n th e same
m anner a s o t h e r e a s e m e n t s . R ig h t -o f-w a y s p r o v id e f o r
p a s s a g e a c r o s s o r th r o u g h p r o p e r ty f o r su ch t h in g s a s
r o a d s , d r iv e w a y s , p a t h s , e t c . The e x i s t e n c e o f a r i g h t -
o f-w a y may m ean t h a t th e u s e o f la n d i s l i m i t e d b e c a u se
o th e r p a r t i e s w i l l b e a b le to c r o s s th e p r o p e r t y . T h ese
c ir c u m s ta n c e s may b e d e t r im e n t a l t o th e v a lu e o f th e r e a l
e s t a t e . I t , i s e n t i r e l y p o s s i b l e t h a t an o ld r ig h t - o f - w a y
h a s lo n g s i n c e b een f o r g o t t e n . The p r e s e n t ow ners o f th e
p r o p e r ty may n o t e v e n be aw are o f i t s e x i s t e n c e . I n f a c t ,
th e y may h ave e r e c t e d p erm an en t s t r u c t u r e s o r im provem ents
i n th e r i g h t - o f - w a y . I f th e y h ave done t h i s , th e e x e r c i s e
o f th e p r i v i l e g e o f th e r ig h t - o f - w a y m ig h t s e r i o u s l y
im p a ir t h e i r p r o p e r ty v a l u e . I t may b e t h a t no s t r u c t u r e
h a s b e e n e r e c t e d upon th e r ig h t - o f - w a y b u t th r o u g h lo n g
d i s u s e th e ow n ers h a v e come to c o n s id e r t h a t i t i s o f no
im p o r ta n c e . H ow ever, a ch an ge i n c ir c u m s ta n c e m ig h t
| r e q u ir e th e r e n e w a l o f th e u s e o f th e r ig h t - o f - w a y w ith
f
a r e s u lta n t lo w erin g in land v a lu e s . An i l l u s t r a t i o n
o f th e lo w erin g o f p ro p erty v a lu e s i s th e r e e sta b lish m e n t
j^~l
I
o f a lo n g d is u s e d b r i d l e and f o o t p a t h , w h ich had a r i g h t -
o f-w a y th r o u g h th e r e a r yard and p a t i o o f a hom e. The
r e s u l t a n t l o s s i n p r iv a c y and r e s t r i c t i o n i n th e u se o f j
th e b ack yard w ould i n a l l p r o b a b i l i t y g r e a t l y lo w e r th e
p r o p e r ty v a l u e . I f su ch a th in g sh o u ld h ap p en a le n d e r
m ig h t f i n d t h a t h i s c o l l a t e r a l i s w o rth c o n s id e r a b ly l e s s
th a n th e lo a n s ta n d in g a g a i n s t i t , Ih e w is e le n d e r w i l l
c o n s id e r a l l o f th e p o s s i b i l i t i e s b e f o r e h e m akes an
ad van ce a g a i n s t p r o p e r ty on w h ich th e r e a r e r ig h t - o f - w a y s
o r e a se m e n ts o f r e c o r d , He may r e q u ir e t h a t th e r i g h t s
be q u it c la im e d b e fo r e h e m akes h i s lo a n o r he may r e q u ir e
t h a t th e t i t l e in s u r e r g r a n t s p e c i f i c in d e m n ity c o v e r in g
any l o s s t h a t m ig h t a r i s e b e c a u se o f t h e e x e r c i s e o f any
o f t h e s e r i g h t s .
I n many i n s t a n c e s fo rm er ow n ers o f r e a l p r o p e r ty
h ave r e t a in e d c e r t a i n r i g h t s i n th e l a n d . The d eed by
w h ich th e y g r a n te d th e p r o p e r ty s e t s f o r t h t h o s e i n t e r e s t s
w h ich a r e b e in g con veyed and th o s e w h ich a r e b e in g r e ta in e d ,,
The m o st common r e s e r v a t i o n i s t h a t w h ich r e s e r v e s th e
m in e r a l r i g h t s a n d /o r o i l , g a s and h y d r o -c a r b o n s , I n
i
| many c a s e s t h i s r e s e r v a t i o n c a r r i e s w it h i t th e r i g h t to
j e n t e r upon th e la n d f o r th e p u r p o se o f m in in g , d i g g i n g ,
d r i l l i n g o r o t h e r w is e c a u s in g th e rem o v a l o f s a id m i n e r a l s •
S in c e t h e ow ner o f th e la n d may n o t be com p en sated f o r t h i s
29
e n t r y i t i s a p p a r e n t t h a t he m ig h t s u f f e r c o n s id e r a b le
m o n eta ry l o s s . I t i s e n t i r e l y p o s s i b l e t h a t th e s u r f a c e
v a lu e o f th e p r o p e r ty c o u ld b e a lm o s t c o m p le te ly o b l i t e r a
te d , s i n c e many m in in g o r d r i l l i n g o p e r a t io n s c a u se
su r r o u n d in g s u r f a c e c o n d it io n s w h ich a r e n o t c o n d u c iv e
to h ig h s u r f a c e v a l u e s • The le n d e r i s e s p e c i a l l y
i n t e r e s t e d i n any m a tte r w h ich m ig h t a d v e r s e ly a f f e c t h i s
c o l l a t e r a l and he t h e r e f o r e sh o u ld ta k e s p e c i a l c a r e i n
e x a m in in g th e r i g h t s o f th e ow ners o f m in e r a l r e s e r v a t i o n s •
M in e r a l r i g h t s a r e many tim e s r e s e r v e d b u t th e r e s e r v a t i o n
in c lu d e s a s t a te m e n t t h a t th e r e s h a l l be no r i g h t o f
I
s u r f a c e e n t r y . I n t h o s e c a s e s w here t h e r e i s no r i g h t o f
s u r f a c e e n t r y , th e m in e r a l r e s e r v a t i o n i s o f l i t t l e
c o n se q u e n c e t o a le n d e r *
I t i s f a i r l y common t o f in d i n th e p r e lim in a r y
r e p o r t t h a t a h om estead h a s b een f i l e d a g a i n s t th e p r o p e r
t y . The f i l i n g o f a h o m estead p r o t e c t s a home o f l im i t e d
v a lu e from e x e c u t io n o r fo r c e d s a l e i n s a t i s f a c t i o n o f
c e r t a i n d e b t s • I t p r e s e r v e s th e h o m estea d o f th e husband
and w if e by r e s t r i c t i n g i t s co n v ey a n ce o r encum berance by
one sp o u se w ith o u t th e c o n s e n t o f th e o t h e r . A d e c l a r a t i o n
o f h o m estea d c r e a t e s no new o r a d d i t io n a l t i t l e . I t m e r e ly
g i v e s c e r t a i n p r i v i l e g e s and im m u n itie s to su ch t i t l e a s
i s h e ld a t th e tim e th e d e c l a r a t i o n becom es e f f e c t i v e •
3 0 !
t
The C a l i f o r n ia S t a t e C o n s titu tio n * ’p r o v id e s f o r th e p r o t e c
t i o n o f th e h o m estead r i g h t . The e x t e n t o f th e h om estead
i
r i g h t and th e mode o f i t s p r o t e c t i o n from th e c la im s o f
c r e d i t o r s a r e p u r e ly m a tte r s o f l e g i s l a t i v e p r e s c r i p t i o n ,
w h ich th e c o u r ts ca n o n ly c o n s tr u e and a p p ly * S e c t io n
1241 o f th e C i v i l Code p r o v id e s t h a t th e h om estead i s
s u b j e c t t o e x e c u t io n o r f o r c e d s a l e i n s a t i s f a c t i o n o f
ju d gm en ts o b ta in e d :
( 1 ) B e fo r e th e d e c l a r a t i o n o f h o m estea d w as f i l e d
f o r r e c o r d , and w h ich c o n s t i t u t e l i e n s upon
th e p r e m is e s ;
( 2 ) On d e b ts s e c u r e d by m e c h a n ic s , c o n t r a c t o r s ,
s u b c o n t r a c t o r s , a r t i s a n s , a r c h i t e c t s , b u i l d e r s ,
la b o r e r s o f e v e r y c l a s s , m a te r ia lm e n 's or
v e n d o r 's l i e n s upon th e p r e m is e s ;
( 3 ) On d e b ts se c u r e d by m o r tg a g e s ( o r t r u s t d e e d s )
on th e p r e m is e s , e x e c u te d and ack n ow led ged by
husband and w i f e , o r by an u n m arried c la im a n t;
/
( 4 ) On d e b t s s e c u r e d by m o r tg a g e s ( o r t r u s t d e e d s )
on th e p r e m is e s , e x e c u te d and r e c o r d e d b e f o r e
th e d e c l a r a t i o n o f h o m estead was f i l e d f o r
r e c o r d .
I t ca n e a s i l y be s e e n from a r e v ie w o f t h i s s e c t i o n
o f th e Code t h a t th e le n d e r n eed n o t be co n c er n e d w ith th e
D e c la r a t io n o f H om estead i f th e h o m estea d c la im a n ts j o i n
in t o th e e x e c u t io n o f th e m o rtg a g e in s tr u m e n ts • I f any
1 C o n s t i t u t i o n . A r t i c l e X V II, S e c . 1 .
d o u b t a r i s e s a s to th e p r o p e r r e q u ir e d s i g n a t u r e s , th e
le n d e r s h o u ld r e q u ir e t h a t th e h om estead b e abandoned*
I f t h i s i s d o n e , t h i s e x c e p t io n to c le a r t i t l e w i l l be
e lim in a t e d from th e t i t l e r e p o r t and w i l l h a v e no e f f e c t
w h a ts o e v e r upon th e m ortgage* in s tr u m e n t .
The p r u d e n t le n d e r w i l l make a th o r o u g h s tu d y o f
th e p r e lim in a r y r e p o r t , c o v e r in g th e p a r c e l on w h ic h h e i s
t o ad van ce fu n d s • Any e x c e p t io n s to c l e a r t i t l e sh o u ld be
i n v e s t i g a t e d th o r o u g h ly and no fu n d s sh o u ld be ad van ced
u n t i l th e le n d e r i s f u l l y s a t i s f i e d t h a t n on e o f th e
e x c e p t io n s s e t o u t m ig h t i n any w ay p r e j u d ic e h i s i n t e r e s t .
I t may e v e n be d e s i r a b l e i n some e s p e c i a l l y c o m p lic a te d
s i t u a t i o n s to o b t a in th e a d v ic e o f c o u n s e l . I f th e m a tte r
u n d er c o n s id e r a t io n m ig h t j e o p a r d iz e th e l e n d e r ’ s i n t e r e s t
i n any way he sh o u ld e i t h e r n o t make th e lo a n o r h e sh o u ld
I
I r e q u ir e t h a t th e m a tte r be e lim in a t e d from t h e e x c e p t io n
i n th e t i t l e p o l i c y . I t many tim e s h ap p en s t h a t o b j e c t i o n
a b le m a tt e r s ca n be e lim in a t e d by th e p o s t in g o f an
in d e m n ity bond w ith th e t i t l e com pany. The le n d e r m u st
The e li m in a t i o n o f c e r t a i n e a se m e n ts o f r e s t r i c
t i o n s t h a t ru n w ith th e la n d can i n many i n s t a n c e s be
a c c o m p lish e d by a n e g o t i a t i o n b e tw e e n th e ow ner and th e
t i t l e com pany. The t i t l e company b a s e s i t s p r o c e d u r e upon
p a s t c o u r t d e c i s i o n s r e n d e r e d i n s i m i l a r c a s e s . I f th e
t i t l e company f e e l s t h a t p a s t d e c i s i o n s a r e s u f f i c i e n t l y
i n d i c a t i v e o f th e f e e l i n g s o f . th e c o u r ts th e y w i l l , f o r a
f e e i n th e form o f a bond p r e m iu m ,e lim in a te c e r t a i n ite m s •
remember t h a t th e p r e lim in a r y r e p o r t i s th e t i t l e company* s
s ta te m e n t o f th e m a tte r s a g a in s t w h ich i t o f f e r s no p r o
t e c t i o n and h e m u st a lw a y s be c o g n iz a n t o f th e f a c t t h a t
t h e s e m a tte r s may be e x tr e m e ly d e t r im e n t a l t o h i s i n t e r
e s t s »
CHAPTER IV
MORTGAGES
P r o b a b ly th e m o st im p o r ta n t docum ent from th e
le n d e r * s s t a n d p o in t i n a lo a n t r a n s a c t i o n , i s th e m o'rtgage
o r th e d eed o f t r u s t . I t i s im p o r ta n t t h a t th e le n d e r
u n d e r sta n d th e p r i n c i p l e s and t h e o r i e s o f th e m o rtgage
and th e m o rtg a g e t r a n s a c t io n s i n c e th e t r u s t d eed i s
a c t u a l l y o n ly a m o rtg a g e w ith c e r t a i n added p o w e r s. The
p r i n c i p l e s a p p ly in g t o m o r tg a g e s a p p ly e q u a lly t o t r u s t
d e e d s e x c e p t i n th e m eth od s o f f o r e c l o s u r e . M ortgages
a r e d i s c u s s e d i n t h i s c h a p te r and i n th e f o l lo w in g c h a p te r
th e t r u s t d eed i s c o n s id e r e d . I n th e c h a p te r c o v e r in g
t r u s t d e e d s , th e s i m i l a r i t i e s and d i f f e r e n c e s b e tw e en
th e t r u s t d eed and th e m o rtg a g e a r e s t r e s s e d . The le n d e r
sh o u ld a lw a y s k eep i n m ind t h a t t h e t r u s t d eed i s o n ly a
m o rtg a g e w ith a s p e c i a l pow er o f s a l e and t h a t p r i n c i p l e s
a p p ly in g t o m o r tg a g e s a p p ly e q u a lly to t r u s t d e e d s .
I n th e U n ite d S t a t e s th e r e a r e two g e n e r a l u n d e r
l y i n g t h e o r i e s o f m o r tg a g e s . One th e o r y h o ld s t h a t a
m o rtg a g e i s m e r e ly a l i e n upon p r o p e r ty ; w h ile th e o t h e r
th e o r y h o ld s t h a t th e m o rtg a g e a c t u a l l y p a s s e s t i t l e d *
^ S u b je c t to the r ig h t o f r e g a in in g th e t i t l e by
f u l f i l l i n g th e c o n d itio n s o f th e o b l i g a t i o n .________________
34
C a l i f o r n i a , a t an e a r l y d a t e , a d o p ted t h e " l i e n th eo ry "
o f m o r tg a g e s . I t , h o w e v e r , a d o p ted th e " t i t l e " th e o r y
i n r e f e r e n c e s to d e e d s o f t r u s t . M ost s t a t e s r e g a r d t r u s t
i
d e e d s s im p ly a s m o rtg a g e s w it h th e pow er o f s a l e • I n
C a l i f o r n i a , h o w e v e r , th e d i s t i n c t i o n b e tw e en m o r tg a g e s and ;
t r u s t d e e d s h a s becom e so w e l l s e t t l e d t h a t i t c a n n o t now
be d is tu r b e d • The t h e o r y f o l lo w s t h a t by u s e o f th e t r u s t
d eed t i t l e to th e p r o p e r ty i s a c t u a l l y co n v ey ed to th e
t r u s t e e who r e t a i n s su ch t i t l e u n t i l th e d e b t i s s a t i s f i e d
o r th e p r o p e r ty i s d is p o s e d o f t o e n f o r e e p a y m e n ts»
M o rtg a g es a r e v e r y seld o m u se d i n C a l i f o r n i a . I n a r e a l
e s t a t e le n d in g c o n f e r e n c e , th e Bank o f A m erica e s t im a t e d
t h a t f i f t y th o u sa n d t r u s t d e e d s w ere u se d by t h e i r o r g a n i
z a t i o n t o e v e r y one m o r tg a g e . I t i s w e l l , h o w e v e r , t h a t
th e le n d e r on r e a l p r o p e r ty h a s some k n o w led g e o f th e
e f f e c t and th e o r y o f m o r tg a g e s , s i n c e th e u n d e r ly in g
p r i n c i p l e s a p p ly e q u a lly t o th e t r u s t d e e d .
A m o rtg a g e i s a c o n t r a c t by w h ich s p e c i f i c p r o p e r ty
i s h y p o th e c a te d f o r th e p e r fo r m a n c e o f an a c t w it h o u t th e
n e c e s s i t y o f a ch an ge o f p o s s e s s i o n . 2 I t d o e s n o t o p e r a te
a s a t r a n s f e r o f t i t l e , no m a tte r w hat i t s te r m s , p r i o r
to f o r e c l o s u r e and s a l e . A m o rtg a g e im p o ses a l i e n upon
2 C iv il Code 2 9 3 0 .
35
th e p r o p e r ty to s e c u r e p e r fo r m a n c e o f . t h e o b l i g a t i o n i n
fa v o r o f th e m o rtg a g e e ( l e n d e r ) . In o r d e r to c r e a t e a
m o rtg a g e t h e r e m ust be tw o b a s i c e le m e n ts : f i r s t , a
d e b t; a n d , s e c o n d , a p le d g e o f p r o p e r ty to s e c u r e t h a t
d e b t . I f e i t h e r i s la c k in g no m o rtg a g e can r e s u l t .
I f t h e r e i s a d e b t and a c o n v e y a n c e o f r e a l p r o p e r
t y a s s e c u r i t y f o r th e d e b t t h e r e i s a m o r tg a g e . T h is
h o ld s tr u e i r r e s p e c t i v e o f th e form i n w h ich th e p a r t i e s
h ave c lo t h e d th e t r a n s a c t i o n . The law g i v e s th e m o rtg a g o r
a r i g h t o f r e d e m p tio n , w h ich h e c a n n o t w a iv e , r e l e a s e , o r
c o n v e y by any a g reem en t c o n ta in e d i n th e m o rtg a g e i t s e l f •
E ven th ou gh th e p a r t i e s e x p r e s s l y c o n t r a c t t o th e c o n tr a r y
t h i s r i g h t o f r e d e m p tio n can be e x t in g u is h e d o n ly by a c tio n ,
s u b s e q u e n t to th e o r i g i n a l t r a n s a c t i o n . T h is s u b s e q u e n t
a c t i o n m ig h t ta k e th e form o f a l e g a l f o r e c l o s u r e o r i t
m ig h t be a su b s e q u e n t c o n v e y a n c e from th e m o rtg a g o r by
w h ich h e r e l e a s e s and c o n v e y s h i s e q u i t y o f r e d e m p tio n .
A m o rtg a g e ca n be c r e a t e d , r e n e w e d , o r e x te n d e d
o n ly i n w r i t i n g , e x e c u te d w it h th e f o r m a l i t i e s r e q u ir e d
i n th e e a s e o f a g r a n t o f r e a l p r o p e r t y .3 A m o r tg a g e ,
p r o p e r ly e x e c u t e d , a c k n o w le d g e d , o r p r o v e d , i s e n t i t l e d to
3 C a lifo r n ia Code 2 9 2 2 .
be r e c o r d e d ; i t ta k e s th e same p r i o r i t y and p r o t e c t i o n
from r e c o r d in g a s a g r a n t* T i t l e a c q u ir e d by th e m o r tg a
g o r s u b s e q u e n t to t h e e x e c u t io n o f th e m o rtg a g e in u r e s to
th e m o rtg a g e e a s s e c u r i t y f o r th e d e b t * 4
The m o rtg a g e i s an i n c id e n t o f th e d e b t o r o b l i g a
t i o n s e c u r e d ; t h e r e f o r e , t h e r e can be no m o rtg a g e w ith o u t
su ch d e b t o r o b l i g a t i o n . ^ I t i s n o t e s s e n t i a l t h a t th e
m o rtg a g e i t s e l f c o n t a in a d e s c r i p t i o n o f th e o b l i g a t i o n .
I t i s o n ly n e c e s s a r y t h a t t h e r e be an o b l i g a t i o n t o be
p erform ed and t h a t t h i s be s u f f i c i e n t l y r e c i t e d i n th e
m o rtg a g e to p u t th o s e i n t e r e s t e d upon i n q u i r y . H ow ever,
a m o rtg a g e r e c i t i n g o n ly t h a t i t s e c u r e s a s p e c i f i c d e b t
c a n n o t be made to c o v e r o t h e r o b l i g a t i o n s * I t sh o u ld be
n o te d t h a t an In str u m e n t e x e c u te d by th e ow ner and
d e l iv e r e d to th e le n d e r w ith i n t e n t to make r e a l p r o p e r ty
s e c u r i t y f o r an o b l i g a t i o n i s a m o rtg a g e and t h a t i t
c r e a t e s o n ly a l i e n and i s e n f o r c e a b le a s su c h and n o t
o th e r w is e ( u n l e s s i t i s a t r a n s f e r i n t r u s t ) . T h u s, an
a b s o lu t e d e e d , in te n d e d a s s e c u r i t y , w i l l be t r e a t e d by
^ C a l i f o r n ia Code 2 9 3 0 .
5 W e ste r n Loan & B u ild in g Company v . S c h e ib , 218
C a l• 3 8 6 , i t was h e ld t h a t th e l i e n d id n o t a t t a c h p r i o r
t o t h e d e l i v e r y o f th e n o t e to th e le n d e r •
57
th e c o u r ts a s n o th in g m ore th a n a m o r tg a g e , e x c e p t as
a g a i n s t a good f a i t h p u r c h a s e r from th e g r a n te e r e l y i n g
upon th e a b s o lu t e c h a r a c te r o f th e c o n v e y a n c e , and w it h o u t
i
k n ow led ge o r n o t i c e o f th e r i g h t s o f th e g r a n t o r .
A m o r tg a g e , b e in g o n ly a l i e n , d o e s n o t ch an ge th e
t i t l e o f th e m o rtg a g o r * He rem a in s th e ow ner and may
c o n v e y , im p r o v e , o r f u r t h e r encum ber th e p r o p e r ty ; i n f a c t
he may e x e r c i s e a l l o f th e r i g h t s he p o s s e s s e d a t th e
tim e o f th e m o rtg a g e o r s u b s e q u e n t ly a c q u ir e d . H ow ever,
h e i s s u b j e c t a lw a y s to th e l i e n o f th e m o rtg a g e and th e
r i g h t s o f th e m o r tg a g e e .
Any p e r s o n , fir m o r c o r p o r a t io n w h ich h as th e
l e g a l c a p a c it y to a c t may p la c e a m o rtg a g e upon h i s p r o -
p e r t y . Any p e r s o n , fir m o r c o r p o r a t io n ( o t h e r th a n th e
m o r tg a g o r ) c a p a b le o f h o ld in g r e a l e s t a t e may be a
m o r tg a g e e .7 E v e ry s p e c i e s o f o r i n t e r e s t i n r e a l p r o p e r ty
w h ich can be made th e s u b j e c t o f a g r a n t o r t r a n s f e r may
be m o r tg a g e d . The ow ner o f p r o p e r ty may m o rtg a g e a p a r t ;
he may m o rtg a g e th e g e n e r a l e s t a t e i n th e la n d r e s e r v in g
^ S u b j e c t a lw a y s , o f c o u r s e , to th e com m unity p r o
p e r t y la w s and th e i n s t r u c t i o n s o f th e a p p r o p r ia te c o u r ts |
o r d o c u m e n ts, i n th o s e c a s e s w here th e p a r t i e s a r e a c t i n g
u n d er g u a r d ia n s h ip o r t r u s t e e s h i p .
