Bill Text: CA SB306 | 2019-2020 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Mortgages and deeds of trust: trustee substitutions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2019-10-02 - Chaptered by Secretary of State. Chapter 474, Statutes of 2019. [SB306 Detail]

Download: California-2019-SB306-Introduced.html

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CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 306

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Introduced by Senator Morrell

February 15, 2019

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An act to amend Section 2934a of the Civil Code, relating to mortgages.

LEGISLATIVE COUNSEL'S DIGEST

SB 306, as introduced, Morrell. Mortgages and deeds of trust: substitutions.

Existing law regulates the terms and conditions of mortgages and deeds of trust. Existing law authorizes a beneficiary of a deed of trust to substitute a new trustee for the existing trustee in accordance with certain statutory requirements, and that substitution is not effective in certain cases unless it is signed by the respective parties under penalty of perjury. Under existing law, a trustee named in a recorded substitution of trustee is deemed to be authorized to act in this capacity under the mortgage or deed of trust for all purposes from the date the substitution is executed by the mortgagee, beneficiaries, or by their authorized agents.

Existing law provides specified methods by which a trustee may resign, including as provided in the trust investment, or, in the case of a revocable trust, with the consent of the person holding the power to revoke the trust.

This bill would authorize a trustee to resign at that trustee’s own election as an alternative to being replaced by the beneficiary or by their authorized agents, under a trust deed upon real property or an estate for years. The bill would require the trustee to give prompt written notice of resignation to the beneficiary or their authorized agents, and would make the resignation of that trustee effective upon the recording of the notice of resignation in each county in which the deed of trust is recorded. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would specify that the resignation of the trustee does not affect the validity of the mortgage or deed of trust, except that no action required to be performed by the trustee under those provisions or under the mortgage or deed of trust may be taken until a substituted trustee is appointed. The bill would make related conforming and nonsubstantive changes to those provisions.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 2934a of the Civil Code is amended to read:

2934a.

 (a) (1) The trustee under a trust deed upon real property or an estate for years therein given to secure an obligation to pay money and conferring no other duties upon the trustee than those which are incidental to the exercise of the power of sale therein conferred, may be substituted by the recording in the county in which the property is located of a substitution executed and acknowledged by: (A) all of by either of the following:

(A) All of the beneficiaries under the trust deed, or their successors in interest, and the substitution shall be effective notwithstanding any contrary provision in any trust deed executed on or after January 1, 1968; or (B) the holders 1968.

(B) The holders of more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests or of any affiliate of that licensed real estate broker.

(2) A substitution executed pursuant to subparagraph (B) of paragraph (1) is not effective unless all the parties signing the substitution sign, under penalty of perjury, a separate written document stating the following:

(A) The substitution has been signed pursuant to subparagraph (B) of paragraph (1).

(B) None of the undersigned is a licensed real estate broker or an affiliate of the broker that is the issuer or servicer of the obligation secured by the deed of trust.

(C) The undersigned together hold more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction.

(D) Notice of the substitution was sent by certified mail, postage prepaid, with return receipt requested to each holder of an interest in the obligation secured by the deed of trust who has not joined in the execution of the substitution or the separate document.

The separate document shall be attached to the substitution and be recorded in the office of the county recorder of each county in which the real property described in the deed of trust is located. Once the document required by this paragraph is recorded, it shall constitute conclusive evidence of compliance with the requirements of this paragraph in favor of substituted trustees acting pursuant to this section, subsequent assignees of the obligation secured by the deed of trust and subsequent bona fide purchasers or encumbrancers for value of the real property described therein.

(3) For purposes of this section, “affiliate of the licensed real estate broker” includes any person as defined in Section 25013 of the Corporations Code that is controlled by, or is under common control with, or who controls, a licensed real estate broker. “Control” means the possession, direct or indirect, of the power to direct or cause the direction of management and policies.

(4) The substitution shall contain the date of recordation of the trust deed, the name of the trustor, the book and page or instrument number where the trust deed is recorded, and the name of the new trustee. From the time the substitution is filed for record, the new trustee shall succeed to all the powers, duties, authority, and title granted and delegated to the trustee named in the deed of trust. A substitution may be accomplished, with respect to multiple deeds of trust which that are recorded in the same county in which the substitution is being recorded and which that all have the same trustee and beneficiary or beneficiaries, by recording a single document, complying with the requirements of this section, substituting trustees for all those deeds of trust.

(b) If the substitution is executed, but not recorded, prior to or concurrently with the recording of the notice of default, the beneficiary or beneficiaries or their authorized agents shall cause mail notice of the substitution to be mailed prior to before or concurrently with the recording thereof, in the manner provided in Section 2924b, to all persons to whom a copy of the notice of default would be required to be mailed by the provisions of Section 2924b. An affidavit shall be attached to the substitution that notice has been given to those persons and in the manner persons, as required by this subdivision.

(c) If the substitution is effected after a notice of default has been recorded but prior to the recording of the notice of sale, the beneficiary or beneficiaries or their authorized agents shall cause mail a copy of the substitution to be mailed, prior to, substitution, before, or concurrently with, the recording thereof, in the manner as provided in Section 2924b, to the trustee then of record and to all persons to whom a copy of the notice of default would be required to be mailed by the provisions of Section 2924b. An affidavit shall be attached to the substitution that notice has been given to those persons and in the manner persons, as required by this subdivision.

(d)  (1) A trustee named in a recorded substitution of trustee shall be deemed to be authorized to act as the trustee under the mortgage or deed of trust for all purposes from the date the substitution is executed by the mortgagee, beneficiaries, or by their authorized agents. Nothing herein requires that a A trustee under a recorded substitution is not required to accept the substitution. Once recorded, the substitution shall constitute conclusive evidence of the authority of the substituted trustee or his or her agents to act pursuant to this section.

(2) The trustee may resign at that trustee’s own election as an alternative to being replaced by the beneficiary or by their authorized agents. The trustee shall give prompt written notice of resignation to the beneficiary or their authorized agents. The resignation of the trustee shall become effective upon the recording of the notice of resignation in each county in which the deed of trust is recorded. The resignation of the trustee does not affect the validity of the mortgage or deed of trust, except that no action required to be performed by the trustee under this chapter or under the mortgage or deed of trust may be taken until a substituted trustee is appointed pursuant to this section. If a trustee is not designated in the deed of trust, or upon the resignation, incapacity, disability, absence or death of the trustee, or the election of the beneficiary to replace the trustee, the beneficiary or the beneficiary’s authorized agents shall appoint a trustee or a successor trustee.

(3) Once recorded, the substitution shall constitute conclusive evidence of the authority of the substituted trustee or their authorized agents to act pursuant to this section.

(e)  Notwithstanding any provision of this section or any provision in any deed of trust, unless a new notice of sale containing the name, street address, and telephone number of the substituted trustee is given pursuant to Section 2924f after execution of the substitution, any sale conducted by the substituted trustee shall be void.

(f) This section shall become operative on January 1, 1998.

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.