From the desk of San Francisco lead attorney Alison Cordova:
There are deadlines for foreclosure. Which deadline depends on what type of foreclosure and whether there is a maturity date in the note.
In 1933, CA adopted Section 725(a) of the Code of Civil Procedure, essentially creating judicial foreclosure. That section provides: “The beneficiary or the trustee named in a deed of trust upon real property or any interest therein to secure a debt or other obligation, shall have the right to bring suit to foreclose the same in the manner and subject to the provisions, rights and remedies relating to the foreclosure of a mortgage upon such property.”
In Flack v. Boland, 11 Cal.2d 103 (1938), the court decided that a four-year statute of limitations is a defense to a judicial foreclosure. See Id at 106-7. See also CA Civ Pro Section 2911. However, most lenders pursue non-judicial foreclosures, and neither the statute nor case law addressed deadlines for non-judicial foreclosures.
The issue was settled by passage of The Marketable Record Title Act (“MRTA”) in 1982. CA Civ Pro Section 882.020, the part of MRTA addressing time limits, states:
(a) Unless the lien of a mortgage, deed of trust, or other instrument that creates a security interest of record in real property to secure a debt or other obligation has earlier expired pursuant to Section 2911, the lien expires at, and is not enforceable by action for foreclosure commenced, power of sale exercised, or any other means asserted after, the later of the following times:
(1) If the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the record,10 years after that date.
(2) If the final maturity date or the last date fixed for payment of the debt or performance of the obligation is not ascertainable from the record, or if there is no final maturity date or last date fixed for payment of the debt or performance of the obligation, 60 years after the date the instrument that created the security interest was recorded.
To summarize, deadline is 10 years after maturity if the recorded deed of trust recites a maturity date, and 60 years after recording if it does not. Lenders typically do not recite maturity dates, so usually it is 60 years after the deed of trust was recorded, i.e. a ton of time.
What this means? If you are a consumer who defaulted on a second mortgage during the recession and are now facing rising value in your property, you may be at risk of foreclosure and should contact an attorney immediately. There are steps that can be taken to avoid foreclosure.