7 S u b j e c t , h o w e v e r , to any r e s t r i c t i v e la w , c o n t r a c t
o r t r u s t p r e v e n tin g th e m aking o f th e lo a n o r th e a c c e p t in g
o f t h e o b l i g a t i o n .________ j
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------I
38 !
th e m in e r a ls t h e r e in ; h e may m o rtg a g e th e m in e r a ls ; he j
may m o rtg a g e an u n d iv id e d i n t e r e s t o r o n ly th e r e n t s and J
i
p r o f i t s •
The m o rtg a g e i s m e r e ly an i n c i d e n t o f th e o b l i g a
t i o n . When th e o b l i g a t i o n i s s a t i s f i e d , th e m o rtg a g e
c e a s e s to be m ore th a n a c lo u d on th e t i t l e and th e d i s
c h a r g e t h e r e o f , o f r e c o r d , ca n be c o m p e lle d .8 I t i s n o t
e s s e n t i a l t h a t th e m o rtg a g e c o n t a in th e p a r t i c u l a r s o f th e
o b l i g a t i o n , o r a cop y o f th e n o te o r o t h e r in s tr u m e n t
e v id e n c in g th e sam e, o r t h a t th e am ount t h e r e o f b e s t a t e d .
I t i s o n ly n e c e s s a r y t h a t t h e r e be a d e b t or d u ty to be
p erform ed and t h a t t h i s i s r e c i t e d i n th e m o r tg a g e . I t I s
s u f f i c i e n t i f th e in s tr u m e n t c o n t a in s su c h f a c t s a s w i l l
le a d an i n t e r e s t e d p a r ty t o a s c e r t a i n th e r e a l s t a t e o f
th e en cu m b ra n ce. The o b l i g a t i o n may b e a d e b t o f f i x e d
am ount th e n ow in g th e m o r tg a g e e , o r a l l e x i s t i n g in d e b t e d
n e s s o f th e m o rtg a g o r t o th e m o r tg a g e e , o r e i t h e r o f
t h e s e and a l l sums a fte r w a r d ad van ced by th e m o rtg a g e e
t o th e m o rtg a g o r w h e th e r o b l i g a t o r y o r o p t io n a l; b u t th e
m o rtg a g e c o n s t i t u t e s s e c u r i t y o n ly f o r su ch o b l i g a t i o n s
a s a r e s u f f i c i e n t l y i d e n t i f i e d o r r e f e r r e d t o t h e r e i n
to p u t a p r u d e n t p e r s o n on i n q u i r y .
8 C a lifo r n ia Code 2491•
- — _ l
I
U n le s s th e m o rtg a g e b y i t s term s i s made s e c u r i t y
f o r f u t u r e a d v a n ce s o r in d e b te d n e s s i t s e c u r e s o n ly th e
e x i s t i n g o b l i g a t i o n and o n c e t h i s i s r ed u c ed a f u r t h e r
lo a n may n o t be made on s e c u r i t y o f th e m o rtg a g e e v e n
th ou gh t h i s a d d i t io n a l ad v a n ce a g g r e g a te d l e s s th a n th e
o r i g i n a l t o t a l am ount o f th e o b l i g a t i o n . I t i s e n t i r e l y
p o s s i b l e t o make a m o rtg a g e t h a t w i l l s e c u r e f u r t h e r o r
f u t u r e a d v a n c e s . H ow ever, th e p r i o r i t y o f su c h a m o r t
g a g e i n s o f a r a s t h e s e f u r t h e r a d v a n ce s a r e co n cern ed
d ep en d s upon w h e th e r th e a d v a n ce s a r e o b l i g a t o r y o r
o p t io n a l and i f w h e th e r i n m aking th e o p t i o n a l a d v a n ce s
t h e r e was any k n ow led ge by th e le n d e r o f in t e r v e n in g
r i g h t s .
A p u r c h a se money m o r tg a g e , i . e . , a m o rtg a g e g iv e n
by th e p u r c h a s e r to s e c u r e a p o r t io n o f th e p u r c h a se p r i c e
i o f th e m o rtg a g e p r o p e r t y , i s s u p e r io r t o a l l o t h e r l i e n s
9
c r e a te d a g a i n s t th e p u r c h a s e r . The d e e d and m ortgage
b ack a r e c o n s id e r e d a s con tem p oran eou s a c t s and no l i e n
o r c h a r g e a g a i n s t th e p u r c h a s e r ca n be p r io r to th e r i g h t s
o f th e s e l l e r un d er h i s m o r tg a g e . Thus ju d gm en ts a g a i n s t
th e p u r c h a s e r a r e s u b o r d in a te to th e m o r tg a g e . I t h a s
e v e n b e e n h e ld t h a t m ech a n ics* l i e n s f o r w h ich th e v en d o r
i
■ .......... ............................. ■ ■ I I -HM — I — I, I I
9 C a lifo r n ia Code 2 8 9 8 . |
40
i s n o t l i a b l e w i l l be i n f e r i o r to su c h p u r c h a s e money
m o r tg a g e s , i f r e c o r d e d c o n c u r r e n t ly w ith p a s s a g e o f t i t l e j
i
to th e p u r c h a s e r , e v e n th o u g h th e w ork had b e e n commenced I
10 I
p r i o r t o su ch r e c o r d a t io n , u n le s s th e v e n d o r i s e s to p p e d j
from a s s e r t i n g p r i o r i t y b y k n ow led ge o f im p rovem en ts and !
1 1 1
f a i l u r e to r e c o r d n o t i c e o f n o n - r e s p o n s i b i l i t y .
I t i s a lw a y s p o s s i b l e f o r th e p a r t i e s t o a m o rtg a g e '
t o a g r e e upon an a l t e r a t i o n o r e x t e n s i o n o f th e term s o f j
th e m o rtg a g e o r o f th e o b l i g a t i o n s e c u r e d t h e r e b y , s o j
i
_ i
lo n g a s t h e s e ch a n g e s do n o t p r e j u d ic e th e r i g h t s o f n o n - j
c o n s e n tin g t h ir d p a r t i e s * Paym ent o r s a t i s f a c t i o n o f th e
o b l i g a t i o n e x t i n g u i s h e s th e m o rtg a g e • The m o r tg a g e e c a n
be c o m p e lle d t o e x e c u t e and d e l i v e r , i n a form s u f f i c i e n t j
f o r r e c o r d in g , a c e r t i f i c a t e t h a t th e m o rtg a g e h a s b e e n 1
p a id * I f he f a i l s to do s o h e i s l i a b l e f o r a l l dam ages
o c c a s io n e d by th e f a i l u r e p lu s a p e n a lt y o f T hree Hundred
12 i
D o lla r s • j
t
!
F o r e c lo s u r e u n d er a m o rtg a g e m u st r e s u l t from a
i
c o u r t a c t i o n . T h is m eans t h a t a s u i t m u st be b r o u g h t b y |
i
i
.
Havward Lumber and I n v e s tm e n t C o. Vj l S t a r l e v .
1 2 4 C .A . 2 8 3 .
^ A very v . C la r k . 8 7 C a l. 6 1 9 .
C a lifo r n ia Code 2 9 4 1 . I
41
th e m o rtg a g e e a g a i n s t th e m o rtg a g o r and a l l p a r t i e s who
h a v e an i n t e r e s t i n th e p r e m is e s w h ich a r e s u b j e c t to th e
m o r tg a g e . B e c a u se o f t h i s p r i n c i p l e , a l l p e r s o n s who h a v e ,
o r c la im r i g h t s o r i n t e r e s t i n th e m ortgaged p r e m is e s
w h ich can be c u t o f f by th e f o r e c l o s u r e s u i t m ust be made
p a r t i e s t o th e f o r e c l o s i n g p r o c e e d in g s and m u st be p r o p e r ly
s e r v e d w it h sum m ons, o r o th e r w is e b r o u g h t b e f o r e th e c o u r t*
I n o r d e r t o i n i t i a t e th e f o r e c l o s u r e a c t i o n , a c o m p la in t
m ust be f i l e d w h ich s e t s f o r t h and d e f i n e s th e n a tu r e o f
th e i n t e r e s t s o f a l l p a r t i e s * The c o u r t w i l l th e n d e t e r
m ine th e am ount due and th e p r i o r i t y o f th e l i e n s • A f t e r
t h i s i s d o n e , th e c o u r t o r d e r s a f o r e c l o s u r e s a l e . The
C ounty S h e r i f f th e n h a s s i x t y ( 6 0 ) d a y s w i t h i n w h ich t o
p u b lis h n o t i c e o f th e s a l e and make th e o f f e r i n g .
The i n t e r e s t o f any p a r t y n o t s e r v e d and n o t named
i n th e a c t i o n i s i n no way a f f e c t e d by t h i s j u d i c i a l f o r e
c l o s u r e . Such a p a r t y may a t any tim e e n f o r c e h i s l i e n
j u s t a s th ou gh th e r e had b e e n no f o r e c l o s u r e .
The m o rtg a g o r h a s th e r i g h t t o redeem th e p r o p e r ty
by paym ent o f th e d e b t , p lu s c o s t s , a t an y tim e w it h in one
y e a r from th e d a t e o f s a l e . The m o rtg a g o r h a s th e r i g h t
to l i v e i n th e m ortgaged p r e m is e s d u r in g th e f u l l term
o f t h i s r e d e m p tio n p e r io d •
From th e f o r e g o i n g , i t can r e a d i l y be s e e n t h a t
f o r e c l o s u r e u n d er a m o rtg a g e i s a tim e c o n su m in g , cum ber
some p r o c e d u r e , and i t a l s o i s a p p a r e n t t h a t many d i f f i
c u l t i e s a r i s e i n th e s a l e o f p r o p e r ty u n d er a m o rtg a g e
b e c a u se o f th e one y e a r r e d e m p tio n p e r i o d « M ost b u y e r s
o f r e a l e s t a t e a r e n o t i n t e r e s t e d i n c o m m ittin g t o
p u r c h a se a p i e c e o f p r o p e r ty on w h ich a t h ir d p a r ty may
be a b le to f o r c e i t s r e t u r n .
The a d d it io n to a c o n v e n tio n a l m o rtg a g e o f a pow er
o f s a l e w h ereb y upon d e f a u l t th e m o rtg a g e e may e f f e c t a
s a l e o f th e p r o p e r ty w it h o u t th e n e c e s s i t y o f j u d i c i a l
p r o c e e d in g s , d o e s n o t change th e in s t r u m e n t s f e s s e n t i a l
c h a r a c te r from t h a t o f a l i e n to a c o n v e y a n c e * T h is
pow er o f s a l e i s v e r y s i m i l a r t o th e e x e r c i s e o f a pow er
o f a t t o r n e y . I n th e a b s e n c e o f e x p r e s s p r o v i s i o n i n th e
i
m o rtg a g e th e m o rtg a g e e m u st e x e c u t e a d eed u n d er t h i s
pow er o f s a l e by h im s e lf a s a t t o r n e y i n f a c t f o r th e
m o r tg a g e e • The a d d it io n o f th e pow er o f s a l e to a m o rtg a g e
d o e s n o t e li m in a t e th e d i s t i n c t i o n b e tw e e n su c h a m o rtg a g e
and a d eed o f t r u s t . The m o st im p o r ta n t d i s t i n c t i o n b e
tw een them i s t h a t when a d e b t i s o u tla w e d b y th e la p s e
o f tim e ( f o u r y e a r s from m a t u r it y ) th e pow er o f s a l e
u n d er a m o rtg a g e i s l o s t . H ow ever, t h i s pow er o f s a l e
n e v e r l a p s e s u n d er a t r u s t d eed e v e n th ou gh j u d i c i a l
e n fo r c e m e n t o f th e d e b t i s b a r r e d . T here i s a l s o some
q u e s t io n a s to w h eth er th e m o rtg a g o r h a s th e r i g h t to
redeem w here th e m o r tg a g e e p u r c h a s e s a t su ch a s a l e ,
w h erea s h e h a s n on e a f t e r s a l e u n d er a d eed o f t r u s t .
B eca u se o f t h e s e d i s t i n c t i o n s th e le n d e r w i l l f in d th e
d eed o f t r u s t form w h ich i s d is c u s s e d n e x t i s p r e f e r a b le
to a m o rtg a g e w ith pow er o f s a l e .
Bank o f I t a l y N a tio n a l T r u s t and S a v in g s
A s s o c ia t i o n v . B e n t l e y . 2 1 7 C a l. 6 4 4 .
CHAPTER V
TRUST DEEDS
As p r e v io u s l y p o in te d o u t , C a lif o r n ia h a s a d o p ted
th e " lie n " th e o r y o f m o r tg a g e s . H ow ever i t a d o p ted th e
" t it le '* t h e o r y i n r e f e r e n c e to d e e d s o f t r u s t e v e n th o u g h
t h i s i s i n d i r e c t c o n t r a d i c t i o n . I n m o st s t a t e s t r u s t
d e e d s a r e r e g a r d e d s im p ly a s m o rtg a g e s w ith th e pow er o f
s a l e . U nder th e t r u s t d eed i n C a l i f o r n ia th e t i t l e to
th e p r o p e r ty i s a c t u a l l y co n v ey ed to th e t r u s t e e who
r e t a i n s su c h t i t l e u n t i l th e d e b t i s s a t i s f i e d o r th e
p r o p e r ty s o ld to s a t i s f y th e l i e n . B oth th e m o rtg a g e and
th e t r u s t d eed a r e c o n t r a c t s s e c u r in g th e p erfo rm a n ce o f
an a c t o r th e paym ent o f a d e b t , b u t i n th e l a t t e r th e
l e g a l t i t l e t o th e p r o p e r ty h y p o th e c a te d v e s t s I n a t h ir d
p a r t y . The t r u s t e e ' s t i t l e rem a in s dorm ant u n t i l th e
d e b t i s p a id o r a d e f a u l t o c c u r s • I n th e e v e n t th e d e b t
I s p a id , th e t r u s t e e upon th e r e q u e s t o f th e b e n e f i c i a r y
i s s u e s i t s r e c o n v e y a n c e o f th e p r o p e r ty to th e p e r s o n s
e n t i t l e d to o w n e r s h ip . I n th e e v e n t o f d e f a u l t th e
t r u s t e e , upon th e f i l i n g o f n o t i c e o f d e f a u l t by th e
t
b e n e f i c i a r y , s e l l s th e p r o p e r ty i n a c c o r d a n c e w ith th e
p r o v i s i o n s o f th e la w and th e term s o f th e d eed o f
tr u s t •
45
The d i s t i n g u i s h i n g f e a t u r e o f th e d e e d o f t r u s t
i s t h a t i t i s a t h r e e p a r t y in s tr u m e n t; th e owner b e in g
th e t r u s t o r , th e c r e d i t o r th e b e n e f i c i a r y , and th e t h ir d
p a r ty g r a n t e e , th e t r u s t e e . The t r u s t o r g r a n ts th e p r o
p e r t y M i n t r u s t , w ith pow er o f s a l e ” t o th e t r u s t e e t o
s e c u r e t o th e b e n e f i c i a r y paym ent o r p er fo r m a n c e o f th e
o b l i g a t i o n . No fo r m a l a c c e p ta n c e by th e t r u s t e e i s
n e c e s s a r y , and i n th e u s u a l s i t u a t i o n th e t r u s t e e i s n o t
e v e n aw are o f th e s e t t i n g up o f th e t r u s t . T here may be
more th a n one t r u s t e e ; th e c r e d i t o r may a c t a s t r u s t e e
b u t th e d e b to r may n o t .
M o rtg a g es and d e e d s o f t r u s t a r e s i m i l a r i n th e
f o l lo w in g r e s p e c t s :
1 . P o s s e s s io n o f th e p r e m is e s r em a in s i n th e
b orrow er •
2 . B o th in s tr u m e n ts a r e g iv e n t o s e c u r e o b l i g a
t i o n s •
4 , They do n o t p r o h i b i t th e b orrow er from o t h e r
w is e d e a l in g w ith th e p r o p e r t y .
j p a r t i e s t o th e in s tr u m e n ts and th e m ethod and le n g t h
3 . They a r e l i e n s .
The p r i n c i p l e d i f f e r e n c e s i n th e two a r e th e
o f tim e o f f o r e c l o s u r e .
46
I n th e e v e n t t h a t t h e r e i s a d e f a u l t o f e i t h e r
th e term s o f th e n o t e o r p r o v i s i o n s o f th e d eed o f t r u s t
s e c u r in g th e n o te th e b e n e f i c i a r y d e c la r e s d e f a u l t and h i s
e l e c t i o n t o s e l l th e t r u s t p r o p e r t y . T h is i s d on e by
e x e c u t in g and d e l i v e r i n g t o th e t r u s t e e th e f o llo w in g
d o cu m en ts:
1 . A d e c l a r a t i o n o f d e f a u l t w h ich s e t s f o r t h th e
n a tu r e o f th e b r e a c h , i d e n t i f i e s th e d eed o f
t r u s t and nam es th e t r u s t o r .
2 . A n o t i e e o f d e f a u l t and e l e c t i o n t o s e l l
p r o p e r ly e x e c u te d by th e b e n e f i c i a r y .
3 . The d eed o f t r u s t , th e n o t e , and a l l o th e r
d ocu m en ts e v id e n c in g e x p e n d i t u r e s .
The s t a t u t e s r e q u ir e t h a t b e f o r e e x e r c i s i n g th e
pow er o f s a l e , a n o t i c e o f d e f a u l t be r e c o r d e d i n th e
c o u n ty w h ere th e p r o p e r ty l i e s a t l e a s t t h r e e m onths b e
f o r e th e p o s t in g and p u b l i c a t i o n o f th e n o t i c e . T h is
n o t i c e m u st be e x e c u te d by th e c r e d i t o r o r by th e t r u s t e e .
The t r u s t d eed m ust b e c l e a r l y i d e n t i f i e d by g iv in g th e
r e c o r d in g d a t a o r s e t t i n g o u t th e l e g a l d e s c r i p t i o n o f th e
p r o p e r ty a f f e c t e d . The name o f th e t r u s t o r o r m o rtg a g o r
m u st be s e t o u t , and a d e c l a r a t i o n t h a t a b r e a c h h a s
o c c u r r e d t o g e t h e r w ith a s ta te m e n t o f th e n a tu r e o f th e
b r e a c h m u st be i n c lu d e d . The p e r s o n e x e c u t in g th e n o t i c e
m u st s t a t e i n th e n o t i c e t h a t h e h a s e l e c t e d to s e l l o r
c a u se s a l e o f th e p r o p e r ty to s a t i s f y th e o b l i g a t i o n
S tan d ard form s o f d e e d s o f t r u s t o r d i n a r i l y r e q u ir e t h a t
th e n o t i c e o f d e f a u l t be e x e c u te d by th e b e n e f i c i a r y and
d e l iv e r e d to th e t r u s t e e w ith a d e c l a r a t i o n o f d e f a u l t
and demand o f s a l e a l s o e x e c u te d by him • They n o r m a lly
r e q u ir e t h a t th e o r i g i n a l n o t e and d eed o f t r u s t a l s o be
d e l i v e r e d . Upon r e c e i p t o f t h e s e e x h i b i t s t h e t r u s t e e
r e c o r d s th e n o t i c e o f d e f a u l t . I t i s im p o r ta n t t o th e
p r o p e r e x e r c i s e by th e t r u s t e e o f th e pow er o f s a l e t h a t
t h e s e a d d i t io n a l r e q u ir e m e n ts be o b s e r v e d .
I t i s p o s s i b l e f o r th e t r u s t o r t o r e i n s t a t e any
o b l i g a t i o n s e c u r e d by a d eed o f t r u s t on w h ich th e
m a tu r ity h a s b e e n a c c e le r a t e d by n on -p aym en t o f an i n
s t a l l m e n t o r i n t e r e s t o r n o n -p e rfo r m a n c e o f a c e r t a i n
c o l l a t e r a l o b l i g a t i o n ,^ R e in s ta te m e n t m u st be e f f e c t e d
t
| w i t h i n th e t h r e e m onths p e r io d f o l lo w in g r e c o r d a t io n
o f th e n o t i c e o f d e f a u l t by paym ent o f a l l sums du e o t h e r
th a n by a c c e l e r a t i o n , p lu s a t w e n t y - f iv e d o l l a r t r u s t e e ’ s
f e e . The e f f e c t i s t o com p el d is c o n t in u a n c e o f th e s a l e s
*
p r o c e e d in g s and r e s t o r a t i o n o f th e o b l i g a t i o n and s e c u r i t y
^ C i v i l Code 2 9 2 4 .
2 C i v i l Code 2 9 2 4 c .
48
t o t h e i r fo rm er p o s i t i o n j u s t a s th o u g h no d e f a u l t had
o c c u r r e d • T h is r i g h t e x i s t s o n ly w i t h in th e t h r e e m onths
p e r io d f o l lo w in g r e c o r d a t io n and n o t t h e r e a f t e r u n le s s
th e b e n e f i c i a r y c o n c u r s •
I f no r e in s t a t e m e n t t a k e s p la c e w i t h i n th r e e m onths
th e t r u s t e e e x e c u t e s a n o t i c e o f s a l e w h ich s t a t e s th e
tim e and p la c e o f s a l e , d e s c r i b e s th e p r o p e r ty t o be s o l d ,
and a l s o u s u a l l y s t a t e s th e r e a s o n f o r th e s a l e * The s a l e
d a t e i s s e t s o as t o a llo w tim e f o r th e r e q u ir e d p u b l i c a
t i o n and p o s t i n g . The p la c e o f s a l e m u st be r e a d i l y
a c c e s s i b l e t o th e g e n e r a l p u b l i c . The n o t i c e o f s a l e m u st
be p u b lis h e d i n a n ew sp a p er o f g e n e r a l c i r c u l a t i o n p u b
l i s h e d i n a c i t y i n w h ich th e p r o p e r ty l i e s , o r i f t h e r e
i i s no su ch n e w sp a p e r , th e n i n th e c o u n t y . T h is n o t i c e
m u st be p u b lis h e d o n ce p e r w eek f o r tw e n ty d a y s , t h e r e m u st
be t h r e e p u b l i c a t i o n s n o t m ore th a n s e v e n d a y s a p a r t . The
n o t i c e m u st a l s o be p u b lis h e d f o r th e sam e p e r io d i n a t
l e a s t one p u b lic p la c e i n th e c i t y w here th e s a l e i s t o
be made and a l s o i n some c o n s p ic u o u s p la c e on th e p r o p e r t y .
I f th e t r u s t d eed r e q u ir e s o th e r o r d i f f e r e n t n o t i c e o f
s a l e to be g i v e n , su ch n o t i c e m ust be i n a d d it io n t o t h a t
o u t lin e d ab ove inasm uch a s th e s t a t u t o r y r e q u ir e m e n ts a r e
49
m a n d a to ry *
E r r o r s i n p r o c e d u r e may i n v a l i d a t e th e s a l e * M a te r
i a l m i s d e s c r i p t io n o f t h e p r o p e r ty i n th e n o t i c e o f s a l e
i n v a l i d a t e s th e p r o c e e d in g s *s F a ilu r e to p u b lis h o r
p r o p e r ly p o s t n o t i c e o f s a l e w i l l i n v a l i d a t e th e s a l e •
Under th e C a l i f o r n ia S t a t u t e 4 th e t r u s t o r o r m o rtg a g o r
o r any o t h e r i n t e r e s t e d p e r s o n , by i n c l u s i o n i n th e s e -
>
c u r it y in s tr u m e n t o r a fte r w a r d s by r e c o r d in g su ch r e q u e s t ,
may demand n o t i c e by m a il o f th e r e c o r d a t io n o f th e
n o t i c e o f d e f a u l t and o f th e p u b l i c a t i o n o f th e n o t i c e o f
s a l e • W herever su c h a r e q u e s t h a s b e e n made a cop y o f th e
n o t i c e o f d e f a u l t m u st be s e n t by r e g i s t e r e d m a il w it h in
t e n d a y s o f th e r e c o r d in g o f su ch n o t i c e • F or t h i s p u r p o se
th e a d d r e ss g iv e n i n su c h r e q u e s t s sh o u ld be u se d *
Law f u r t h e r p r o v id e s t h a t i n th e a b se n c e o f su c h
t
i r e q u e s t th e r e c o r d e d n o t i c e o f d e f a u l t m u st be p u b lis h e d
o n ce a w eek f o r f o u r w e e k s , f i r s t p u b l i c a t i o n b e in g w i t h i n
t e n d a y s a f t e r th e r e c o r d a t io n o r th e n o t i c e m u st be
p e r s o n a lly s e r v e d upon th e t r u s t o r w it h in th e t e n d ay
p e r io d •
|
i
i
t
® C r i s t v . H ouse & O sm onson. I n c . 7 C al (2 d ) 5 5 6 .
4 C iv il Code 2924b
50
The s a l e m u st be h e ld d u r in g b u s in e s s h o u rs in a
p la c e s u f f i c i e n t l y p u b lic so t h a t a l l i n t e r e s t e d b id d e r s
may a t t e n d , i n th e c o u n ty i n w h ich th e p r o p e r ty i s lo c a t e d *
O nly th e h o ld e r o f th e d e b t w h ich i s to be s a t i s f i e d by
th e s a l e ca n o f f s e t , ( b id w ith o u t p a y in g c a sh up to th e
amount o f th e d e b t ) * A l l o t h e r b id d e r s m u st p u t up c a sh
o r i t s e q u iv a le n t * The h o ld e r o f a j u n io r encum brance
may n o t o f f s e t h i s encum brance e v e n th ou gh h e w ould
5
a p p a r e n tly be e n t i t l e d t o th e p r o c e e d s • Any p e r s o n
in c lu d in g th e d e b to r and c r e d i t o r may b id * When th e
h i g h e s t r e s p o n s ib l e b id i s o b ta in e d th e p r o p e r ty i s d e
c la r e d s o l d to su c h b id d e r * The b id d e r p a y s th e am ount
b id and a d eed oh s a l e i s is s u e d by th e t r u s t e e .
T h is d e e d on s a l e , u n d er pow er o f s a l e , p a s s e s
t o th e p u r c h a s e r th e t i t l e o f th e p r o p e r ty h e ld by th e
m akers o f th e s e c u r i t y in s tr u m e n t on th e d a t e th e m ortgagor
e x e c u te d i t , t o g e t h e r w it h any t i t l e a fte r w a r d s a c q u ir e d *
The t i t l e i s f r e e from an y r i g h t o r p e r io d o f r e d e m p tio n
and e n t i t l e s th e p u r c h a s e r to im m ed ia te p o s s e s s i o n . The
p u r c h a s e r a t a t r u s t e e * s s a l e a c q u ir e s a t i t l e f r e e o f
a l l r i g h t , t i t l e o r e s t a t e o f th e t r u s t o r o r anyon e c la im
in g u n d er him by s u b s e q u e n t c o n v e y a n c e o r en cu m b ran ce, and
5 D a v ie s v . R a m s d e ll. 40 C,A* 4 2 4 .
51
becom es th e s u c c e s s o r i n I n t e r e s t o f th e t r u s t o r *
The p r o c e e d s o f th e s a l e a r e a p p lie d f i r s t , i n
paym ent o f th e c o s t s , f e e s and e x p e n s e s o f th e s a l e and
t h e n , i n s a t i s f a c t i o n o f th e o b l i g a t i o n to p a y f o r w h ich
th e s a l e was c o n d u c te d . I f th e n e t p r o c e e d s a r e s u f f i
c i e n t to s a t i s f y f u l l y su c h o b l i g a t i o n th e b a la n c e i s
a p p lie d to th e j u n io r l i e n s and r i g h t s w h ich w ere c u t o f f
by th e s a l e . The d i s t r i b u t i o n i s b a sed upon th e p r i o r i t y
o f su c h s u b o r d in a te l i e n s and i s im m e d ia te ly p a y a b le
w h eth er su c h l i e n s a r e m atu red o r n o t .
The p r o c e d u r e s s e t f o r t h i n th e p r e c e d in g p a g e s
m u st be f o llo w e d i f th e le n d e r i s to a c q u ir e a v a l i d
t i t l e u n d er th e t r u s t d eed f o r e c l o s u r e p r o c e d u r e . The
le n d e r m u st be c o g n iz a n t o f th e f a c t t h a t t h e t r u s t d eed
i s a s p e c i a l i z e d ty p e o f m o rtgage and i f th e t e c h n i c a l
p r o c e d u r e s r e q u ir e d f o r f o r e c l o s u r e a r e n o t f o llo w e d th e
f o r e c l o s u r e w i l l be in a d e q u a te and th e t i t l e r e c e iv e d w i l l
p r o b a b ly be no b e t t e r th a n th e t i t l e r e c e iv e d u n d er th e
f o r e c l o s u r e o f any m o r tg a g e . T h is m eans t h a t th e le n d e r
w i l l n o t be a b le to p a s s an ir r e v o c a b le t i t l e f o r a
p e r io d o f one y e a r o r m o r e . In f o r e c l o s u r e c a s e s th e
^ Brown v . C a m p b e ll. 100 C a l. 635; A tk in s o n v . F o o t e .
44 C a l. 1 4 9 .
le n d e r i s u s u a l l y a n x io u s f i n a l l y to d is p o s e o f th e p r o
p e r t y , th u s th e one y e a r w a it in g p e r io d w ith th e r i g h t o f
r e d e m p tio n s e r i o u s l y im p a ir s h i s a b i l i t y to m eet h i s o b
j e c t i v e s .
The t y p i c a l t r u s t d eed form s p r o v id e d by v a r io u s
com p an ies who a c t a s t r u s t e e s u s u a l l y c o n t a in many p r o v i
s io n s w h ich a r e o f b e n e f i t t o th e le n d e r i n th e p r o t e c t i o n
o f h i s s e c u r i t y * A lm o st a l l o f th e t r u s t d e e d form s c o n
t a i n p r o v i s i o n s i n w h ieh th e t r u s t o r a g r e e s t o th e
f o l lo w in g c o n d i t i o n s ;
1* To k eep th e p r o p e r ty i n good c o n d it io n and
r e p a i r .
2 . To p r o v id e s a t i s f a c t o r y f i r e i n s u r a n c e .
3 . To d e fe n d a l l a c t i o n s o r p r o c e e d in g s a f f e c t i n g
th e s e c u r i t y *
4 . To p a y a l l t a x e s and a s s e s s m e n ts when d u e .
I
5 . To a s s i g n any aw ards o r dam ages r e c e iv e d i n
c o n n e c tio n w it h th e p r o p e r t y .
I n a d d i t io n to th e ab ove th e t r u s t o r a g r e e s to
g r a n t t o th e t r u s t e e a n d /o r th e b e n e f i c i a r y many r i g h t s
p e r t a in in g to th e e x e c u t io n o f in s tr u m e n t s , th e a c c e p ta n c e
t
| o f l a t e p a y m e n ts, th e a c c e l e r a t i o n o f m a t u r i t i e s , th e |
!
paym ent o f c o s t s and f e e s and many o t h e r m a tte r s w h ich th e j
t r u s t o r f e e l s may b e o f b e n e f i t to e i t h e r h i m s e l f o r th e
b e n e f i c i a r y .
53
The r e a d e r I s r e f e r r e d t o p a g e s 8 4 and 8 5
o f th e A p p en d ix f o r sa m p le s o f th e T i t l e In su r a n c e and
T r u st Company and th e Bank o f A m erica D eed o f T r u st fo rm s*
I t w i l l be n o te d t h a t on th e r e v e r s e s i d e o f e a ch o f t h e s e
form s i s a l i s t o f th e a g r e e m e n ts th e t r u s t o r m akes i n
o r d e r to p r o t e c t th e s e c u r i t y . The le n d e r sh o u ld becom e
th o r o u g h ly f a m i l i a r w it h th e p r o t e c t i v e c o v e n a n c e s c o n
ta in e d i n th e D eed o f T r u s t form u sed i n c o n n e c tio n w it h
h i s t r a n s a c t i o n . He sh o u ld a lw a y s e n d e a v o r to u s e th e
form w h ich he f e e l s b e s t p r o t e c t s h i s i n t e r e s t s . E it h e r
o f th e fo rm s i l l u s t r a t e d In th e A p p en d ix c o n t a in a l l o f
th e e s s e n t i a l a g r e e m e n ts •
t
t
CHAPTER VI
TITLE INSURANCE
I n th e p a s t when th e U n ite d S t a t e s c o n s i s t e d
l a r g e l y o f s m a ll v i l l a g e s and c o m m u n itie s, la n d h o ld in g s
w ere p a s s e d from g e n e r a t io n to g e n e r a t io n and a c t u a l
p o s s e s s i o n by th e f a m ily c o n s t i t u t e d th e h i g h e s t p r o o f
o f o w n er sh ip and was se ld o m d is p u t e d • As th e c o u n tr y
grew new com ers to th e com m unity becam e ow n ers o f p r o p e r t y .
T h ese new com ers had no backgroun d o f lo n g and c o n tin u o u s
o ccu p a n cy to p r o v e t h e i r r i g h t to th e l a n d . They had to
t r a c e t h e i r r i g h t s to th e la n d th r o u g h th e r i g h t s o f
fo rm er ow n ers • As tim e g o e s on th e p rob lem o f t r a c in g
t i t l e b a c k th ro u g h a m yriad o f ow n ers to th e o r i g i n a l
govern m en t g r a n t becom es m ore and more t e d io u s * Many
! f a c t o r s a r i s e w h ich i n f l u e n c e th e v a l i d i t y o f th e c o n v e y
a n c e s o f v a r io u s fo rm er ow n ers • S in c e in fo rm ed b u y er s now
demand p r o o f and a s s u r a n c e t h a t th e y w i l l r e c e i v e good
t i t l e a s w e l l a s a c t u a l p o s s e s s i o n , th e s a l e o f r e a l e s t a t e
a c t u a l l y becom es a p rob lem o f p r o v id in g a m a r k e ta b le
j t i t l e •
i
i T i t l e in s u r a n c e i s a m ethod o f a s s u r in g la n d
j
j o w n er sh ip b a sed upon a c o n t r a c t o f s p e c i f i c in d e m n ity
I
j c a lle d a t i t l e p o lic y . By th e use o f th e t i t l e p o lic y
55
th e a s s u r in g a g e n c y s t r i v e s t o rem ove some o r th e d e
f i c i e n c i e s o f th e o t h e r sy s te m s o f t i t l e in s u r a n c e , a l l o f
w h ich f a i l to g iv e th e h o ld e r o f th e d o cu m en ta ry t i t l e
p r o o f c o m p le te a s s u r a n c e t h a t h e w i l l be com p en sated f o r
l o s s e s a r i s i n g from e r r o r s i n l e g a l i n t e r p r e t a t i o n , r e p o r t
in g o f t i t l e c o n d i t i o n and o t h e r m a tt e r s o u t s id e th e
r e c o r d s t h a t a d v e r s e ly a f f e c t th e p r o p e r ty *
T i t l e in s u r a n c e p o l i c i e s came i n t o b e in g a s a
d i r e c t r e s u l t o f th e j u d i c i a l d i s p o s i t i o n i n th e e a s e o f
W atson v s * M uirhead i n 1 8 6 8 . I n t h i s c a s e th e o p in io n
o f th e c o u r t s was t h a t a man h ir e d to make an a b s t r a c t o f
t i t l e , who f o llo w e d th e l e g a l l y e s t a b l i s h e d p r o c e d u r e s ,
w as n o t l i a b l e f o r e r r o r s i n ju d g m en t. The o p in io n
lik e n e d h i s p o s i t i o n to t h a t o f a p e r s o n en gaged i n th e
p r a c t i c e o f la w o r m e d ic in e . T h is d e c i s i o n b r o u g h t
a t t e n t i o n t o th e in h e r e n t w ea k n ess o f th e th e n e x i s t i n g
m ethod o f t i t l e A s s u r a n c e •
O b v io u s ly t h o s e m aking a p r o f e s s i o n o f g iv in g
o p in io n s on t i t l e c o u ld n o t rem a in i n b u s in e s s i f th e
p u b l i c d id n o t h ave c o n fid e n c e i n t h e i r o p in io n s • I n o r d e r
f o r th e p u b lic t o h a v e c o n f id e n c e , i t w as n e c e s s a r y t h a t
th e c o n v e y a n c e r s b e f i n a n c i a l l y s t r o n g , r e l i a b l e and w e l l
^ W atson v * M u irh ea d . 7 P en n S t a t e R e p o r ts 1 6 1 . 1 8 6 8 .
56
e s t a b l i s h e d * T h is b r o u g h t a b o u t a s e l e c t i v e p r o c e s s w h ich
c e n t r a l i z e d t h e b u lk o f th e c o n v e y a n c in g b u s in e s s i n t o a
v e r y few s t r o n g h a n d s • T h is c e n t r a l i z a t i o n e v e n t u a l ly le d
to a p o o lin g o f r e s o u r c e s and th e fo r m a tio n o f a t i t l e
in s u r a n c e company*
The b ig a d v a n ta g e o f th e t i t l e in s u r a n c e company
i s t h a t i t b a c k s up i t s o p in io n s w it h a s p e c i f i c c o n t r a c t
o f in d e m n ity * T h e r e fo r e a p u r c h a s e r o r le n d e r c a n be
a s s u r e d t h a t h e w i l l s u s t a i n no l o s s d u e to in a c c u r a c y o r
e r r o r i n th e r e p o r t in g o f t i t l e c o n d it io n *
A t i t l e p o l i c y r e p r e s e n t s th e f i n a l r e s u l t s o f
th r e e s u c c e s s i v e p r o c e s s e s ; i n v e s t i g a t i o n o f th e t i t l e ,
d e t e r m in a t io n o f th e am ount o f in s u r a n c e r e q u ir e d , and th e
g u a r a n te e o f t h e in s u r e r to h o ld th e in s u r e d h a r m le ss from
t i t l e l o s s e s r e s u l t i n g from m a tte r s n o t d i s c l o s e d i n th e
| t i t l e p o l i c y *
The s e r v i c e s o f a company s p e c i a l i z i n g i n t i t l e
m a tte r s a r e n e c e s s a r y b e c a u se o f th e d e f i c i e n c i e s o f th e
p u b lic r e c o r d sy ste m * The sy ste m d o e s n o t p r o v id e f o r o r
in c lu d e r e c o r d s r e l a t i n g t o a l l i n t e r e s t s w h ich may a t t a c h
i
| to l a nd and t i t l e e v id e n c e i s r e c o r d e d w it h o u t i n t e r p r e t s -
t
j t i o n o r l e g a l c o n s id e r a t io n *
! I n o r d e r t o i l l u s t r a t e th e d i f f i c u l t i e s o f th e
title company* s .job a_ few_of-_the-hazards-Which-exlst-will
57
b e p o in te d o u t . S in c e t h e r e i s no s e p a r a t io n by p a r c e l s
i n th e p u b lic r e c o r d , th e s e a r c h e r i s n e v e r p o s i t i v e t h a t
he h a s b e e n s u c c e s s f u l i n c o l l e c t i n g a l l o f th e im p e r fe c
t i o n s i n th e ch an ge o f t i t l e s . S in c e many u n r e la t e d
m a tte r s su c h a s t a x , d i v o r c e , l a w s u i t s , l i e n s , i n s a n i t y ,
b a n k r u p t c ie s , c i v i l a c t i o n s , p r o b a t e s , to name b u t a f e w ,
a l l a f f e c t p r o p e r t y , th e s e a r c h e r m u st s e a r c h a l l o f th e
r e c o r d s i n w h ich any on e o f t h e s e ite m s m ig h t be l i s t e d .
T h ese s c a t t e r e d r e c o r d s p r o v id e many h a z a r d s and p i t f a l l s ,
f o r th e u n i n i t i a t e d . T i t l e com p an ies em p loy s k i l l e d
a r t i s a n s who a r e th o r o u g h ly f a m i l i a r w ith th e m a ch in ery
o f th e r e c o r d in g o p e r a t i o n s •
t i o n o f th e r e c o r d e d in s t r u m e n t s . The la w s r e l a t i n g t o
r e a l p r o p e r ty a r e so c o m p lic a te d t h a t s p e c i a l l y t r a in e d
l e g a l e x p e r t s a r e r e q u ir e d to i n t e r p r e t th e docu m en ts i n
l i g h t o f e x i s t i n g l a w s . T here a r e many m a tte r s o f la w ,
w h ich s i n c e th e y h a v e n o t b e e n t e s t e d i n th e c o u r t s , a r e
m e r e ly m a t te r s o f o p i n io n . The t i t l e company in s u r e s th e
h o ld e r o f a t i t l e p o l i c y a g a i n s t t h e s e m is t a k e s o f o p in io n
and a g a in s p o s s i b l e e r r o r o f f a c t . In a d d i t io n t o th e
r e c o r d e d m a tte r s a f f e c t i n g la n d t h e r e a r e many e x t e r n a l
f a c t o r s w h ich h a v e a s i g n i f i c a n t b e a r in g upon la n d
o w n e r s h ip . I t i s e n t i r e l y p o s s i b l e t h a t in f o r m a tio n from
T h ere i s a g r e a t d a n g e r o f e r r o r i n th e i n t e r p r e t a -
58
s o u r c e s o u t s id e th e r e c o r d may e n t i r e l y a l t e r o w n er sh ip
a s shown by t h e r e c o r d e d in s t r u m e n t s . Some o f th e m ore
im p o r ta n t e x t e r n a l h a z a r d s a r e th o s e r e l a t i n g to o c c u p a n c y ,
a d v e r s e p o s s e s s i o n , and u n re c o rd ed l e a s e s *
The l e g a l s t a t u s o f p a r t i e s e x e c u t in g in s tr u m e n ts
p e r t a in in g to la n d I n t e r e s t s i s o f u tm o st im p o r ta n c e i n
d e t e r m in a t io n o f t i t l e • Many c o m p lic a te d l e g a l p ro b lem s
i n th e d e t e r m in a t io n o f o w n er sh ip a r i s e i n th e c a s e s w here
th e r e c o r d e d ow ner o f p r o p e r ty h a s d ie d i n t e s t a t e , o r i n
c a s e s w h ere p a r t i e s to a docum ent a r e n o t l e g a l l y com pe
t e n t t o e n t e r i n t o b in d in g c o n t r a c t s . The a c t o f r e c o r d
in g d o e s n o t p u rg e a docum ent o f d e f i c i e n c i e s due t o
f r a u d , in c o m p e te n c y o r m is ta k e *
From t h i s b r i e f d i s c u s s i o n i t may r e a d i l y be s e e n
t h a t th e p r o c e s s o f d e te r m in in g th e t i t l e s t a t u s o f la n d
p a r c e l s i s e x tr e m e ly c o m p lic a te d and in d e e d many c a s e s
becom e m e r e ly a m a tte r o f in fo rm ed o p i n io n . The t i t l e
company s e r v e s a d e f i n i t e n eed i n p r o v id in g h o ld e r s o f f e e
and o th e r t i t l e s o r in s tr u m e n ts i n r e a l p r o p e r ty w ith a
g u a r a n te e b ack ed up by a c o n t r a c t o f in d e m n ity a s to th e
s t a t u s o f th e t i t l e o f a p a r t i c u l a r p a r c e l «
T here a r e two g e n e r a l ty p e s o f t i t l e p o l i c i e s
is s u e d ; th o s e in te n d e d f o r th e p r o t e c t i o n o f p u r c h a s e r
59
o r owner o f r e a l p r o p e r ty and t h o s e d e s ig n e d f o r th e
b e n e f i t o f th e m o rtg a g e e o r le n d e r o f m oney on r e a l e s t a t e
s e c u r i t y * The ow n er1s form and th e m o r tg a g e e 's o r lo a n
form c o n t a in e s s e n t i a l l y th e same p r o v i s i o n s , b u t b e c a u se
o f t h e ’ n a tu r e o f th e i n t e r e s t s in v o lv e d , th e y d i f f e r i n
a fe w m in or p o i n t s . T i t l e p o l i c i e s o r d i n a r i l y a r e made
up o f fo u r s e c t i o n s ♦ The f i r s t s e c t i o n i s th e in s u r in g
o r in d e m n ity a g reem en t; th e se co n d a s c h e d u le c o n t a in in g
th e s u b j e c t m a tte r o f th e c o n t r a c t ; th e t h ir d a s c h e d u le
o f e x c e p t io n s and r e s t r i c t i o n s ; and th e f o u r t h a s e c t i o n
d e a lin g w it h th e c o n d it io n s and s t i p u l a t i o n s w h ich c o n t r o l
th e s u b s e q u e n t a c t i o n o f th e in s u r e r and th e i n s u r e d .
The in s u r in g a g reem en t s t a t e s th e c o n s id e r a t io n
and th e am ount o f l i a b i l i t y assum ed* I n a d d i t io n t o t h i s
i t c o n t a in s th e in d e m n ity c l a u s e . T h ese in d e m n ity c la u s e s
ta k e v a r io u s form s b u t m o st g e n e r a l ly u se d o n e s a r e
"Does h e r e b y g u a r a n te e" "Does h e r e b y in s u r e " o r "Does
c o v e n a n t t o in d e m n ify and k eep h a r m le s s T h is s e c t i o n
a l s o c o n t a in s a s ta te m e n t o f w h at i s in s u r e d a g a i n s t , su c h
a s "Any l o s s w h ich s h a l l be s u s t a in e d by r e a s o n o f d e f e c t
i n t i t l e o r by r e a s o n o f any l i e n o r en cu m b ra n ce, n o t
c o v e r e d i n S c h e d u le B , and s u b j e c t to th e c o n d it io n s and
s t i p u l a t i o n s an n exed and made a p a r t o f t h i s p o l i c y . " 1
_______ 5L.See_Iitle_Insurance_Gcontinued_on_page_60)____ ___
60
I n m o st p o l i c i e s no s p e c i f i e d p e r io d o f c o v e r a g e i s
s t a t e d , and i t i s t h e r e f o r e assum ed t h a t th e a g reem en t i s
e f f e c t i v e a s lo n g a s th e t i t l e rem a in s i n th e hands o f
th e o r i g i n a l ow ner who w as in d e m n ifie d * I f i t i s a lo a n
p o l i c y th e in s u r a n c e r em a in s e f f e c t i v e a s lo n g a s th e
m o rtg a g e s t a n d s .
A f t e r th e in s u r in g a g reem en t u s u a l l y comes a
s e c t i o n known a s S c h e d u le A . T h is s c h e d u le c o n t a in s th e
s u b j e c t m a tte r o f th e c o n t r a c t . H ere a s ta te m e n t o f th e
i n t e r e s t o r e s t a t e o f t h e in s u r e d i s f o u n d . T h is p o r t i o n
a l s o c o n t a in s a f u l l l e g a l d e s c r i p t i o n o f th e p r o p e r ty
c o v e r e d . R e fe r e n c e i s a l s o made i n th e lo a n form o f
p o l i c y t o th e m o rtg a g e o r t r u s t d eed w h ich r e p r e s e n t s th e
i n t e r e s t p r o t e c t e d . I n th e ow n er*s form o f p o l i c y , th e
d eed o r o t h e r m eans by w h ic h he a c q u ir e d t i t l e i s r e
f e r r e d to •
The e x c e p t io n s and o b j e c t i o n s s e c t i o n i s u s u a l l y
la b e le d S c h e d u le B . H ere i s fou n d a l i s t o f a l l th e
d e f e c t s , l i e n s and o t h e r m a tte r s w h ich th e t i t l e company
i s e x c e p t in g from i t s c o v e r a g e * Many p o l i c i e s a l s o c o n
t a i n i n t h i s s c h e d u le a p r in t e d l i s t o f g e n e r a l d e f e c t s
1 (c o n tin u e d from p age 59) & T r u st C o .* s p o l i c y ,
A p p en d ix E w h ich i s u sed a s sam p le f o r t h i s and o t h e r
t i t l e p o l i c y q u o t a t i o n s •
6 1
and h a z a r d s a g a i n s t w h ich th e in s u r e d i s n o t p r o t e c t e d .
T h is s e c t i o n i s th e m o st im p o r ta n t from th e s t a n d p o in t
o f th e le n d e r o r ow ner b e c a u s e i t s e t s o u t t h e s e i n t e r e s t s
w h ich e x i s t i n th e la n d ahead o f th e o w n e r 's o r th o s e o f
th e m o rtg a g e h o ld e r *
I n th e c o n d it io n s and s t i p u l a t i o n s s e c t i o n o f th e
in d e m n ity c o n t r a c t a r e many o f th e s a l i e n t f e a t u r e s o f
th e p o l i c y * T here i s a s ta te m e n t o f th e s e r v i c e s w h ich
th e in s u r e r w i l l p erfo rm f o r th e b e n e f i t o f th e i n s u r e d .
F o llo w in g t h i s s ta te m e n t a r e l i s t e d th e c o n d it io n s v /ith
w h ich th e in s u r e d m ust com ply i n o r d e r to s e c u r e th e
b e n e f i t o f th e u n d e r w r ite r s s e r v i c e s • A s t a t e m e n t to
th e e f f e c t t h a t th e I n s u r in g company ( w it h o u t c o s t to
th e in s u r e d ) w i l l d e fe n d a l l a c t io n s and p r o c e e d in g s
b a sed upon a c la im o f t i t l e o r l i e n , p r i o r i n d a t e to th e
p o l i c y and n o t in c lu d e d a s an e x c e p t io n u n d er S c h e d u le B
i s fou n d i n t h i s s e c t i o n *
The p o l i c y a l s o r e c i t e s th e f a c t t h a t s i n c e i t i s
s t r i c t l y a c o n t r a c t o f in d e m n ity , i t i s in cu m b en t upon
th e in s u r e d to show a c t u a l l o s s * I t i s th e d u ty o f th e
in s u r e d t o g i v e n o t i c e t o th e company o f any a d v e r s e
c la im s o r I n t e r e s t w h ich a r i s e by r e a s o n s o f d e f e c t s n o t
l i s t e d i n th e p o l i c y * T h is n o t i c e m ust be g iv e n i n
s u f f i c i e n t tim e so a s n o t to J e o p a r d iz e th e i n s u r e r ' s
p o s i t i o n o r p r e j u d ic e th e i n t e r e s t o f th e in s u r e d *
T here a r e many o t h e r p r o v is io n s o f th e g e n e r a l
t i t l e in s u r a n c e p o l i c y w h ich c o v e r su c h t h in g s a s
s e t t le m e n t s by th e in s u r e d , w a r r a n tie s o r s ta te m e n ts by
th e in s u r e d m eth od s and m eans o f paym ent o f l o s s , th e s u b
r o g a t io n c l a u s e , p r o v i s i o n s c o v e r in g a s s ig n m e n t and so
f o r t h •
B e c a u se o f th e dem ands o f t h e l i f e in s u r a n c e
com p an ies f o r t i t l e in s u r a n c e a s a m eans o f p r o t e c t i n g
t h e i r in v e s t m e n t s i n r e a l e s t a t e lo a n s a u n ifo rm ty p e o f
p o l i c y h a s d e v e lo p e d . The l a r g e in s u r a n c e com p an ies j
i
d r a f t e d a sta n d a r d form known a s th e L .I .C . ( L i f e I n -
j su r a n c e Company) form i n 1 9 2 9 * The t i t l e com p an ies b e
lo n g in g to th e A m erican T i t l e A s s o c ia t i o n d r a f t e d a lo a n
p o l i c y w h ic h c o n ta in e d e s s e n t i a l l y th e same f e a t u r e s a s
th e L*I*C* form * T h is p o l i c y came to be known a s th e j
i
A .T .A fo r m . j
T h ese A .T .A . form p o l i c i e s p r e s e n t th e u tm o st i n j
t i t l e p r o t e c t i o n . The m u l t i p l i c i t y o f c o n d it io n s and ;
i
s t i p u l a t i o n s h ave b een d o n e away w i t h . The o n ly c o n d itio n !
{
i I
t h a t r em a in s i s t h a t th e t i t l e company i s n o t r e s p o n s ib le !
t |
| f o r l o s s r e s u l t i n g from th e e x e r c i s e o f th e p o l i c e pow er j
t
o f th e s t a t e . I n t h e s e ad van ced p o l i c i e s e v e r y c o n -
tin g e n c y w h ich m ig h t r e s u l t i n unmark e ta b l e t i t l e s i s ______
c o v e r e d in c lu d in g q u e s t io n s o f b o u n d a r ie s and e n c r o a c h
m e n ts , r i g h t s o f p a r t i e s i n p o s s e s s io n * I t h as come to
be th e p r a c t i c e o f a l l m ajor le n d in g i n s t i t u t i o n s to r e
q u ir e one o f t h e s e f u l l c o v e r a g e ty p e s o f p o l i c y . How
e v e r , th e i n d iv i d u a l ow ner p a y in g f o r h i s own t i t l e p r o
t e c t i o n , h a s u s u a l l y b e e n c o n t e n t w ith th e ty p e o f p o l i c y
o f f e r e d h im , e i t h e r b e c a u s e o f a l a c k o f k n ow led ge o f
w h at p r o t e c t i o n i s o f f e r e d o r b e c a u se t h i s ty p e o f p o l i c y
r e p r e s e n t e d lo w e r c o s t .
T i t l e In su r a n c e r e p r e s e n t s a d e f i n i t e s t e p tow ard
s e c u r in g m a r k e t a b i li t y o f la n d t i t l e s . The t i t l e com -
i
pany s ta n d s a s a p r o t e c t o r o f th e many i n d iv i d u a l s f o r |
whom i t in s u r e s la n d t i t l e s . R e a l e s t a t e , b e c a u se o f th e '
many i n t e r e s t s a t t a c h in g t o i t , i s a f o c a l p o i n t f o r
I
j l i t i g a t i o n . S in c e no r e a l e s t a t e t i t l e i s a p e r f e c t o n e ,
i
i t w ould be an e a s y m a tte r f o r th e u n sc r u p u lo u s to
l
c a p i t a l i z e on m in or t i t l e d e f e c t s . I n m o st c a s e s i n d i
v id u a ls w ould s e t t l e d is p u t e d t i t l e s o u t o f c o u r t r a th e r |
th a n go t o lo n g and e x p e n s iv e j u d i c i a l p r o c e e d in g s . !
i H ow ever when t h e r e i s t i t l e i n s u r a n c e , M t i t l e
-
p i r a c y 1 1 i s u n p r o f i t a b l e , s i n c e th e t i t l e company i s i
i
backed by am ple r e s o u r c e s and a s t r o n g l e g a l s t a f f . ( I t
i p r e s e n t s a r e l a t i v e l y in su r m o u n ta b le o b s t a c l e to p a r t i e s
!
t r y in g to c a p i t a l i z e on lo o p - h o le s and t e c h n i c a l i t i e s . ) 1
64
Through th e u s e o f t i t l e in s u r a n c e , r e a l e s t a t e
t r a n s a c t io n s a r e made s a f e r and f a s t e r , ^he owner and
th e le n d e r a r e a ss u r e d and g u a r a n te e d t h a t t h e i r i n t e r e s t s
i n la n d w i l l n o t be a d v e r s e ly a f f e c t e d b y m a tte r s n o t
' b r o u g h t to t h e i r a t t e n t i o n i n th e e x c e p t io n s s e c t i o n o f ;
i
t h e i r t i t l e in s u r a n c e p o l i c y . T i t l e in s u r a n c e f u l f i l l s
a d e f i n i t e n eed and f i n d s s o c i a l j u s t i f i c a t i o n i n i t s
in e x p e n s iv e p r o t e c t i o n o f i n t e r e s t s a t t a c h in g t o la n d *
T h ere a r e t h r e e p r i n c i p a l ty p e s o f t i t l e in s u r a n c e
p o l i c i e s is s u e d by C a l i f o r n ia t i t l e in s u r a n c e co m p a n ies:
( 1 ) The C a l i f o r n ia Land T i t l e A s s o c ia t i o n p o l i c y . T h is
p o l i c y may in s u r e th e le n d e r and ow ner j o i n t l y , th e ow ner
o n l y , o r i t may be is s u e d a s a lo a n p o l i c y t o th e le n d e r
o n l y . T h is p o l i c y i s th e form m o st commonly i s s u e d .
( 2 ) The F u l l C overage P o l i e y . T h is i s a sta n d a r d
p o l i c y form i n w h ich th e p r in t e d e x c e p t i o n s 2 a r e e li m in a
te d f o r an a d d i t io n a l f e e . ( 3 ) A m erican T i t l e A s s o c ia
t i o n P o l i c y ( A .T .A ) . T h is i s th e m o st c o m p re h e n siv e
p o l i c y is s u e d f o r th e b e n e f i t o f a le n d e r o n ly and i s
c o n fin e d t o th e l i e n o f a m o rtg a g e o r d eed o f t r u s t .
The t i t l e p o l i c y a f f o r d s p r o t e c t i o n t o th e
p
See Appendix E f o r sample »
65
b e n e f i c i a r y a g a i n s t l o s s r e s u l t i n g from th e f a c t t h a t th e
t i t l e a s shown i n th e p o l i c y i s n o t c o r r e c t . I t p r o t e c t s
a g a i n s t v a l i d c la im s and p r o v id e s a d e f e n s e a g a in s t
i n v a l i d c la im s • The p o l i c y c o v e r s a l l m a t te r s d i s c l o s e d
by an e x a m in a tio n o f th e p u b lic r e c o r d s and f u r t h e r c o v e r s
i n a d d it io n many o f f - r e c o r d r i s k s f i . e . , d e f e c t s i n t i t l e
n o t d i s c l o s e d by an e x a m in a tio n o f th e p u b lic r e c o r d .
By p u b lic r e c o r d s i s m eant t h o s e r e c o r d s w h ich
u n d er th e r e c o r d in g la w s im p a r t c o n s t r u c t iv e n o t i c e o f
m a tte r s r e l a t i n g to l a n d . P u b lic r e c o r d s in c lu d e f e d e r a l ,
c o u n ty , c i t y , i n th e o f f i c e s o f t h e r e c o r d e r , r e g i s t r a r ,
c le r k s o f th e c o u r t s , c l e r k s o f th e c o u n ty and c i t y , 1
a s s e s s o r s , t r e a s u r e r s , t a x c o l l e c t o r s and o t h e r g o v e r n
m e n ta l a g e n c ie s •
i
j O ff-r e c o r d r i s k s c o v e r e d by th e p o l i c i e s in c lu d e
i
i d e n t i t y o f p a r t i e s , m a r it a l s t a t u s , c o m p ete n c y , e l i g i b i -
!
l i t y o f a l i e n s , r i g h t s o f f i c t i t i o u s e n t i t i e s , pow ers o f i
i
t r u s t s , f i d u c i a r i e s , c o r p o r a t io n s , g o v e r n m e n ta l a g e n c i e s , •
i
p a r t n e r s h i p s , a s s o c i a t i o n s , e t c . , d e l i v e r y , and a p p l i c a
t i o n o f l a w s • i
i
i
The p o l i c y o f t i t l e in s u r a n c e a f f o r d s p r o t e c t i o n j
a g a i n s t f o r g e r y , and f a l s e p e r s o n a t io n . I n su r a n c e j
j
a g a i n s t l o s s d u e to m i n o r it y , in c o m p e te n c y , i n s a n i t y , '
d e a t h , o r presum ed d e a th o f any i n t e r e s t e d p e r s o n i n th e
t i t l e c h a in , i s p r o v id e d by th e p o l i c y . The p o l i c y
g u a r a n te e s t h a t th e p a r t i e s i n th e t i t l e c h a in had th e
r i g h t and pow er to c o n v e y . The t i t l e company ex a m in es
o f f - r e c o r d r i s k s , su ch a s th e r i g h t o f p a r t i e s to a c t and
g i v e s s p e c i a l a t t e n t i o n t o th e pow ers c o n fe r r e d upon
a g e n t s , c o r p o r a t io n s , p a r t n e r s h ip s and o t h e r s . A n o th er
im p o r ta n t o f f - r e c o r d r i s k t h a t i s in s u r e d a g a i n s t i s t h a t
th e r e was l a c k o f p r o p e r d e l i v e r y o f th e in s tr u m e n ts
a f f e c t i n g th e t i t l e to l a n d . The d e l i v e r y o f any i n s t r u
m ent a f f e c t i n g th e t i t l e to la n d w it h i n t e n t to p a s s o r j
chan ge th e t i t l e i s e s s e n t i a l to e f f e c t u a t e i t s p u r p o se •
Y e t t h i s f a c t o f d e l i v e r y i s n o t d i s c l o s e d by th e r e c o r d , i
| The p r e su m p tio n o f d e l i v e r y from b e in g r e c o r d e d i s
1 3 i
j r e b u t t a b l e ♦ I
j L aw s, s t a t u t e s , r e g u la t i o n s and o r d e r s , b o th
f e d e r a l and s t a t e , h ave a d i r e c t b e a r in g upon t i t l e t o
p r o p e r t y . The many t e c h n i c a l r u l e s r e l a t i n g to j o i n t ■
^ A d eed e x e c u te d i n b la n k can o n ly be co m p lete d by:
a n o th e r u n d er w r i t t e n a u t h o r it y i n t h a t r e g a r d , t h i s a u th -,
o r i t y w i l l seld o m ap p ea r o f r e c o r d , C ro ss d e e d s , t h e i r
o p e r a tio n c o n d it io n e d upon th e h a p p en in g o f some f u t u r e ;
j e v e n t , a r e i n e f f e c t i v e , a s a r e d e e d s p la c e d i n e sc r o w
and d e l iv e r e d i n d is r e g a r d o f th e c o n d it io n s t h e r e o f ,
j (S e e S o , C a l. Law R e v ie w . V o l . 1 , p . 5 2 , I
67
te n a n c y , com m unity p r o p e r t y , h o m e s te a d s , and p a r t n e r s h ip s
m u st be c o n s id e r e d . P o s s i b i l i t i e s o f f e d e r a l e s t a t e
t a x e s o r p o s s i b l e l i e n s by th e d e p a r tm e n t o f i n t e r n a l
r e v e n u e a r e e x a m in e d . The l i s t o f la w s w h ich m u st be
c o n s id e r e d i n p a s s in g on t i t l e s c o u ld be e x te n d e d in d e
f i n i t e l y a s c o u ld th e d e c i s i o n s o f th e c o u r ts d e a lin g w it h
t h e s e la w s • The t i t l e company ta k e s a l l o f th e f o r e g o in g
m a tte r s i n t o c o n s i d e r a t io n and in s u r e s a g a i n s t r i s k s
a r i s i n g o u t o f them when i t i s s u e s a t i t l e p o l i c y .
The e a s i e s t way to d i f f e r e n t i a t e b e tw e e n th e
v a r io u s t y p e s o f t i t l e p o l i c i e s i s to exam in e th e r i s k s
I
n o t c o v e r e d by th e v a r io u s form s • The sta n d a r d form o f |
p o l i c y o f la n d t i t l e in s u r a n c e i n g e n e r a l u s e i n C a l i - |
i
- f o r n ia , th e C .L .T .A . ( C a l i f o r n i a Land T i t l e A s s o c ia t i o n )
d o e s n o t in s u r e a g a i n s t : 4 ( 1 ) L o s s e s a r i s i n g from
d e f e c t s o r o t h e r m a tte r s c o n c e r n in g th e t i t l e known to
th e in s u r e d to e x i s t a t th e d a t e o f th e p o l i c y and n o t
t h e r e t o f o r e com m unicated i n w r i t i n g to th e i n s u r e r .
An in s u r e r w i l l n o t p r o t e c t a g a i n s t m a tte r s o f w h ich th e
in s u r e d i s c o g n iz a n t b u t d o e s n o t d i s c l o s e . The a p p l i c a
t i o n o f t h i s r u le w ould p r e c lu d e th e o b t a in in g o f a v a l i d I
i
I
t i t l e p o l i c y w h ere th e b u y er knew he w as d e a l in g w ith a j
_______________________ i
4 See Appendix E f o r sample . !
68
m in o r . The in s u r in g a g reem en t w ou ld be v o id a b le i f th e
t r a n s a c t io n w as in d u ced b y fr a u d , d u r e s s , undue i n f l u e n c e
o r m is ta k e o f th e i n s u r e d . A w aren ess o f t h i s l i m i t a t i o n
upon th e l i a b i l i t y o f th e in s u r e r w ould le a d th e p r u d e n t
p e r s o n to make a f u l l d i s c l o s u r e o f a l l c ir c u m s ta n c e s
p e r t a in in g to t r a n s a c t io n s on w h ich th e p r o t e c t i o n o f
t i t l e in s u r a n c e i s s o u g h t .
( 2 ) E a se m e n ts, l i e n s , o r en cu m b ran ces n o t shown
by th e p u b lic r e c o r d su c h a s u n re c o rd ed u t i l i t y e a s e m e n ts ,
p u b lic o r p r i v a t e r o a d s , com m unity d r iv e w a y s , m e c h a n ic s j
l i e n s w h ose p r i o r i t y w i l l r e l a t e b a ck t o th e i n c e p t io n o f
w o r k . . > I
i
i
( 3 ) The r i g h t s o r c la im s o f p e r s o n s i n p o s s e s s i o n i
o f la n d w h ich a r e n o t show n by p u b lic r e c o r d s . P o s s e s s io n !
i s c o n s t r u c t iv e n o t i c e o f a l l th e r i g h t s w h ich th e p e r s o n !
i
I
i n p o s s e s s i o n a c t u a l l y h a s , j u s t a s f u l l y a s i s c o n s t r u e - j
t i v e n o t i c e by th e r e c o r d s * I t i s in cu m b en t upon anyon e j
s e e k in g t o a c q u ir e an i n t e r e s t i n la n d t o make in q u ir y o f
j
t th o s e i n p o s s e s s i o n and h e i s deem ed t o h ave c o n s t r u c t iv e
i
j n o t i c e o f a l l th o s e f a c t s w h ich w ould be d i s c l o s e d by su ch
an i n q u i r y . j
( 4 ) F a c t s , r i g h t s , i n t e r e s t s , w h ich a r e n o t show n j
by th o s e p u b l i c r e c o r d s w h ich im p a r t c o n s t r u c t iv e n o t i c e ,
69
b u t w h ich c o u ld be a s c e r t a in e d by an i n s p e c t i o n o f th e
la n d o r by m aking in q u ir y o f p e r s o n s i n p o s s e s s i o n o r by
a c o r r e c t su r v e y * Thus th e p o l i c y d o e s n o t p r o t e c t
a g a i n s t e n c r o a c h m e n ts, t h e e x a c t l o c a t i o n o f th e
b o u n d a r ie s , v i o l a t i o n s o f d e e d r e s t r i c t i o n s and o th e r
m a tte r s w h ich w ould be d i s c l o s e d b y an e x a m in a tio n *
( 5 ) M in in g c la im s , r e s e r v a t i o n s i n p a t e n t s ,
w a te r r i g h t s , c la im s o r t i t l e to w a t e r , w h e th e r o r n o t o f
r e c o r d . One d o e s n o t e n c o u n te r m in in g c la im s o r r e s e r v a
t i o n s i n p a t e n t s t o p r o p e r ty o r i g i n a l l y em braced i n
M exican g r a n t s , n o r w ou ld su c h c la im s o r r e s e r v a t i o n s be
i
o f any im p o r ta n c e i n c o n n e c tio n w ith th e t i t l e to u rb an I
I
! p r o p e r ty * i
|
( 6 ) The a c t s o r r e g u la t i o n s o f any g o v e r n m e n ta l j
i :
| a g e n c y la w , in c lu d in g z o n in g o r d in a n c e s , r e g u la t i n g o f j
i I
i o c c u p a n c y , u s e , o r e n jo y m en t o f la n d o r any im provem ent i
on th e la n d ♦
I t i s a p p a r e n t from th e f o r e g o in g t h a t many o f
i
th e ite m s n o t c o v e r e d by th e sta n d a r d p o l i c y can be !
i i
i I
| d e te r m in e d by a c a r e f u l e x a m in a tio n o f th e l a n d , and j
■ in q u ir y o f p a r t i e s i n p o s s e s s i o n . The in s u r e d i s ch a rg ed
| w it h th e r e s p o n s i b i l i t y and assu m es th e r i s k o f t h e s e
ite m s w h ich a r e n o t c o v e r e d by th e p o l i c y .
70
F or s t i p u l a t e d a d d i t io n a l f e e s , s p e c i a l e n d o r s e
m en ts can be o b ta in e d f o r u s e w it h th e sta n d a r d p o l i c y
w h ich w i l l e li m in a t e any one o r a l l o f t h e r i s k s r e f e r r e d
t o a b o v e . T h ese s p e c i a l e n d o r se m e n ts may a l s o be o b ta in e d
to c o v e r c e r t a i n s p e c i a l s i t u a t i o n s su c h a s d e f e c t s i n
th e t i t l e o f r e c o r d w h ich th e in s u r e d i s u n w illin g to
a ssu m e . T h ese d e f e c t s a r e s t i l l shown i n th e t i t l e p o l i c y
b u t i n many c a s e s an e n d o r se m en t ca n be added w h ich w i l l
p r o t e c t th e in s u r e d from any l o s s o c c a s io n e d by t h a t d e
f e c t . I l l u s t r a t i o n s o f su c h d e f e c t s a r e u n lim it e d r e
s t r i c t i o n s , w h ich a r e f o r v a r io u s r e a s o n s known o r b e
l i e v e d t o be u n e n f o r e e a b le ; e a se m e n ts o f r e c o r d lo n g i n
d i s u s e and u n l i k e l y e v e r to be c la im e d ; e t c .
The l e n d e r ' s e x te n d e d c o v e r a g e p o l i c y commonly
I g
j known a s th e A .T .A . (A m erican T i t l e A s s o c ia t i o n ) form
; o f p o l i c y in s u r e s a g a i n s t t h o s e m a tte r s w h ich a r e e x c lu d e d
from th e p r o t e c t i o n o f th e sta n d a r d c o v e r a g e p o l i c y ,
u n d er ite m s 2 , 3 , 4 , and 5 a b o v e . T h is added c o v e r a g e i s
b a sed upon an e x a m in a tio n o f th e p r o p e r ty by th e in s u r e r
and in q u ir y o f th e p e r s o n s i n p o s s e s s i o n . W hatever
r i g h t s o r d e f e c t s a r e d i s c l o s e d by t h e s e i n v e s t i g a t i o n s
w i l l be show n a s w r i t t e n e x c e p t io n s i n th e p o l i c y . T h is
5 See Appendix F f o r sample .
71
e x t r a premium ty p e o f p o l i c y h a s b e e n d e v is e d f o r th e
u s e o f le n d e r s who w i l l n o t assum e th e r i s k s . I n s t i t u t i o n
a l le n d e r s demanded t h i s ty p e o f p o l i c y b e c a u se th e y w ere
u n a b le to make th e p e r s o n a l i n s p e c t i o n s r e q u ir e d f o r t h e i r
own p r o t e c t i o n u n d er th e sta n d a r d p o l i c y fo r m s .
The f u l l c o v e r a g e p o l i c y p r o v id e s th e same p r o t e c
t i o n to ow n ers t h a t th e A .T .A . form a f f o r d s th e l e n d e r .
The f e e f o r b o th o f t h e s e p o l i c y form s i s u s u a l l y d o u b le
t h a t f o r th e sta n d a r d form on th e same r i s k . The p r o c u r e
m en t o f t h e s e e x t r a c o v e r a g e p o l i c i e s d o e s n o t in s u r e
th e h o ld e r a g a i n s t known d i s c l o s e d d e f e c t s . I n t h e s e
b ro a d er fo rm s th e t i t l e company d o e s n o t in s u r e a g a i n s t
m a tte r s known t o th e in s u r e d and n o t d i s c l o s e d to th e
in s u r e r n o r a r e r e g u la t i o n s o f g o v e r n m e n ta l a g e n c ie s r e s p e c
t i n g th e o c cu p a n c y o r u s e o f th e la n d in s u r e d a g a i n s t .
I t i s p o s s i b l e to o b t a in in s u r a n c e c o v e r in g z o n in g
o r d in a n c e s . H ow ever, t h i s i s seld o m o f s u b s t a n t i a l b e n e f i t
due t o th e c o n s t a n t ly c h a n g in g n a tu r e o f su ch r e g u l a t i o n s .
The p r o t e c t i o n o f t i t l e in s u r a n c e a llo w s th e le n d e r
o r h o ld e r i n la n d t o c o v e r h im s e lf a g a i n s t r i s k s i n c i d e n t a l
to t h i s la n d i n t e r e s t , by a c o n t r a c t o f in d e m n ity w ith a
t i t l e in s u r a n c e com pany. Thus he i s a b le to know b e f o r e
hand any d e f e c t s t h a t w i l l ap p ea r i n th e t i t l e i n th e e v e n t
h e w i l l h a v e to r e a l i z e on th e s e c u r i t y . _________________________
72
I n o r d e r to g iv e a d d i t io n a l p r o t e c t i o n a number
o f en d o rsem en t form s f o r u s e i n c o n n e c tio n w it h th e t i t l e
p o l i c i e s h a v e b een d e v e lo p e d . E n d orsem en ts h ave b een
d e v is e d to o f f e r a d d i t i o n a l p r o t e c t i o n a t a d d i t io n a l e x
p e n se * One o f th e m o st commonly u sed e n d o rsem en t form s
i s known a s th e C*L*T.A. 100 Form . T h is C .L .T .A . 1 0 0
en d o rsem en t i s r e q u ir e d on any lo a n t h a t i s g u a r a n te e d or
in s u r e d b y th e F e d e r a l H o u sin g A d m in is t r a t io n o r th e
V e te r a n s A d m in is t r a t io n , A sam p le o f t h i s en d o rsem en t
form i s in c lu d e d i n th e A .T .A p o l i c y sa m p le , A p p en d ix F .
i
The C .L .T .A * 100 form o r en d o r se m en t in s u r e s 1
i
a g a i n s t any l o s s w h ich may be s u s t a in e d by r e a s o n s o f
f u t u r e v i o l a t i o n s o f c o n v e y a n c e s , c o n d it io n s and r e s t r i c - j
j
t i o n s . I t f u r t h e r in s u r e s a g a i n s t any dam ages t o e x i s t i n g
Im provem ents o c c a s io n e d b y th e e x e r c i s e o r u s e o f e a se m e n ts
s e t f o r t h i n th e p o l i c y *
Through th e u s e o f t i t l e in s u r a n c e th e le n d e r i s
a b le to a s s u r e h im s e lf t h a t he w i l l s u f f e r no l o s s due to
u n m a r k e t a b ilit y o f t i t l e , w h ich a r i s e s a s a r e s u l t o f
m a tte r s n o t d i s c l o s e d to him i n th e t i t l e s e a r c h . The
t i t l e p o l i c y i s th e le n d e r * s e v id e n c e o f th e c o n d it io n
o f t i t l e and h i s a s s u r a n c e and g u a r a n te e t h a t th e t i t l e
c o n d it io n s a r e a s s t a t e d . I n th e e v e n t he w is h e s to s e l l
73
h i s t r u s t d eed th e t i t l e p o l i c y p r o v id e s him w ith an
e v id e n c e o f t i t l e and a g u a r a n te e a s t o th e l e g a l i t y o f
h i s l i e n w h ich i s r e a d i l y a c c e p t a b le to o t h e r le n d e r s o r
b u y er s o f t r u s t d e e d s #
The t r u s t d eed l e n d e r , a f t e r an e x a m in a tio n o f th e
p r e lim in a r y r e p o r t p r o v id e d him by th e t i t l e company
m ust make a d e t e r m in a t io n o f th e ty p e o f t i t l e in s u r a n c e
he d e s i r e s i n th e lo a n u n d er c o n s i d e r a t i o n . I n many
in s t a n c e s c o m p e t it iv e f a c t o r s d i c t a t e t h a t h e m u st a c c e p t
t h a t ty p e o f t i t l e in s u r a n c e w h ich can be o b ta in e d a t th e
l e a s t c o s t to th e b o r r o w e r . The lo w e s t c o s t ty p e o f t i t l e
in s u r a n c e , i . e . , sta n d a r d c o v e r a g e , p r o v id e s th e l e a s t
p r o t e c t i o n , t h e r e f o r e th e le n d e r m u st be w e l l aware o f
j u s t w h at he i s g e t t i n g i n th e way o f t i t l e in s u r a n c e .
I I t may be t h a t due t o p e c u l i a r t i t l e c o n d i t i o n s , more
I ■
p r o t e c t i o n i s n e e d e d . I f t h i s i s th e c a s e , th e n th e
A .T .A . form i s i n d i c a t e d . I f th e le n d e r f e e l s t h a t t h e r e
i s a p o s s i b i l i t y o f th e e x e r c i s e o f an e a se m e n t o r th e
v i o l a t i o n o f a r e s e r v a t i o n he may r e q u ir e th e C .L .T .A . 1 0 0
e n d o r se m en t o r some o t h e r s p e c i f i c e n d o r se m en t w h ich
g u a r a n te e s t h a t he w i l l s u f f e r no l o s s du e t o any p a r t i c u
l a r h a p p en in g w h ich he f e e l s may be d e t r im e n t a l to h i s
i n t e r e s t . The w is e le n d e r w i l l i n e v e r y c a s e w here i t i s
74
p r a c t i c a l o b t a in th e u lt im a t e i n t i t l e In su r a n c e w h ich a t
th e p r e s e n t tim e w ould be an A *T .A . p o l i c y w it h a C .L .T .A .
1 0 0 e n d o r se m e n t.
6 S e e A p p en d ix F f o r exam p le .
BIBLIOGRAPHY
A . BOOKS
A m erican I n s t i t u t e o f B a n k in g : Home M ortgage L e n d in g .
New York; A m erican B an k ers A s s o c i a t i o n , 1 9 4 6 . 354 pp
D e e r in g , Jam es H .: C a l i f o r n i a . L aw s. S t a t u t e s e t c e t e r a .
C i v i l Code S t a t e o f C a l i f o r n i a 4 San F r a n c is c o :
B a n e r o ft-W h itn e y C o ., 1 9 4 8 . 763 p p .
D i l l a v o u , E s s e l R . and H oward, C h a rle s G .; P r i n c i p l e s o f
B u s in e s s L aw . New Y ork: P r e n t i c e - H a l l , I n c . , 1 9 4 6 .
990 pp »
F is h e r , E r n e s t M.: Urban R e a l E s t a t e M a r k e ts: C h a r a c te r
i s t i c s and F in a n c in g . New Y ork: N a t io n a l B ureau o f
E conom ic R e s e a r c h , 1 9 5 1 . 186 p p .
G age, D a n ie l D . , J r . ; Land T i t l e A s s u r in g A g e n c ie s i n th e
U n ite d S t a t e s . San. F r a n c is c o ; The R e c o r d e r P r i n t i n g
and P u b lis h in g C o ., 1 9 3 7 ; 162 p p .
R i e g e l , R o b e r t and M i l l e r , Jerom e S .: In su r a n c e P r i n c i p l e s
and P r a c t i c e s . New York; P r e n t i c e - H a l l , I n c . , 1 9 4 7 .
788 p p .
B . PERIODICAL LITERATURE
D i v i s i o n o f R e a l E s t a t e , S t a t e o f C a lif o r n ia : The R e a l
E s t a t e B u l l e t i n . M arch, 1952 i s s u e .
O t i s , L aw rence L .: What P r o t e c t i o n i s T i t l e I n s u r a n c e ?
L os A n g e le s -B a r B u l l e t i n , D ecem b er, 1 9 4 6 .. 10 p p .
C. PAMPHLETS
C a l i f o r n ia B an kers A s s o c ia t i o n : J o i n t T e n a n c ie s i n
C a l i f o r n i a . San F r a n c is c o , 1 9 4 7 . 31 p p .
77
T i t l e In su r a n c e and T r u st Company: W ith d raw al From T o r r e n s.
November 7 , 1950 P a m p h le t, Los A n g e le s .
T i t l e In s u r a n c e and T r u st Company: Here* s How to Speed U p
Your E s c r o w s . P a m p h le t, Los A n g e le s *
T i t l e I n s u r a n c e and T r u s t Company; P in n in g Down Your
P r o p e r t y * P am p h let c o m p iled by Edmund M. P i t t s f o r
th e C a l i f o r n ia Land T i t l e A s s o c i a t i o n , L os A n g e le s .
T i t l e In su r a n c e and T r u st Company: B eh in d th e S c e n e s . a.
Tour Through th e T . I . T i t l e P l a n t . L os A n g e le s ,
P a m p h le t, 32 p p .
D . UNPUBLISHED MATERIALS
B o o n e , Jam es V . , P r i n c i p l e s and P r a c t i c e s G overn in g and
I n c i d e n t a l to O w nership and T r a n s fe r o f R e a l and
P e r s o n a l P r o p e r ty * U n p u b lish ed m a n u s c r ip t , Los A n g e le s .
74 p p .
E m an u el, G ordon M. , , A p p lie d B an king Law, U n p u b lish ed
m a n u s c r ip t, 1 9 4 8 , 53 p p . 1
A P P E N D I X I
i
!
T o:
Appendix A
ESCROW INSTRUCTIONS
(REAL ESTATE TRANSACTION)
IBttttit Am^rtirt* p S c r o w * °:
N A T IO N A L - s a v ® n o NS A S S O C I A T I O N t S C T O W U t t l C e r _______________________________________
_____________________________■ Branch
__________________________________. California , 19
In consideration of your acting as escrow holder herein, it is agreed th a t you shall in no case or event be liable for forgeries or false personations in
connection with these instructions, instrum ents of record, or those handled in this escrow.
I t is fu rth er agreed th a t if any controversy arises between th e parties hereto or w ith any third person, you shall not be required to determ ine the
same or take any action in the premises, bu t you m ay aw ait th e settlem ent of any such controversy by final appropriate legal proceedings or otherwise
as you m ay require, notw ithstanding anything in the following instructions to the contrary, and in such event you shall not be liable for interest or
damage.
I hand you
and will deliver to you any notes, instrum ents and additional funds required from me to enable you to com ply with these instructions, all of which you
are authorized and instructed to use and deliver provided instrum ents have been filed for record entitling you to procure assurance of title in the form
of a Policy of Title Insurance issued by
in its usual form , with a liability of $
covering property in the C ounty of S tate of California,
as per m ap recorded in Boole , Page of Records of said C ounty,
described as follows:
showing title vested in:
subject to: (1) G eneral and Special taxes for the fiscal year 19 19 IN C L U D IN G A N Y
SPE C IA L D IS T R IC T L E V IE S, P A Y M E N T S FO R W H IC H A R E IN C L U D E D T H E R E IN A N D C O L L E C T E D T H E R E W IT H .
(2) Assessments and Bonds, not delinquent, unpaid balance
(3) A ny covenants, conditions, restrictions, reservations, rights, rights of way and easem ents of record, or in deed to file.
(4) M ortgage — Deed of T ru st securing an indebtedness of $ , as per its term s, now of record, unpaid balance of
principal $
( S ' ) M ortgage — Deed of T ru st on form , executed by
securing N ote for $ in favor of
dated due (if straight note)
a t per cent per annum , from payable •
at
principal and interest due and payable in installm ents of $ DR M O R E , each on the
every m onth, beginning
*
yc«M8 after date, w ith interest
day of
T he following adjustm ents O N L Y are required in this escrow:
Tru-245 8-50
\ J U
U nless otherw ise provided m ake all adjustm en ts on basis of 30-day m onth, based on la test available figures in case of taxes and A ssessm ents or
Bonds, principal and interest on encum brances of record based on statem en ts by M ortgagees or holders of notes for collection, in terest on new encum
brances by endorsem ent on notes, and rents on basis of statem en t approved by me. Assume th a t insurance prem ium s are paid and tran sfer on behalf of
parties hereto any fire insurance policies as handed you. Forw ard such policies, upon close of escrow, to agent w ith the request th a t insurer consent to
such transfer or a tta c h Loss Payable or M ortgagee’ s C lause or o th er additions or corrections, and th a t agent thereafter forw ard such policies to parties
entitled thereto.
T he expression “ close of escrow” if w ritten in these instructions shall m ean th e d ate instrum ents are filed for record or registration.
You are to cause no exam ination or report to be m ade on state, c o u n ty or city taxes, either real or personal, or sta te corporation taxes for th e year
stated in p arag rap h (1) above prior to d ate first installm ent paym ents are due and payable, and you are to order no special tax report except as herein
otherw ise specifically instructed.
I t is understood th a t all disbursem ents shall be m ade to parties in interest, by your rem ittance and th a t rem ittance and instrum ents will be m ailed
to one of the parties entitled thereto, if m ore th a n one, to address given below. In stru c t C o u n ty Recorder to mail instrum ents in the sam e m anner.
D eliver T itle Policy to
P repare from
I will pay, on dem and, regardless of the consum m ation of this escrow, all charges incurred by you for me, including fee for preparing instrum ents
I execute, fee for recording , your escrow fee and
If you are unable to com ply w ith these instructions on or prior to
th ereafter as possible unless a w ritten dem and for retu rn of m oney or instru m en ts by
and prior to the recording of any in strum ent provided for herein.
this escrow :
you will com ply as soon
received by you subsequent to such date
Address
Telephone
Address
Telephone
T he foregoing instructions and conditions are hereby approved and accepted in th eir en tirety and concurred in by me. I will supply you w ith
funds, notes and instrum ents required from me to enable you to com ply w ith the instructions, w hich you are authorized to use and deliver provided
you hold for m y account any instrum ents accruing to me and th e sum of $
O rder search of title a t once. D ed u ct all m y expenses from funds accruing to me. I will pay, on dem and, regardless of the consum m ation of this
escrow, all charges incurred by you for me (except those o th er p a rty has agreed to p a y ), including title charge, fee for preparing instrum ents I execute,
yo u r escrow fee and
P repare from
A ttach In tern al R evenue Stam ps in the am ount of $ to Deed * 1 execute.
P ay C om m ission of $ to
License No.
M ake following disposition of proceeds due me:
M ail C heck
S ignature S ignature
A ppendix R
D E C L A R A T IO N O F QWBML P L A fl O F C O V E S * A K T 3 A H D R E ST R IC T IO N S
W EH H A S, the undersigned . Is the
owner of that certain real property situated In the City of Bara tow' »
County of San Bernardino » State of California, m m particularly
described as followsi Tract Bo* 3844, which rdal property Is hereinafter
referred to as the “trac t0, and such owner hereinafter referred to as the
“Declarant0, desires to establieha general plan of covenants and restrictions
affecting the use and occupancy of said tract and each lot or part thereof
pursuant to a plan for subdividing and soiling said trac t or part thereof, for
the mutual benefit of each and every lo t of said tract or port thereof, and
the owners and assigns thereof*
S O W T H E R E F O R E , the Declarant does hereby declare and establish the provisions,
covenants and restrictions upon and subject to which each and a ll of the lo ts
and portions of lota In the above described tract shall be Improved, sold,
conveyed, used and hold by the Declarant and thoir assigns, and each and a ll
of which are declared to be for the mutual benefit of the lots or portions of
N co
lo ts in said tract and of each owner thereof and h is successors and assigns| °
and further, that each and a ll of the covenants or restrictions hereby declared
shall run with the land and shall Inure to and pass with said trac t and each
and every lo t or portion thereof, and shall apply to and bind the reap active
successors' in in.tereat: ^th«reto ftnd are, A nd © aC h thereof 1*,"imposed upon''
said tract' and, each lo t © r pe^tloh thereof, as a mutual servitude in fav©r of
each and e v efifcy parcel of land Contained in said tract as the dominant tenement
©r'tenements* which said covenants and restrictions are as follower
fhdt.wSCW^sid ©verylot Ih th e tract shall fe w knoW n, described a a,: sold
and used for residential purpose* only* All le ts are designated as one*
family dwelling le ts , That each and every lo t-in the trac t, shall be used
for a private single-family residence only1 , and m building or structurepother'
than.a single-family dwelling*or building, not te exceed oh* story In height,
and a private garage for not more than two ears, shall be erected or construeted
upon any of the lo ts of said tract* M o temporary structure shall be erected
or constructed on said tract except for use in connection with the actual
eonstruetion of t&l permanent residential building on any lo t in said tra c t,
but In no event shall said temporary structure remain on any lo t in said
tra c t for a period of time in excess of that period of time customarily
rsquired to construct such permanent single-family dwelling together with
• I ^ * ■ ■ ; ■ - 'v ‘ * V , ■ / , • '
garage and customary outbuildings*
2 m
M m m building shall be erected, pieced or altered on any building
plot In this subdivision u n til the building plans* specifications, end plot
plan snowing the location of such building have been .approved in writing as
to conformity and harmony of e&ternaV design with existing structure in the
subdivision, and as to location of the building with respect to topography
add finish ground elevation* by a committee composed of Adrian & • Wilbur*
K,s* dossier ft lloyd b* McDonald or by a representative designed by ammajortty
of the member of said committee| that In the event of the death of resign**
at ion of any member of cadi committee, the remaining member of members* shall
have authority to approve or disapprove such design and location* or to
designate a representative With like authority* th at in the event said
committee or i t s designated representative* fa ils to approve or disapprove
such design or location within S O days > afte r said plans and specifications
have been submitted to it* or in any event* If no su it to enjoin the
erection of such building or buildings or the .asking of such alterations
has been commenced prior to the completion thereof*. such approval shall
not be required and th is covenant shall be deemed to have been fuuly complied*
with* neither the members of this committee* nor of its designated repres
entatives shall be en titled to any compensation fo r services performed
pursuant to th is covenant* That the powers and duties,of such committee,.,
and ef i t s deai***afted representative shall cease on and a fte r December 1*1.963*
That themeafte r the approval described in this covenant shall not be re-
qulred unless* prior te paid date and effective thereon* a w ritten Instrument
' -- -.V' .,r ■■' ■ . - . - ■' . ,■ t - . .. ' ‘
shall be executed by the then record owners of a majority Of the lo ts In'*
■ ' ’V ' * ' ■ -r , V • r- -r \ . , ^ ^ *V / ,
th is subdivision and duly recorded appointing a representative er represent
atives* who shall therafter exercise, the same powers previously exercised
by said commit tee.
3* lhat no building th a n be located nearer than 89 feet to the front lo t
lime nor nearer than 10 feet tw any Side street lines that no bpildiag*
except a detaehed garage or ether outbuilding located 60 feet or mere from
front le t line* s h a ll be located nearer than J| feet to any side le t line*
except with the speoiflc written authority of the, committee set up In the
preceding paragraph* oneoef the side nine .setbacks stay be fiduced te not
lews than 5 feet* provided that the sum pf the width of ?the side yard is
not less than 1§ feet*-and the distance between wall line* of the adjacent
p a g e 2 1 *
building Is not Isas than 10 feet*
4* lhat no fanes or wall snail be erected or permitted bo remain between
the street and the front s©t~baek line* nor shall any hedge therein be
permitted to exceed the heigth of three {3) feet# and no fence or m il in
excess of 6 feet In height shall toe erected or maintained on any other
portion of any residential building lot*
5* 2hat.no residential structure shalltoe erected or placed upon any building
plot* which plot has been an area of less than 6000 feet nor a width of
less than 50 feet at the front building setback line*
6* That no noxious or offensive trade shall toe carried on upon any lot#
nor shall anything toe to e thereon which may toe or become any annoyance or
nuisance to the neighborhood*
7* That no trailer* basement* tent* shook* garage* barn or other out
building erected in the tract shall at any time be used as a residence
temporarily or permanently* not shall any structure of a temporary character
be used as a residence*
8* % at no single dwelling shall be erected or placed or maintained on any
lo t in the said tract having a ground floor area in the main structure*
exclusive of one story ©pen porches and garage# of less than 800 feet$
9* %at" m easement is reserved over the rear 6^ feet of'cash le t fo r
U tility installations and maintenance or as otherwise specified on m ap#
10* Ifoagerage shall toe erected on the premises u n til the plans, have been
submitted end approved toy the committee* set up in Paragraph 8#
11. r i?hat a© headge': sh all be permitted to exceed the height ©f 3 feet on
nay; lo t bn said tract#; :
12# :'% a t theie covenants# with the exception of the covenants contained In
paragraph 7* are f c © rah with the land* and shall bebingingon a llp e r tie s
claiming under them u n til Uedember 1, 1983* a t which time said toovtonta
shall, automatically to e extended for successive periods of ten years# unless
by a vote of the majority of the then owners of the lots i t is agreed to
change the" said covenants in whole © r in part.# She covenants contained in
said paragraph 7 rune with the land and shall toe perpetual*
IS# $hst i f the parties hereto or.any of them* or th e ir heirs, or assigns
shall violate or attempt to violate any of the covenants herein i t shall toe
lawfuliLfor an^ other person or persons owning any re a l property situated In
fage 4«
said tract to prosecute any proceedings at law or la equity against the
person or. parsons viola tin or attempting to- violate amh covenants and either
to prevent or essoin him of them from so' doing or to recover damages or other
does for such violation*
14* lhafc I f any provisions of those covenants or restrictions he declared
invalid or uneadorceable# a ll other provisions# covenants# and restrictio n s
shall remain in .full, fore# and effect*.
18* Breach of any of said covenants and restrictions* or any re-entry by
reason of such breach* shall not defeat or render invalid the lien of any
mortgage or deed of tru s t made in good faith and for value as to said lots
of property# or any part thereof* but such provision*, restric tio n of
covenants shall be binding and effective against a n y owner of property whose
t i t l e thereto is acquired by foreclosure* trustee*a sale* or otherwise*. •
16* 8b derrick or other structure designed for use in boring, mining# or
quarrying for water* o il or natural gas or precious minerals# shall ever
be erected* maintained* or permitted upon any lo t in said tract*
X tt witness w hjssbgf* the undersigned owners,
abevf refe rn d to aa Declarants* have caused
thiS,: ;i*i»fcr^ to.'be executed th is ...
M*£*Mossler
Appendix G
S H O R T FO RM D EED O F T R U S T A N D A SSIG N M E N T O F R E N T S
adopting and including by reference certain provisions o f a deed of trust recorded in the counties nam ed herein.
A copy of said provisions is set forth on the reverse hereof.__________________________
Q H y t a of Etmt, made this............................................. day of........
of..................................................................... ................................................. in the City of .............................. ,
(Street and Number)
County of , State of ...................................................................................
herein called TR U STO R , jSktttStrtCS. a national banking association, herein called TRU STEE, and
NATIONA L, m m ASSOCIATION
.................. herein called BENEFICIARY,
H E U t n e a a e t f f : T hat Trustor irrevocably G RA N TS, TRANSFERS A N D A SSIGNS to TR U STEE IN TR U ST, W IT H
PO W E R OF SALE, that property in............................................................................................... ..............................................................................
County, California, described as:
T O G ETH ER W IT H the rents, issues and profits thereof, SUBJECT, H O W EV ER , to the right, power and authority given
to and conferred upon Beneficiary by Section B, Paragraph 5, of the provisions adopted and included herein by reference to
collect and apply such rents, issues and profits.
Wat ttj? purpoE? of (1) payment of the indebtedness evidenced by one promissory note of even date here-
with in the principal sum of $.........................................payable to Beneficiary or order, and (2) the performance of each agreement
of Trustor adopted and included by reference or contained herein.
tfc r e execution anfc fcelinerg of tfyis Ueeii of ©rust and the note secured hereby the parties hereto agree that
there are adopted and included herein for any and all purposes by reference as though the same were written in full herein the
provisions of Section A, including paragraphs 1 through 5 thereof, and of Section B, including paragraphs 1 through 9 thereof,
of that certain fictitious Deed of Trust recorded in the official records in the office of the County Recorder of Sacramento County
on April 18, 19 JO, in book 1814 at page 186 and in the official records in the office of the County Recorder of Shasta County on
on April 17, 1950, in the books and at the pages designated after the name of each county:
C O U N T Y BOOK PAGE C O U N T Y BOOK PAGE C O U N T Y BOOK PAGE C O U N T Y BOOK PAGE
Alam eda 6080 519 Kern 1634 347 N evada 149 199 Santa Cruz 767 498
A lpine F 71 Kings 454 10 O range 1999 492 Sierra 1 202
A m ador 42 76 Lake 206 449 Placer 566 647 Siskiyou 257 334
Butte 544 145 Lassen 60 146 Plumas 31 94 Solano 527 21
Calaveras 60 309 Los Angeles 32874 331 Riverside 1164 336 Sonoma 953 386
Colusa 166 2 M adera 491 62 San Benito 169 406 Stanislaus 1000 1
Contra Costa 1539 32 M arin 647 154 San Bernardino 2562 143 Sutter 321 30
Del N orte 31 475 M ariposa 31 396 San D iego 3584 100 Teham a 210 308
El D orado 275 485 M endocino 267 53 San Francisco 5423 490 T rinity 40 420
Fresno 2835 75 M erced 981 44 San Joaquin 1240 432 T ulare 1437 411
Glenn 244 415 M odoc 82 341 San Luis Obispo 560 594 Tuolum ne 47 119
H um boldt 127 442 M ono 27 83 San M ateo 1838 193 V entura 926 397
Im perial 777 126 M onterey 1210 132 Santa Barbara 911 491 Y olo 321 95
Inyo 83 1 N apa 331 100 Santa Clara 1962 33 Y uba 140 213
A copy of said provisions so adopted and included herein by reference is set forth on the reverse hereof.
The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his
address given above.
Signature of Trustor
STA TE O F CA LIFORN IA
CO U N TY OF..
O n this................................day of......................................................., 19.......,
before me , a Notary
Public in and for said County, personally appeared .................................
known to me to be the person(s) whose nam e(s) ................... subscribed
to the within instrument, and acknowledged that .................. executed
the same.
W IT N ESS my hand and official seal.
(SEA L)
N otary Public in and for said County and State.
M y Commission Expires .................................
(If executed by a corporation the corporation form of acknowledgment
must be used.)
SPACE BELOW FOR RECORDER’S USE ONLY
Indexed as Trust Deed and Assignment of Rents
DO NOT RECORD
C l >
To obtain either a Partial Reconveyance or a Subordination Agreement, this Deed of Trust, together with the note secured
hereby, must be presented to the Trustee for endorsement, accompanied by either a Request for Partial Reconveyance or a Sub'
ordination Agreement, as the case may be, and Trustee’s fee.
To obtain a Full Reconveyance of this Deed of Trust present to the Trustee this request properly executed, the Deed of Trust,
the original note secured by said Deed of Trust and any other evidence of indebtedness secured thereby, together with reconveyance
fee.
R E Q U E ST FO R FULL R EC O N VEYA N CE
To BANK OF AM ERICA N A T IO N A L TR U ST A N D SAVINGS A SSO CIATION , Trustee. D ated:
The undersigned is the legal owner and holder of the note in the amount of $............................................ and all other indebtedness
secured by the foregoing Deed of Trust, which was recorded in Book ....................... Page of...........................................................
Records of ............................................................................... County, California.......................................................................................................................................................
You are hereby notified that said note and all other sums and indebtedness secured by said Deed of Trust have been fully
paid and satisfied; and you are hereby requested and directed upon surrender to you of said note, Deed of Trust, and evidence of any
other indebtedness secured thereby, for cancellation and retention, and upon payment to you of any sums owing to you under
the terms of said Deed of Trust, to reconvey, without warranty, to “the person or persons legally entitled thereto,” the estate now
held by you thereunder.
M ail reconveyance to this address:
Received reconveyance: .....................................................................................
Signed:
DO NOT RECORD
T h e following is a copy of the provisions of Section A, including Paragraphs 1 through 5 thereof, and of Section B, including Paragraphs 1
through 9 thereof, of that certain fictitious Deed of Trust recorded as set forth on the reverse hereof:
A. uln prntrrt tlr? ii^rurtty nf tfyts Urrti uf yJruist, ©rmittir agrees:
T j S 1. T o keep sa id p ro p e rty in good co n d itio n a n d re p a ir; n o t to rem ove o r dem olish an y b u ild in g th ereo n ; to com plete o r resto re p ro m p tly an d in good an d
y p w ork m an lik e m a n n e r an y b u ild in g w h ich m ay h e c o n stru cted , dam aged o r d estro y ed th e re o n an d to p a y w h en due all claim s fo r lab o r p e rfo rm e d an d m aterials fu rn ish e d th e re fo r;
to com ply w ith all law s affecting sa id p ro p e rty o r re q u irin g any a lte ra tio n s o r im p ro v e m e n ts to be m ade th e re o n ; n o t to com m it o r p e rm it w aste th e re o f; n o t to co m m it, suffer
O
o r p e rm it any act u p o n sa id p ro p e rty in v io la tio n of law ; to cu ltiv ate, irrig a te , fe rtiliz e , fu m ig ate, p ru n e an d do all o th e r acts w hich fro m th e c h a ra c te r o r use of sa id p ro p e rty
m ay be reaso n ah ly n ecessary, th e specific e n u m eratio n s h e re in n o t excluding th e g en eral.
^ 3 2. T o p ro v id e , m a in ta in an d d e liv e r to B eneficiary fire in su ran ce satisfa c to ry to an d w ith loss p ay ab le to B eneficiary. T h e a m o u n t co llected u n d e r any fire o r
o th e r in su ran ce policy m ay be a p p lie d by B eneficiary u p o n an y in d eb ted n ess secu red h ereb y an d in such o rd e r as B eneficiary m ay d e te rm in e , o r a t o p tio n o f B eneficiary
>
the entire amount so collected or any part thereof may he released to Trustor. Such application or release shall not cure or waive any default or notice of default here
under or invalidate any act done pursuant to such notice,
3. T o ap p e a r in an d defen d any actio n o r pro ceed in g p u rp o rtin g to affect th e secu rity h e re o f o r th e rig h ts o r p o w ers o f B eneficiary o r T ru s te e ; an d to p a y all costs
an d expenses, in clu d in g cost of evidence of title a n d a tto rn e y ’s fees in a reaso n ah le su m , in any such actio n o r pro ceed in g in w h ich B eneficiary o r T ru ste e m ay a p p ear.
T o p a y : a t least te n days b efo re delin q u en cy all taxes a n d assessm ents affecting sa id p ro p e rty , in clu d in g assessm ents o n a p p u rte n a n t w a te r stock; w h en
d u e, all in cu m h ran ces, charges a n d lie n s, w ith in te re s t, on sa id p ro p e rty o r any p a rt th e re o f, w hich ap p ear to be p rio r o r su p e rio r n e re to ; all costs, fees a n d expenses o f th is T ru s t.
r ^ S h o u ld T ru s to r fail to m ake any p ay m e n t o r to do any act as h e re in p ro v id e d , th e n B eneficiary o r T ru s te e , h u t w ith o u t o h lig atio n so to do a n d w ith o u t notice
to o r d em an d u p o n T ru s to r an d w ith o u t releasin g T ru s to r fro m any o b lig a tio n h ereo f, m ay: m ake o r do th e sam e in such m an n er an d to su ch ex te n t as e ith e r m ay deem necessary
to p ro te c t th e secu rity h ereo f, Beneficiary o r T ru ste e h eing a u th o riz e d to e n te r u p o n sa id p ro p e rty fo r such p u rp o ses; ap p ear in an d d efen d an y actio n o r pro ceed in g p u rp o rtin g to
EQ affect th e se c u rity h ereo f o r th e rig h ts o r p o w ers of B eneficiary o r T ru ste e ; p a y , p u rc h a se , co n test o r com prom ise any in cu m b ran ce, charge o r lien w h ich in th e ju d g m en t of
e ith e r ap p ears to be p rio r o r su p e rio r h e re to ; a n d , in exercising any such p o w ers, p a y necessary expenses, em p lo y counsel an d pay his reasonahle fees.
5. T o p a y im m ed iately an d w ith o u t d em an d a ll sum s so ex p en d ed b y B eneficiary o r T ru s te e , w ith in te re st from date of e x p en d itu re a t sev en p e r cen t p e r an n u m .
m 21. Jft is mutually agrrrfi ilrai:
1. A n y a w ard of dam ages in connection witfT an y co n d em n atio n fo r p u h lic use of o r in ju ry to sa id p ro p e rty or an y p a rt th ereo f is h ereb y assigned an d sh all be p a id
to B eneficiary w ho m ay ap p ly o r release such m oneys received b y h im in th e sam e m a n n e r an d w ith th e sam e effect as above p ro v id ed fo r d isp o sitio n o f proceeds o f fire o r o th e r
in surance,
2. By accepting p ay m en t of any sum secu red h ereh y a fte r its du e d a te , B eneficiary does no t w aiv e his rig h t e ith e r to re q u ire p ro m p t p ay m en t w h en d u e o f all
o th e r su m s so secu red o r to d eclare d efau lt fo r fa ilu re so to pay,
U
3. At any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed
and said note for endorsement, and without affecting the personal liability of any person^ for payment of the indebtedness secured hereby, Trustee may: reconvey all
, or any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any
C m agreement subordinating the lien or charge hereof.
^ 4. U p o n w ritte n re q u e st o f B eneficiary sta tin g th a t all sum s secu red h e re b y h av e b een p a id , a n d u p o n su rre n d e r o f th is D eed a n d sa id n o te to T ru ste e fo r
can cellatio n a n d re te n tio n a n d u p o n p ay m en t of its fees, T ru ste e sh a ll reco n v ey , w ith o u t w a rra n ty , th e p ro p e rty th e n h eld h e re u n d e r. T h e recitals in such reconveyance o f any
H
m atters o r facts sh all h e conclusive p ro o f of th e tru th fu ln e ss th e re o f. T h e g ran tee in such reconveyance m ay b e describ ed as “ th e p erso n o r perso n s legally e n title d thereto.**
5. A s ad d itio n a l se c u rity , T ru s to r h e re b y gives to an d confers u p o n B eneficiary th e rig h t, p o w er an d a u th o rity , d u rin g th e co n tin u an ce of th ese T ru s ts , to
collect th e re n ts , issues an d profits o f sa id p ro p e rty , reserv in g u n to T ru s to r th e rig h t, p rio r to an y d efau lt b y T ru s to r in p ay m en t o f a n y in d eb ted n ess secu red h ereb y o r in
O
perfo rm an ce of an y ag reem en t h e re u n d e r, to collect an d re ta in such re n ts, issues a n d profits as th ey hecom e du e a n d p ay ab le. U p o n any such d e fa u lt, B eneficiary m ay at
an y tim e w ith o u t n o tic e , eith e r in p e rso n , b y ag en t, o r b v a receiv er to be a p p o in te d by a co u rt, an d w ith o u t re g a rd to th e adequacy o f an y se c u rity fo r th e in d eb ted n ess
h e re b y secu red , e n te r u p o n an d tak e possession o f sa id p ro p e rty o r an y p a rt th e re o f, in h is o w n nam e sue fo r o r o th erw ise collect su ch re n ts , issues an d p ro fits, in clu d in g
m those p a st due a n d u n p a id , an d ap p ly th e sam e, less costs an d expenses o f o p e ra tio n a n d co llectio n , in clu d in g reasonable a tto rn e y ’s fees, u p o n an y in d eb ted n ess secu red h e re b y ,
KX a n d in su ch o rd e r as B eneficiary m ay d e term in e. T h e en te rin g u p o n an d tak in g possession o f sa id p ro p e rty , th e collection o f such re n ts, issues an d profits a n d th e a p p licatio n
th e re o f as afo resaid , sh all n o t cure o r w aive an y d efau lt o r no tice o f d e fa u lt h ere u n d e r o r in v a lid a te an y act do n e p u rsu a n t to such notice.
6 . U p o n d efau lt b y T ru s to r in p ay m e n t o f a n y in d eb ted n ess secu red h e re h y o r in p erfo rm an ce o f an y agreem ent b e re u n d e r, B eneficiary m ay declare all sum s
secu red h e re b y im m ed iately due a n d pay ab le b y d eliv ery to T ru ste e o f w ritte n d e c la ra tio n o f d efau lt a n d d em an d fo r sale a n d of w ritte n n otice o f d efau lt a n d o f electio n to
F"/ cause to be sold said property, which notice Trustee shall cause to be duly filed for record. Beneficiary also shall deposit w ith Trustee this Deed, said note and all documents
evidencing expenditures secured hereby.
A fte r th e lapse o f su ch tim e as m ay th e n be re q u ire d b y law fo llo w in g th e re c o rd atio n o f sa id n o tice o f d e fa u lt, an d n o tic e o f sale h av in g b een given as th e n
re q u ire d b y law , T ru s te e , w ith o u t d em an d on T ru s to r, sh all sell sa id p ro p e rty a t th e tim e an d place fixed h y it in sa id n o tice o f sale, e ith e r as a w h o le o r in se p a ra te p arcels
O
an d in such o rd e r as it m ay d eterm in e (h u t suhj’ect to any s ta tu to ry rig h t o f T ru s to r to d ire c t th e o rd e r in w h ich su ch p ro p e rty , if consisting of several k n o w n lots o r parcels, sh all
^ he s o ld ) , a t p u b lic a u ctio n to th e hig h est b id d e r fo r cash in law fu l m oney o f th e U n ite d S tates o f A m e ric a , p ay ab le a t tim e o f sale. T ru ste e m ay p o stp o n e sale o f all o r an y
p o rtio n o f sa id p ro p e rty h y p u b lic an n o u n cem en t a t such tim e an d place o f sale, an d fro m tim e to tim e th e re a fte r m ay p o stp o n e such sale h y p u b lic an n o u n cem en t a t th e tim e
fixed h y th e p reced in g p o stp o n em en t. T ru ste e sh all deliv er to such p u rch aser its d eed conveying th e p ro p e rty so so ld , h u t w ith o u t any co v en an t o r w a rra n ty , express o r im p lied .
O
T h e re citals in su ch d eed o f an y m a tte rs o r facts sh all be conclusive p ro o f o f th e tru th fu ln e ss th ereo f. A n y p e rso n , in clu d in g T ru s to r, T ru s te e , o r Beneficiary as h e re in a fte r defined,
m ay p u rch ase a t such sale.
Q After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall
apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at seven per cent per annum; all other
•• sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
7 . T ru s to r, o r if sa id p ro p e rty sh all h av e b een tra n sfe rre d , th e th e n re c o rd o w n e r, to g e th e r w ith B eneficiary, m ay from tim e to tim e , b y in stru m e n t in w ritin g ,
s u h stitu te a successor o r successors to any T ru ste e nam ed h e re in o r actin g h e re u n d e r, w hich in stru m e n t, executed an d acknow ledged b y each a n d reco rd ed in th e office of
q th e rec o rd e r of th e co u n ty o r coun ties w h ere sa id p ro p e rty is situ a te d , shall he co n clu siv e p ro o f of p ro p e r su b stitu tio n of such successor T ru ste e o r T ru ste e s, w ho sh a ll,
w ith o u t conveyance fro m th e T ru ste e predecessor, succeed to all its title , e sta te , rig h ts, p o w e rs an d d u ties. S aid in stru m e n t m u st c o n tain th e nam e of th e o rig in al T ru s to r, T ru ste e
^ - 4 a n d B eneficiary h e re u n d e r, th e book a n d page w h ere th is D e e d is reco rd ed , a n d th e n a m e a n d address of th e n ew T ru ste e . If no tice of d efau lt sh a ll h av e b een re c o rd e d , th is
p o w e r of su b s titu tio n can n o t b e exercised u n til a fte r th e costs, fees an d expenses o f th e th e n actin g T ru ste e sh all h av e b een p a id to such T ru s te e , w ho sh all endorse receip t
th ereo f u p o n such in stru m e n t of s u b stitu tio n . T h e p ro ced u re h e re in p ro v id e d fo r su b s titu tio n of T ru ste e shall he exclusive o f all o th e r p ro v isions fo r s u b stitu tio n , s ta tu to ry or
^ oth erw ise.
8. T h is D eed ap p lies to , in u res to th e benefit o f. an d b in d s all p a rtie s h e re to , th e ir h e irs, legatees, d evisees, ad m in istra to rs, ex ecutors, successors and
assigns. T h e te rm B eneficiary shall m ean th e o w n er an d h o ld e r, in clu d in g pledgees, o f th e n o te secu red h e re b y , w h e th e r o r n o t n am ed as B eneficiary h erein . In th is D e e d ,
w h en ev er th e co n tex t so re q u ire s, m asculine g en d er includes th e fem in in e a n d /o r n e u te r, an d th e sin g u lar n u m b er includes th e p lu ral.
9. Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated
to notify any party hereto o f pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a
party unless brought by Trustee.
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TRU-352 7-50 (REVISED)
(USE F O R REAL ESTATE I N L O S ANGELES COUNTY ONLY)
Appendix D
SPACE ABOVE THIS LINE FOR RECORDER’S USE- ----------------------------
SHORT FORM DEED O F TRUST A ND ASSIGNMENT O F RENTS
incorporating by reference certain provisions of a deed of trust recorded in Los Angeles County.
Form 4 9 9 R ev. 6 - 4 9 A copy of said provisions is set forth on the reverse hereof.
This Deed of Xrust, Made this day of , between
, herein called T R U S T O R ,
whose address i s ,
(Number and Street) (City) (Zone) (State)
TITLE INSURANCE AND TRUST COMPANY, a California corporation, herein called T R U S T E E , and
, h e r e i n c a l l e d b e n e f i c i a r y ,
W^itnesseth: That Trustor i r r e v o c a b l y g r a n t s , t r a n s f e r s a n d a s s i g n s t o t r u s t e e i n t r u s t , w i t h p o w e r o f
s a l e , that property in Los Angeles County, California,
described a s:
T o g e t h e r w i t h the rents, issues and profits thereof, S u b j e c t , h o w e v e r , to the right, power and authority given to and conferred upon
Beneficiary by paragraph 10 of the provisions incorporated herein by reference to collect and apply such rents, issues and profits.
F or th e P u rp ose o f Securing:
1. Performance of each agreement of Trustor incorporated by reference or contained herein. 2. Payment of the indebtedness
evidenced by one promissory note of even date herewith in the principal sum of $..................................................................executed by Trustor
in favor of Beneficiary or order.
T o P rotect th e Security o f T h is D eed o f T rust, Trustor A grees:
by the execution and delivery of this Deed of Trust and the note secured hereby, that provisions 1 to 14, inclusive, of the Deed of Trust
recorded on October 8, 1947, in book 24952, page 9 of Official Records, in the office of the county recorder of Los Angeles County,
California, shall be and they are hereby incorporated herein and made an integral part hereof for all purposes as fully as though
set forth herein at length; that he will observe and perform said provisions; that the note and other obligations therein referred to
shall be deemed to mean the obligations secured by this Deed of Trust; that the property therein referred to shall be deemed to
mean the property affected by this Deed of Trust; that the terms “Trustor,” “Beneficiary” and “Trustee” as used therein shall be
deemed to mean the Trustor, Beneficiary and Trustee, respectively, under this Deed of Trust.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him
at his address hereinbefore set forth.
S ig n a tu r e o f T r u sto r
STATE OF CALIFORNIA, 7
COUNTY OF LOS ANGELES j ss
On .............................................................................................................................
before me, the undersigned, a Notary Public in
and for said County and State, personally ap p eared
SPACE BELOW FOR RECORDER’S USE ONLY
Index as Trust Deed and Assignment of Rent..
known to me to be the person whose name................................
subscribed to the within instrument and acknowledged that
............................................executed the same.
WITNESS my hand and official seal.
(Seal)
N o tary P u b lic in and fo r sa id C o u n ty an d S ta te .
I f execu ted , b y a C o rp o ra tio n th e C o rp o ra tio n F o r m o f
A c k n o w le d g m e n t m u s t b e u sed .
(USE FOR REAL ESTATE IN LOS ANGELES COUNTY ONLY)
(USE F O R REA L ESTATE I N L O S ANGELES COUNTY ONLY)
DO N O T R EC O R D
The f a llo w in g is a c o p y o f p r o v isio n s ( 1 ) to ( 1 4 ) , In c lu siv e , o f th a t ce rta in D e e d o f Trust re co r d e d in b o o k 2 4 9 5 2 , p a g e 9 o f O ffic ia l R ecards In th e o ffic e o f th e R ecorder
o f Las A n g e le s C o u n ty , in c o r p o r a te d b y r e fe r e n c e in th e fo r e g o in g D e ed a f Trust o s b e in g a p a rt th e r e o f o s If s e t forth a t le n g th th e r e in .
To protect the security of this Deed of Trust, Trustor agrees:
( 1 ) To k e e p s a i d p r o p e r t y in g o o d c o n d i t i o n a n d r e p a i r ; n a t to r e m o v e a r d e m o l i s h . a n y b u i l d i n g thereon,* to c o m p l e t e o r r e s t o r e p r o m p t l y a n d in g o o d a n d w o r k m a n l i k e
m a n n e r a n y b u i l d i n g w h ic h m a y b e c o n s t r u c t e d , d a m a g e d o r d e s t r o y e d t h e r e o n a n d to p a y w h e n d u e a l l c la im s f o r l a b o r p e r f o r m e d a n d m a t e r i a l s f u r n i s h e d t h e r e f o r ; t o
c o m p l y w ith a ll la w s a f f e c tin g s a i d p r o p e r t y o r r e q u i r i n g a n y a l t e r a t i o n s o r i m p r o v e m e n t s to b e m a d e t h e r e o n ; n o t to c o m m i t o r p e r m i t w a s t e t h e r e o f ; n o t to c o m m i t , s u ffe r a r
p e r m i t a n y a c t u p o n s a i d p r o p e r t y in v i o l a t i o n a f l a w ; t o c u l t i v a t e , i r r i g a t e , f e r t i l i z e , f u m i g a t e , p r u n e a n d d o a ll o t h e r a c t s w h ic h fro m t h e c h a r a c t e r o r u s e o f s a i d p r o p e r t y
m a y b e r e a s o n a b l y n e c e s s a r y , t h e sp e c ific e n u m e r a t i o n s h e r e i n n a t e x c l u d i n g t h e g e n e r a l .
( 2 ) To p r o v i d e , m a i n t a i n a n d d e l i v e r to B e n e fic ia ry fire i n s u r a n c e s a t i s f a c t o r y to a n d w ith lo ss p a y a b l e to B e n e f ic ia r y . T h e a m o u n t c o l l e c t e d u n d e r a n y fire o r o t h e r
in s u r a n c e p o lic y m a y b e a p p l i e d b y B e n e fic ia ry u p o n a n y i n d e b t e d n e s s s e c u r e d h e r e b y a n d in su ch o r d e r a s B e n e fic ia ry m a y d e t e r m i n e , o r a t o p t i o n o f B e n e fic ia ry t h e e n t i r e
a m o u n t s o c o l l e c t e d o r a n y p a r t t h e r e o f m a y b e r e l e a s e d t a T ru s to r. S u ch a p p l i c a t i o n o r r e l e a s e s h a ll n o t c u r e o r w a i v e a n y d e f a u l t a r n o tic e o f d e f a u l t h e r e u n d e r o r i n v a l i d a t e
a n y a c t d a n e p u r s u a n t to su c h n o tic e .
( 3 ) To a p p e a r in a n d d e f e n d a n y a c t i o n o r p r o c e e d i n g p u r p o r t i n g to a f f e c t t h e s e c u r i t y h e r e o f o r t h e r ig h ts o r p o w e r s o f B e n e fic ia ry o r T r u s te e ; a n d to p a y a l l c o sts
a n d e x p e n s e s , i n c l u d i n g c o s t o f e v i d e n c e o f title a n d a t t o r n e y ' s f e e s in a r e a s o n a b l e s u m , in a n y su c h a c t i o n o r p r o c e e d i n g in w h ic h B e n e fic ia ry o r T r u s te e m a y a p p e a r , a n d
in a n y s u it b r o u g h t b y B e n e fic ia ry t a f o r e c l o s e th is D e e d .
( 4 ) To p a y : a t l e a s t te n d a y s b e f o r e d e l i n q u e n c y a l l t a x e s a n d a s s e s s m e n t s a f f e c tin g s a i d p r o p e r t y , i n c l u d i n g a s s e s s m e n t s o n a p p u r t e n a n t w a t e r s to c k ; w h e n d u e , a l l
i n c u m b r a n c e s , c h a r g e s a n d l ie n s , w ith in t e r e s t , o n s a i d p r o p e r t y a r a n y p a r t t h e r e o f , w h ic h a p p e a r to b e p r io r or s u p e r i o r h e r e t o ; a ll c o s t s , f e e s a n d e x p e n s e s o f th is T ru s t.
S h o u l d T r u s to r fa il t a m a k e a n y p a y m e n t o r to d o a n y a c t a s h e r e i n p r o v i d e d , t h e n B e n e fic ia ry o r T r u s t e e , b u t w i t h o u t o b l i g a t i o n $a to d o a n d w i t h o u t n o tic e t o o r
d e m a n d u p o n T ru s to r a n d w i t h o u t r e l e a s i n g T ru sto r fro m a n y o b l i g a t i o n h e r e o f , m a y : m a k e o r d o t h e s a m e in su c h m a n n e r a n d to su ch e x t e n t a s e i t h e r m a y d e e m n e c e s s a r y
to p r o t e c t t h e s e c u r ity h e r e o f . B e n e fic ia ry o r T r u s te e b e i n g a u t h o r i z e d to e n t e r u p o n s a i d p r o p e r t y f o r su ch p u r p o s e s ; a p p e a r in a n d d e f e n d a n y a c t i o n o r p r o c e e d i n g p u r p o r t i n g
t o a ffe c t t h e s e c u r ity h e r e o f o r t h e r ig h ts o r p o w e r s a f B e n e fic ia ry o r T ru s te e ; p a y , p u r c h a s e , c o n t e s t o r c o m p r o m i s e a n y i n c u m b r a n c e , c h a r g e o r lie n w h i c h in th e j u d g m e n t
a f e i t h e r a p p e a r s to b e p rio r, o r s u p e r i o r h e r e to ; a n d , in e x e r c i s i n g a n y such p o w e r s , p a y n e c e s s a r y e x p e n s e s , e m p l o y c o u n s e l a n d p a y h is r e a s o n a b l e f e e s .
( 5 ) To p a y i m m e d i a t e l y a n d w i t h o u t d e m a n d a ll s u m s s o e x p e n d e d by B e n e fic ia ry a r T r u s te e , w ith in te r e s t fro m d a t e o f e x p e n d i t u r e a t s e v e n p e r c e n t p e r a n n u m .
( 6 ) T h a t a n y a w a r d o f d a m a g e s in c o n n e c t i o n w ith a n y c o n d e m n a t i o n fo r p u b l i c u s e o f o r in ju ry to s a i d p r o p e r t y o r a n y p a r t t h e r e o f is h e r e b y a s s i g n e d a n d s h a l l b e
p a i d t o B e n e fic ia ry w h o m a y a p p l y o r r e l e a s e su c h m o n e y s r e c e i v e d b y h im in t h e s o m e m a n n e r a n d w i t h t h e s a m e e ffe c t a s a b a v e p r o v i d e d f o r d i s p o s i t i o n o f p r o c e e d s o f
fire o r o t h e r i n s u r a n c e .
( 7 ) T h a t b y a c c e p t i n g p a y m e n t o f a n y sum s e c u r e d h e r e b y a f t e r its d u e d a t e . B e n e fic ia ry d o e s n o t w a i v e h is r ig h t e i t h e r to r e q u i r e p r o m p t p a y m e n t w h e n d u e o f
a l l o t h e r s u m s s a s e c u r e d o r to d e c l a r e d e f a u l t f o r f a i l u r e so to p a y .
( 8 ) T h a t a t a n y t i m e ' o r fro m t i m e to t i m e , w i t h o u t lia b i l i t y t h e r e f o r a n d w ith o u t n o tic e , u p o n w r i t t e h r e q u e s t o f B e n e f ic ia r y a n d p r e s e n t a t i o n o f th is D e e d a n d s a i d
-note f o r e n d o r s e m e n t , a n d - w i t h o u t a f f e c tin g t h e p e r s o n a l M o b ility a f a n y p e r s o n f o r p a y m e n t o f t h e i n d e b t e d n e s s s e c u r e d h e r e b y . T r u s te e m a y : r e c o n v e y a n y p a r t o f s a i d
p r o p e r t y ; c o n s e n t to th e m a k i n g a f a n y m a p o r p l a t t h e r e o f ; jo in in g r a n t i n g a n y e a s e m e n t t h e r e o n ; o r j o in in a n y e x t e n s i o n a g r e e m e n t o r a n y a g r e e m e n t s u b o r d i n a t i n g t h e
lie n o r c h a r g e h e r e o f .
( 9 ) T h a t u p o n w r i t t e n r e q u e s t o f B e n e fic ia ry s t a t i n g t h a t a l l s u m s s e c u r e d h e r e b y h a v e b e e n p a i d , a n d u p o n s u r r e n d e r o f th is D e e d a n d s a i d n o t e t o T r u s te e fo r
c a n c e l l a t i o n a n d r e t e n t i o n a n d u p o n p a y m e n t o f its f e e s . T ru s te e s h a ll r e c o n v e y , w it h o u t w a r r a n t y , t h e p r o p e r t y t h e n h e l d h e r e u n d e r . T h e r e c i t a l s in su c h r e c o n v e y a n c e o f
a n y m a t t e r s o r f a c ts s h a l l b e c o n c lu s iv o p r o o f o f t h e tr u t h f u l n e s s t h e r e o f . T h e g r a n t e e in su ch r e c o n v e y a n c e m a y b e d e s c r i b e d a s " t h e p e r s o n a r p e r s o n s l e g a l l y e n t i t l e d
t h e r e t o . 1' F iv e y e a r s a f t e r i s s u a n c e o f su c h full r e c o n v e y a n c e . T r u s te e m a y d e s t r o y s a i d n o t e a n d th is D e e d ( u n l e s s d i r e c t e d in s u c h r e q u e s t to r e t a i n t h e m ) .
( 1 0 ) T h a t a s a d d i t i o n a l s e c u r ity . T r u s to r h e r e b y g iv e s to a n d c o n fe rs u p o n B e n e fic ia ry t h e r ig h t, p o w e r a n d a u t h o r i t y , d u r i n g t h e c o n t i n u a n c e a f th e s e T ru sts, to c o lle c t
t h e r e n t s , i s s u e s a n d p ro fits o f s a i d p r o p e r t y , r e s e r v i n g u n t o T r u s ta r th e r i g h t , p r i o r to a n y d e f a u l t b y T r u s to r in p a y m e n t o f a n y i n d e b t e d n e s s s e c u r e d h e r e b y o r in p e r f o r m
a n c e o f a n y a g r e e m e n t h e r e u n d e r , to c o lle c t a n d r e t a i n su ch r e n t s , is s u e s a n d p ro fits a s t h e y b e c a m e d u e a n d p a y a b l e . U p o n a n y such d e f a u l t . B e n e fic ia ry m a y a t a n y t i m e
w i t h o u t n o tic e , e i t h e r in p e r s o n , b y a g e n t , o r b y a r e c e i v e r t a b e a p p o i n t e d b y a c o u r t, a n d w i t h o u t r e g a r d to t h e a d e q u a c y o f a n y s e c u r ity f o r the^ i n d e b t e d n e s s h e r e b y s e c u r e d ,
e n t e r u p o n a n d t a k e p o s s e s s i o n o f s a i d p r o p e r t y o r a n y p a r t t h e r e o f . In his o w n n a m e s u e f o r o r o t h e r w i s e c o lle c t su c h r e n t s , is s u e s a n d p ro fits, in c l u d i n g t h o s e p a s t d u e o n ^
u n p a i d , a n d a p p l y t h e s a m e , le ss co sts a n d e x p e n s e s o f . o p e r a t i o n a n d c o l l e c t i o n , i n c lu d in g r e a s o n a b l e a t t o r n e y ' s f e e s , u p o n a n y i n d e b t e d n e s s s e c u r e d h e r e b y , a n d in su ch
a r d e r a s B e n e fic ia ry m a y d e t e r m i n e . T he e n t e r i n g u p a n a n d t a k i n g p o s s e s s i o n o f s a i d p r o p e r t y , th e c o lle c tio n a f su c h r e n t s , is s u e s a n d p ro fits a n d t h e a p p l i c a t i o n t h e r e o f a s
a f o r e s a i d , s h a ll n o t c u re o r w a i v e a n y d e f a u l t o r n o tic e a f d e f a u l t h e r e u n d e r o r i n v a l i d a t e a n y a c t d o n e p u r s u a n t to su ch n o tic e .
( 1 1 ) T h a t u p o n d e f a u l t b y T ru s to r in p a y m e n t o f a n y i n d e b t e d n e s s s e c u r e d h e r e b y o r in p e r f o r m a n c e a f a n y a g r e e m e n t h e r e u n d e r . B e n e fic ia ry m a y d e c l a r e all^ s u m s
s e c u r e d h e r e b y i m m e d i a t e l y d u e a n d p a y a b l e b y d e l i v e r y t a T r u s te e o f w r i t t e n d e c l a r a t i o n o f d e f a u l t a n d d e m a n d f o r s a l e a n d o f w r i t t e n n o t i c e o f d e f a u l t a n d o f e l e c t i o n ta
c a u s e to b e s o l d s a i d p r o p e r t y , w h ic h n o t i c e T r u s te e s h a l l c a u s e t o b e filed f o r r e c o r d . B e n e fic ia ry a l s o s h a l l d e p o s i t w ith T r u s t e e th is D e e d , s a i d n o t e a n d all d o c u m e n t s
e v i d e n c i n g e x p e n d i t u r e s s e c u r e d h e r e b y .
A f t e r t h e l a p s e o f su c h t i m e a s m a y t h e n b e r e q u i r e d b y l a w f o l l o w i n g t h e r e c a r d a t i a n o f s a i d n o tic e o f d e f a u l t , a n d n o tic e o f s a l e h a v i n g b e e n g iv e n a s t h e n r e q u i r e d b y
l a w . T r u s te e , w i t h o u t d e m a n d a n T r u s ta r , s h a ll se ll s a i d p r o p e r t y a t t h e t i m e a n d p l a c e f ix e d b y it in s a i d n o tic e o f s a l e , e i t h e r a s a w h o l e o r in s e p a r a t e p a r c e l s , a n d in su ch
a r d e r a s it m a y d e t e r m i n e , a t p u b l i c a u c t i o n to th e h i g h e s t b i d d e r fo r c a s h in la w f u l m o n e y o f t h e U n i t e d S t a t e s , p a y a b l e a t ti m e o f s a l e . T r u s te e m a y p o s t p o n e s a l e o f a l l a r
a n y p o r t i o n o f s a i d p r o p e r t y b y p u b l i c a n n o u n c e m e n t a t su c h t i m e a n d p l a c e o f s a l e , a n d f r o m t i m e t o t i m e t h e r e a f t e r m a y p o s t p o n e su ch s a l e b y p u b l i c a n n o u n c e m e n t a t t h e
t i m e f ix e d b y th e p r e c e d i n g p o s t p o n e m e n t . T r u s te e s h a ll d e l i v e r t a such p u r c h a s e r its d e e d c o n v e y i n g t h e p r o p e r t y s o s o l d , b u t w i t h o u t a n y c o v e n a n t or w a r r a n t y , e x p r e s s
a r i m p l i e d . T h e r e c i t a l s in su ch d e e d o f a n y m a t t e r s a r fa c ts s h a l l b e c o n c lu s iv e p r o o f o f t h e t r u t h f u l n e s s t h e r e o f . A n y p e r s o n , in c l u d i n g T r u s to r , T r u s t e e , o r B e n e fic ia ry
a s h e r e i n a f t e r d e f i n e d , m a y p u r c h a s e a t su c h s o l e .
A f te r d e d u c t i n g a ll c o s ts , f e e s a n d e x p e n s e s a f T r u s te e a n d o f this T ru st, i n c l u d i n g co st o f e v i d e n c e o f title in c o n n e c t i o n w i t h s a l e . T r u s te e s h a ll a p p l y t h e p r o c e e d s
a f s a l e t o p a y m e n t of: a l l s u m s e x p e n d e d u n d e r t h e t e r m s h e r e o f , n o t t h e n r e p a i d , w ith a c c r u e d i n t e r e s t a t s e v e n p e r c e n t p e r a n n u m ; a l l o t h e r s u m s t h e n s e c u r e d h e r e b y ;
a n d t h e r e m a i n d e r , if a n y , to t h e p e r s o n o r p e r s o n s l e g a l l y e n t i t l e d t h e r e t o .
( 1 2 ) T h a t T ru sto r, o r if s a i d p ro p e rty , s h a ll h a v e b e e n t r a n s f e r r e d , t h e t h e n r e c o r d o w n e r , t o g e t h e r w ith B e n e f ic ia r y , m a y fro m t i m e to t i m e , b y i n s t r u m e n t in w r i t i n g ,
s u b s t i t u t e a s u c c e s s o r o r s u c c e s s o r s to a n y T r u s t e e n a m e d h e r e i n a r a c t i n g h e r e u n d e r , w h ic h i n s t r u m e n t , e x e c u t e d a n d a c k n o w l e d g e d b y e a c h a n d r e c o r d e d in t h e office of
t h e r e c o r d e r o f t h e c o u n ty o r c o u n t i e s w h e r e s a i d p r o p e r t y is s i t u a t e d , s h a ll b e c o n c lu s iv e p r o o f o f p r o p e r s u b s t i t u t i o n a f su c h s u c c e s s o r T r u s te e or T r u s t e e s , w h o s h a l l ,
w i t h o u t c o n v e y a n c e fro m t h e T r u s te e p r e d e c e s s o r , s u c c e e d t a a ll its t itle , e s t a t e , rig h ts , p o w e r s a n d d u t i e s . S a id i n s t r u m e n t m u s t c o n t a i n t h e n a m e o f t h e o r i g i n a l T r u s to r ,
T r u s te e a n d B e n e fic ia ry h e r e u n d e r , th e b o o k a n d p a g e w h e r e th is D e e d is r e c o r d e d , a n d th e n a m e a n d a d d r e s s o f t h e n e w T r u s t e e . If n o tic e a f d e f a u l t sh a ll h a v e b e e n
r e c o r d e d , th is p a w e r o f s u b s t i t u t i o n c a n n o t b e e x e r c i s e d u n til a f t e r t h e c o s ts , f e e s a n d e x p e n s e s o f t h e t h e n a c t i n g T r u s te e sh a ll h a v e b e e n p a i d t o such T r u s te e , w h o s h a ll
e n d o r s e r e c e i p t t h e r e o f u p o n s u c h i n s t r u m e n t o f s u b s t i t u t i o n . T h e p r o c e d u r e h e r e i n p r o v i d e d fo r s u b s t i t u t i o n a f T r u s te e s s h a l l b e e x c l u s i v e o f a ll o t h e r p r o v i s i o n s f o r s u b s t i
t u t i o n , s t a t u t o r y o r o t h e r w i s e .
( 1 3 ) T h a t th is D e e d a p p l i e s t o , i n u r e s to t h e b e n e f it a f , a n d b in d s a ll p a r t i e s h e r e t o , t h e i r h e ir s , l e g a t e e s , d e v i s e e s , a d m i n i s t r a t o r s , e x e c u t o r s , s u c c e s s o r s a n d a s s i g n s .
T h e te r m B e n e fic ia ry s h a l l m e a n th e o w n e r .a n d h o l d e r , i n c l u d i n g p l e d g e e s , o f t h e n o te s e c u r e d h e r e b y , w h e t h e r o r n o t n a m e d a s B e n e fic ia ry h e r e i n . In th is D e e d , w h e n e v e r
t h e c o n t e x t so r e q u i r e s , t h e m a s c u l i n e g e n d e r i n c lu d e s t h e f e m i n i n e a n d / a r n e u t e r , a n d t h e s i n g u l a r n u m b e r in c l u d e s t h e p l u r a l .
( 1 4 ) T h a t T r u s te e a c c e p t s ^ t h i s T ru st w h e n th is D e e d , d u ly e x e c u t e d a n d a c k n o w l e d g e d , is m a d e a p u b l i c r e c o r d a s p r o v i d e d b y l a w . T r u s t e e is n o t o b l i g a t e d to n o tif y a n y
p a r t y h e r e t o o f p e n d i n g s a l e u n d e r a n y o t h e r D e e d o f T ru st o r o f a n y a c t i o n o r p r o c e e d i n g in w h ic h T ru s to r, B e n e fic ia ry o r T r u s te e s h a l l b e a p o r t y u n le s s b r o u g h t b y T r u s t e e .
---------------------------------------------- DO N O T R E C O R D --------------------------------------------------------------------------------------------
REQUEST FOR FULL RECONVEYANCE
T o b e u sed o n ly w h e n n o te h a s b e e n p a id .
To T i t l e I n s u r a n c e a n d T r u s t C o m p a n y , Trustee: Dated.....................................................................................................
The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. All sums
secured by said Deed of Trust have been fully paid and satisfied; and you are hereby requested and directed, on pay
ment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness,
secured by said Deed of Trust, delivered to you herewith together with the said Deed of Trust, and to reconvey, with
out warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you under the same.
M a i l R e c o n v e y a n c e t o :
Do n o t lo se o r d e str o y th is D e e d o f T r u st O R T H E N O T E w h ic h it sec u res.
B o th m u s t be d e liv e r e d to th e T r u s te e fo r c a n cella tio n b e fo re r e c o n v e y a n c e w ill b e m a d e .
Appendix E
1012-1-50
CLTA Standard Coverage Policy Form
Copyright 1950
Fee $
P o licy of T it l e I n s u r a n c e
ISSUED BY
T I T L E I N S U R A N C E A N D T R U S T C O M P A N Y
OF LOS ANGELES
Title Insurance and Trust Company, a corporation, of Los Angeles, California, herein called the Com
pany, for a valuable consideration paid for this policy of title insurance, the number, date, and amount
of which are shown in Schedule A, does hereby insure the parties named as Insured in Schedule A,
together with the persons and corporations included in the definition of “the insured” as set forth in the
stipulations of this policy, against loss or damage not exceeding the amount stated in Schedule A which
the insured shall sustain by reason of:
1. Title to the land described in Schedule A being vested, at the date hereof, otherwise
than as herein stated; or
2. Unmarketability, at the date hereof, of the title to said land of any vestee named
herein, unless such unmarketability exists because of defects, liens, encumbrances,
or other matters shown or referred to in Schedule B; or
3. Any defect in, or lien or encumbrance on, said title, existing at the date hereof, not
shown or referred to in Schedule B; or
4. Any defect in the execution of any mortgage or deed of trust shown in Schedule B
securing an indebtedness, the owner of which is insured by this policy, but only
insofar as such defect affects the lien or charge of such mortgage or deed of trust
upon said land; or
5. Priority, at the date hereof, over any such mortgage or deed of trust, of any lien or
encumbrance upon said land, except as shown in Schedule B, such mortgage or deed
of trust being shown in the order of its priority in Part Two of Schedule B;
all subject, however, to Schedules A and B and the Stipulations herein, all of which
schedules and stipulations are hereby made a part of this policy.
In Witness Whereof, Title Insurance and Trust Company has caused its corporate name and seal to be
hereunto affixed by its duly authorized officers on the date shown in Schedule A.
TKTLj; INSURANCE AND TRUST COMPANY
by o S v
PRESIDENT
Attest
SECRETARY
1012A 2-51
CLTA S tandard C overage Policy
SC H E D U L E A
Amount $ Date
INSURED
1. The title to said land is, at the date hereof, vested in:
Policy No.
2. Description of land in the county of Los Angeles, state of California, title to which is insured
by this policy:
10126 4-51
CLTA Standard Coverage Policy
SC H E D U L E B
This policy does not insure against loss by reason of the matters shown or referred to in this Schedule except
to the extent that the owner of any mortgage or deed of trust shown in Part Two is expressly insured in
paragraphs numbered 4 and 5 on page 1 of this policy.
P art O n e : This part of Schedule B refers to matters which, if any such exist, may affect the title to said
land, but which are not shown in this policy:
1. Taxes or assessments which are not shown as existing liens by the records of any taxing agency or by the public
records; and easements, liens or encumbrances which are not shown by the public records.
2. Rights or claims of persons in possession of said land which are not shown by the public records.
3. Any fads, rights, interests, or claims which are not shown by the public records but which could be ascertained by
an inspection of said land, or by making inquiry of persons in possession thereof, or by a correct survey.
4. Mining claims, reservations in patents, water rights, claims or title to water.
5. Any laws, governmental acts or regulations, including but not limited to zoning ordinances, restricting, regulating
or prohibiting the occupancy, use or enjoyment of the land or any improvement thereon, or any zoning ordinances
prohibiting a reduction in the dimensions or area, or separation in ownership, of any lot or parcel of land; or the
effect of any violation of any such restrictions, regulations or prohibitions.
PART Tw o: This part of Schedule B shows liens, encumbrances, defects and other matters affecting the title to
said land or to which said title is subject:
1012-C 6-50
CLTA Standard Coverage Policy Form
Copyright 1950
S T I P U L A T I O N S
1 . SCOPE OF COVERAGE
This policy does not insure against, and the Company
will not he liable for loss or damage created hy ur
arising out of any of the follow ing: (a) defects, liens,
claims, encum brances, or other m atters which result in
no pecuniary loss to the insured; (h) defects, liens,
encum brances, or other m atters created or occurring
subsequent to the date hereof; (c) defects, liens,
encumbrances, or otber m atters created or suffered hy
the insured claiming such loss or dam age; or (d)
defects, liens, claims, encum brances, or other m atters
existing at the date of this policy and known to the
insured claiming such loss or damage, either at the
date of this policy or at the date such insured claim*
ant acquired an estate or interest insured hy this policy,
unless such defect, lien, claim , encum brance or other
m atter shall have heen disclosed to the Company in
w riting prior to the issuance of this policy or appeared
at the date of this policy on the public records. Any
rights or defenses of the Company against a named
insured shall he equally available against any person
or corporation who shall becom e an insured hereunder
as successor of such named insured.
2 . DEFENSE O F A C T IO N S. NOTICE O F A CT IO N S
O R CLAIMS TO RE G IV E N BY THE INSURED
T he Company at its own cost shall defend the insured
in all litigation consisting of actions or proceedings
against the insured, or defenses, restraining orders, or
injunctions interposed against a foreclosure or sale of
said land in satisfaction of any indehtednesst the
owner of which is insured hy this policy, which litiga*
tion is founded upon a defect, lien, encum brance, or
other m atter insured against hy this policy, and may
pursue such litigation to final determ ination in the
court of last resort, fn case any such litigation shall
hecome known to any insured, or in case knowledge
shall come to any insured of any claim of title or
interest which is adverse to the title as insured or
which might cause loss or damage for which the
Company shall or may he liahle hy virtue of this
policy, such insured shall notify the Company thereof
in writing. If such notice shall not he given to the
Company at least two days hefore the appearance day
in any such litigation, or if such insured shall not, in
writing, prom ptly notify the Company of any defect,
lien, encum brance, or other m atter insured against, or
of any such adverse claim which shall come to the
knowledge of such insured, in respect to which loss
or damage is apprehended, then all liahility of the
Company as to each insured having auch knowledge
shall cease and term inate; provided, however, that
failure to so notify the Company shall in no case prej*
udice the claim of any insured unless the Company
shall he actually prejudiced hy such failure. The Com
pany shall have the right to institute and prosecute
any action or proceeding or do any other act which,
in its opinion, may he necessary or desirable to
establish the title, or any insured lien or charge, as
insured. In all cases where this policy perm its or
requires the Company to prosecute or defend any
action or proceeding, the insured shall secure to it in
w riting the right to so prosecute or defend such action
or proceeding, and all appeals therein, and perm it it
to use, at its option, the name of the insured for such
purpose. W henever requested hy the Company the
insured ahall assist the Company in any such action
or proceeding, in effecting settlem ent, securing evi*
dence, obtaining witnesses, prosecuting or defending
such action or proceeding, to such extent and in such
m anner as is deemed desirable hy the Company, snd
the Company shall reim burse the insured for any
expense so incurred. The Company shall he suhrogated
to and he entitled tn all costs and attorneys* fees in*
curred or expended hy the Company, which may he
recoverable hy the insured in any litigation carried
on hy the Company on hehalf of the insured. The
word “ knowledge” in this paragraph means actual
knowledge, and does not refer to constructive knowl
edge or notice which may he imputed to the insured
hy the puhlic records.
3 . NOTICE O F LO SS. LIMITATION O F A CT IO N
A statem ent in writing of any loss or damage for which
it is claimed the Company is liahle under this policy
shall he furnished to the Company w ithin sixty days
after such loss or damage shall have heen ascertained.
No action or proceeding for the recovery of any such
loss or damage shall he instituted or m aintained
against the Company until after full compliance hy
the insured with all the conditions imposed on the
insured hy this policy, nor unless commenced within
twelve months after receipt hy the Company of such
written statem eot.
4 . O P T IO N TO P A Y . SETTLE. OR COMPROMISE
CLAIMS
The Company reserves the option to pay, settle, or
compromise for, or in the name of, the insured, any
claim insured against or to pay this policy in full at
any time, and payment or tender of payment of the
full amount of this policy, together with all accrued
costs which the Company is obligated hereunder to pay,
shall term inate all liahility of the Company here*
under, including all obligations of the Company with
respect to any litigation pending and subsequent costs
thereof.
5 . SUB RO G A TIO N U P O N PAYM ENT OR SETTLE
MENT
W henever the Company shall have settled a claim
under this policy, it shall he suhrogated to and he
entitled to all rights, securities, and remedies which
the insured would have had against any person or
property in respect to such claim, had this policy not
heen issued. If the payment does not cover the loss
of the insured, the Company shall he suhrogated to
such rights, securities, and remedies in the proportion
which said payment hears to the amount of said loss.
In either event the insured shall transfer, or cause to
he transferred, to the Company such rights, securities,
and remedies, and shall perm it the Company to nse
the name of the insured in any transaction or litigation
involving such rights, securities, nr remedies.
6 . O P T IO N TO PAY INSURED O W N E R O F IN
DEBTEDNESS A N D BECOME O W N E R O F SECURITY
The Company has the right and option, in case any
loss is claimed under this policy hy an insured owner
of an indebtedness secured hy mortgage or deed of
trust, to pay such insured the indehtedness of the
mortgagor or trustor under said mortgage or deed of
trust, together with all costs which the Company is
obligated hereunder to pay, in which case the Com*
pany shall hecome the owner of, and such insured
shall at once assign and transfer to the Company, safd
mortgage or deed of trust and the indehtedness there
by secured, and such payment shall term inate all
liability under this policy to such insured.
7 . PAYM ENT O F LOSS A N D COSTS O F L IT IG AT IO N .
INDORSEM ENT O F PAYMENT O N POLICY
T he Company will pay, in addition to any loss insured
against hy this policy, all eosts imposed upon the in
sured in litigation carried on hy the Company for the
insured, and in litigation carried on hy the insured
with the written authorization nf the Company, h ut not
otherwise. T he liability of the Company under this
policy shall in no case exceed, in all, the actual loss
of the insured and costs which the Company is ohligated
hereunder to pay, and in no case shall such total
liahility exceed the amount of this policy and ssid
costs. All payments under this policy shall reduce the
amount of the insurance pro tanto, and paym ent of loss
o r dam age to an insured owner of indehtedness shall
reduce, to that extent, the liahility of the Company to
the insured owner of said land. No payment may he
demanded hy any insured w ithout producing this policy
for indorsem ent of such payment.
8 . M ANNER OF PAYM ENT OF LOSS TO INSURED
Loss under this policy shall he payable, first, to any
insured owner of indehtedness secured hy mortgage or
deed of trust shown in Schedule B, in order of priority
therein shown, and if such ownership vests in more
than one, paym ent shall he made rstahly as their
respective interests may appear, and thereafter any
loss shall he payable to the other insured, and if more
than one, then to such insured ratably as their respec*
tive interests may appear. If there he no such insured
owner of indehtedness, any loss shall he payable to
the insured, and if more than one, to such insured
ratahly as their respective interests may appear.
9 . DE FIN IT IO N O F TERMS
The following terms when used in this policy m esn:
(a) “ named insured**: the persons and corporations
named as insured in Schedule A of this policy; (h)
“ the insured**: such named insured together with (1)
each successor in ownership of any indehtedness
secured by any mortgage or deed of trust shown in
Schedule B, the owner of which indebtedness is
named herein as an insured, (2) any such owner or
successor in ownership of any such indehtedness who
acquires the land described in Schedule A or any
p art thereof, hy lawful means in satisfaction of said
indehtedness or sny part thereof, (3) any governmental
agency or instrum entality acquiring said land under
an insurance contract or guarantee insuring or gusr*
anteeing said indehtedness or any p art thereof, and
(4) any person or corporation deriving an estate or
interest in said land as an heir or devisee of a named
insured or hy reason of the dissolution, merger, or
consolidation of a corporate named in su red ; (c)
“ land**: the land described specifically or by reference
in Schedule A and improvements affixed theretn which
hy law constitute real p ro p e rty ; (d ) “ date**: the
exact day, hour and m inute specified in the first line
of Schedule A (unless the context clearly requires a
different meaning) ; (e) “ taxing agency*': the State
and each county, city and county, city and district
in which said land or some part thereof is situated that
levies taxes or assessments on real property; (f)
“ puhlic records**; those public records which, under
the recording laws, impart constructive notice of mat*
ters relating to said land.
1 0 . W R IT T E N IN D O R S E M E N T R E Q U IR E D T O
CH ANG E POLICY
No provision or condition of this policy can he waived
or changed except hy w riting indorsed hereon or at
tached hereto signed hy the President, a Vice Presi*
dent, the Secretary, or an Assistant Secretary of the
Company.
1 1 . N O T ICE S, WHERE SENT
All notices required to h e given the Company and any
statem ent in writing required to he furnished the Com
pany shall he addressed to it at the office which issued
this policy.
T
Appendix F
1056 10-52 C p . < t
Amsrican Title Association *
loan Policy—Additional Coveraga „ _
POLICY OF TITLE INSURANCE PoIicy No.
Amount $
Title Insurance and Trust Company
a corporation of Los Angeles, California, herein called the Company,
fo r a valuable consideration paid for this policy of title insurance,
does hereby insure
the owner of the indebtedness secured by the mortgage or deed of trust described in Schedule A, herein called said
indebtedness, and each successor in interest in ownership thereof, and also any such owner who acquires the land
referred to in this policy in satisfaction of said indebtedness as provided in the conditions and stipulations hereof,
herein called the Insured, against loss or damage not exceeding
dollars,
which the Insured shall sustain
by reason of any defect in the execution of said mortgage or deed of trust, but only insofar as such defect affects
the lien or charge of such mortgage or deed of trust upon the said land, or
by reason of the invalidity of the lien thereof upon said land, or
by reason of title to the said land being vested at the date hereof otherwise than as herein stated, or
by reason of unmarketability of the title of the mortgagor or trustor, or
by reason of any defect in, or lien or encumbrance on said title at the date hereof, or
by reason of any statutory lien for labor or material, or assessments for street improvements under construction or
completed at the date hereof, which now have gained or hereafter may gain priority over the lien upon said land
of said mortgage or deed of trust,
other than defects, liens, encumbrances, and other matters set forth in Schedule B, or
by reason of the priority thereto of any lien or encumbrance at the date hereof except as shown by Schedule B,
all subject, however, to the conditions and stipulations hereto annexed, which conditions and stipulations together
with said Schedules A and B are hereby made a part of this policy.
Subject to the provisions of Schedule B and the conditions and stipulations hereof, the Company further
insures that, at the date hereof, any assignments shown by Schedule A, whether recorded or not, are good and
valid and vest title to said mortgage or deed of trust in the insured free and clear of all liens.
In Witness Whereof, Title Insurance and Trust Company has caused its corporate name and seal to be
hereunto affixed by its duly authorized officers, on
TITLE INSURANCE AND TRUST COMPANY
b y
• • • •
• • •
• • •
• • PfcESIDEtfT •
• •• ••• i i , i |*
Attest
SECRETARY
1056A-1 2-51
American Title Association
Loan Policy—Additional Coverage
S C H E D U L E A
1. The fee simple title to said land is, at the date hereof, vested in
2. The mortgage or deed of trust and assignments, if any, covered by this policy are
described as follows:
3. T he land referred to in this policy is situated in the county of Los Angeles, state of
California, and is described as follows:
American Title A ssociation— A dditional Coverage
Form 1056B 2-50
SC H E D U L E B
Showing defects, liens, encumbrances, and other matters against which the
Company does not, by this policy, insure.
CLTA Form 100 (12-1-50)
ATA Restrictions, etc.
INDORSEMENT
ATTACHED TO POLICY NO.
ISSUED BY
T i t l e I n s u r a n c e an d T r u s t C o m p a n y
The Company hereby insures against any loss which the Insured shall sustain by reason
of any of the following m atters:
1. (a) Any incorrectness in the assurance which the Company hereby gives (1) that there are no covenants,
conditions, or restrictions referred to in Schedule B under which the lien of the mortgage or deed of
trust referred to in Schedule A can be cut off, subordinated, or otherwise disturbed, (2) that there
are no present violations on the land described in Schedule A of any enforceable covenants, conditions,
or restrictions referred to in Schedule B ;
/
(b) Any future violations on said land of any covenants, conditions, or restrictions which shall occur prior
to acquisition of title to said land by the Insured, provided such violations result in loss or impairment
of the lien of the mortgage or deed of trust referred to in Schedule A, or result in loss or impairment
of the title to said land if the Insured shall acquire such title in satisfaction of the indebtedness
secured by such mortgage or deed of trust;
(c) Unmarketability of the title to said land occasioned by any violations on said land, occurring prior
to acquisition of title by the Insured, of any covenants, conditions, and restrictions.
2. Damage to existing improvements, including lawns, shrubbery or trees, which are located or encroach
upon that portion of the land subject to any easement shown in Schedule B, which damage is occasioned
by the exercise of the right to use or maintain such easement for the purposes for which the same was
granted or reserved.
3. Damage to existing improvements, including lawns, shrubbery or trees, resulting from the exercise of
any right to use the surface of said land for the extraction or development of the minerals excepted from the
description of said land or shown as a reservation in Schedule B.
4. Any final court order or judgment requiring removal of any encroachment shown in Schedule B, from
the lands, streets or alleys adjoining the land described in Schedule A.
The total liability of the Company under said policy and any indorsements therein
shall not exceed, in the aggregate, the face amount of said policy and costs which the
Company is obligated under the stipulations thereof to pay.
This indorsement is made a part of said policy and is subject to the schedules and
stipulations therein except as modified by the provisions hereof.
TITLE* INSflfcAjNKJE* A*ND TRUST*COMPANY
• ••••••* • • * , •
*
By
S E C R E T A R Y
Am erican Title A ssociation— A dditional C overage
Form 1056C-1 «-47
CONDITIONS AND STIPULATIONS
1. I f any Insured acquires said land, or any part thereof, by
foreclosure, trustee’s sale, or other legal manner in satisfaction of
said indebtedness, or any part thereof, this policy shall continue
in force in favor of such Insured, subject to all of the conditions
and stipulations hereof. The benefits hereof shall inure to any
federal agency or instrumentality acquiring said land under an
insurance contract or guaranty insuring or guaranteeing said
indebtedness, or any part thereof, whether named as an insured
herein or not, subject otherwise to the provisions hereof.
2. The Company at its own cost shall without undue delay de
fend the Insured in all litigation consisting of actions or proceed
ings commenced against the Insured, or defenses, restraining
orders, or injunctions interposed against a foreclosure or sale of
said land in satisfaction of said indebtedness, which litigation is
founded upon a defect, lien or encumbrance insured against by
this policy, and may pursue such litigation to final determination
in the court of last resort. In case any such action or proceeding
shall be begun or defense interposed, or in case knowledge shall
come to the Insured of any claim of title or interest adverse to the
title as insured, or which might cause loss or damage for which
the Company shall or may be liable by virtue of this policy, the
Insured shall at once notify the Company thereof in writing. If
such notice shall not be given to the Company within ten days of
the receipt of process or pleadings or if lie Insured shall not, in
writing, promptly notify the Company of any defect, lien or
encumbrance insured against which shall come to the knowledge
of the Insured, in respect to which loss or damage is apprehended,
then all liability of the Company in regard to the subject matter
of such action, proceeding or matter shall cease and terminate;
provided, however, that failure to notify shall in no case preju
dice the claim of any Insured unless the Company shall be actually
prejudiced by such failure and then only to die extent of such
prejudice. In all cases where this policy permits or requires the
Company to prosecute or defend any action or proceeding, the
Insured shall secure to it the right to so prosecute or defend such
action or proceeding, and all appeals therein, and permit it to use,
at its option, the name of the Insured for such purpose. The word
“knowledge” in this paragraph means actual knowledge and does
not refer to constructive knowledge or notice which may be im
puted to the Insured by reason of any public record or otherwise.
3. If any Insured shall in good faith contract to sell the evi
dence of indebtedness and mortgage or deed of trust described in
Schedule A ,or having acquired said land as in paragraph 1 hereof
provided, in good faith contracts to sell the same, and any such
contract fails, or if the successful bidder at a foreclosure or trus
tee’s sale refuses to complete the purchase, because of alleged
defects in the title to said land, and, in any of such events, the said
title has been declared by a court of competent jurisdiction to be
defective or encumbered or otherwise unmarketable by reason of
any defect, lien, or encumbrance insured against by this policy,
the Company at its option shall either (a) pay such Insured the
amount of this policy, (b) purchase said indebtedness, (c) estab
lish the marketability of the title by decree of court, or (d) other
wise save the Insured harmless. In the event of any litigation
involving refusal of title because of defects insured against here
under, the’Company will, at its own cost, promptly and diligently
prosecute such action as may be available to establish title as
insured, and if such action is not successful, w ill reimburse the
Insured for all costs and attorneys’ fees in said litigation involv
ing refusal of title.
4. The Company reserves the option to pay, settle, or compro
mise for or in the name of the Insured, any claim insured against
or to pay this policy in full, and payment or tender of payment of
the full amount of this policy shall terminate all liability of the
Company hereunder. In such cases the Company shall be liable
to pay in addition all costs and attorneys’ fees incurred by it.
5. Whenever the Company shall have settled a claim under
this policy, all right of subrogation shall vest in the Company
unaffected by any act of the Insured, except that the Insured may
release or substitute the personal liability of any debtor or extend
or otherwise modify the terms of payment, provided such act does
not result in any loss of priority of the lien of the mortgage or
deed of trust herein, but such subrogation shall be in subordina
tion to the lien of the Insured under its said mortgage or deed of
trust and to the right of the Insured to receive and be fully paid
the amount of principal and interest and other sums, if any,
secured by said mortgage or deed of trust. If loss of priority
should result from any act of the Insured, such act shall not void
this policy, but the Company, in that event, shall be required to
pay only that part of any losses insured against hereunder which
shall exceed the amount, if any, lost to the Company by reason of
the impairment of the right of subrogation. The Insured, if
requested by the Company, shall transfer to the Company all
rights, securities, and remedies against any person or property
necessary in order to perfect such right of subrogation.
6. The Company has the right and option, in case any loss is
claimed under this policy, to pay to the Insured the entire indebt
edness secured by said mortgage or deed of trust to the Insured,
together with all costs and attorneys’ fees which the Company is
obligated hereunder to pay, in which case the Company shall be
come the owner of, and the Insured shall at once assign and
transfer to the Company said mortgage or deed of trust and the
indebtedness thereby secured and such payment shall terminate all
liability under this policy and the Insured shall surrender the same.
7. A statement in writing of any loss or damage for which
it is claimed the Company is liable under this policy shall be
furnished to the Company within sixty days after such loss or
damage shall have been determined and no right of action shall
accrue to the Insured under this policy until thirty days after such
statement shall have been furnished, and no recovery shall be
had by the Insured under this policy unless action shall be com
menced thereon within one year after expiration of said thirty-
day period. Failure to furnish such statement of loss or damage,
or to commence such action within the time hereinbefore specified,
shall be a conclusive bar against maintenance by the Insured of
any action under this policy.
8. The Company will pay, in addition to any loss insured
against by this policy, all costs imposed upon the Insured in
litigation carried on by the Company for the Insured, and all costs
and attorneys’ fees in litigation carried on by the Insured with the
written authorization of the Company or as provided in para
graph 3 of the conditions and stipulations hereof but not other
wise. The Company w ill not be liable for loss or damage by
reason o f defects, claims or encumbrances created subsequent to
the date hereof (excepting any statutory lien for labor or material
insured against by this policy or assessments for street improve
ments under construction or completed at the date hereof) or for
defects, claims or encumbrances created or suffered by the Insured
claiming such loss or damage, or existing at the date of this policy
and known to the Insured claiming such loss or damage at the
date such Insured claimant acquired an insurable interest but not
known to the Company or disclosed to it in writing by the Insured.
The liability of the Company under this policy shall in no case
exceed in all the actual loss of the Insured.and costs and attorneys’
fees which the Company is obligated hereunder to pay. A ll pay
ments under this policy shall reduce the amount of the insurance
pro tanto and no payment shall be made without producing this
policy for endorsement of such payment unless the policy be lost
or destroyed, in which case proof of such loss or destruction shall
be furnished to the satisfaction of the Company. Payment in full
by any person or voluntary satisfaction or release by the Insured
of the mortgage or deed of trust described in Schedule A shall
terminate all liability of the Company under this policy, except
as provided in Condition 1.
9. Nothing contained in this policy shall be construed as an
insurance against action by any governmental agency for the
purpose of regulating occupancy or use of said land or any
building or structure thereon.
10. The term “land” when used herein shall be construed to in
clude the land herein described specifically or by reference and im
provements affixed thereto which by law constitute real property.
11. All notices required to be given the Company and any
statement in writing required to be furnished the Company shall
be addressed to it at its Home Office, 433 South Spring Street,
Los Angeles 13, California.
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Asset Metadata
Creator
White, Terrence R. (author)
Core Title
The technical and legal aspects of trust deed landing
Contributor
Digitized by ProQuest
(provenance)
Degree
Master of Business Administration
Degree Program
Business Administration
Publisher
University of Southern California
(original),
University of Southern California. Libraries
(digital)
Tag
Economics, General,OAI-PMH Harvest
Language
English
Advisor
Martin, G. Preston (
committee chair
), Johnstone, George R. (
committee member
), Trefftzs, Kenneth L. (
committee member
)
Permanent Link (DOI)
https://doi.org/10.25549/usctheses-c20-129287
Unique identifier
UC11263734
Identifier
EP43373.pdf (filename),usctheses-c20-129287 (legacy record id)
Legacy Identifier
EP43373.pdf
Dmrecord
129287
Document Type
Thesis
Rights
White, Terrence R.
Type
texts
Source
University of Southern California
(contributing entity),
University of Southern California Dissertations and Theses
(collection)
Access Conditions
The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...
Repository Name
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