Posted by John Merchant on July 07, 2009 at 21:33:13:
Here’s a little article I found with its CCC (Cal Civil Code)citation on lien priorities.
Civil Code section 2898 is the CCC section it cites and the next step for anyone wanting to read ALL CA law on the subject is to go to a CA County or Law School Law Library, find the CCCs (probably 100+ book set, open and read it and the cases it cites.
Here’s the article I found:
“The Position of the Parties
The junior lienor, DMC, argued that its lien was “first in time” and, accordingly, was entitled to priority. “In California, lien priority is determined by the “first in time, first in right” approach. In regards to real property, liens that are recorded first have priority over any later-recorded liens.” DMC, at 195-96 (footnote and citations omitted). The new lender, Downey Savings, on the other hand, argued that purchase-money loans are entitled to “super-priority” under California law: ?A purchase-money mortgage, for example, has priority over all other liens on real property. Civil Code section 2898, subdivision (a) provides: ?A mortgage or deed of trust given for the price of real property, at the time of its conveyance, has priority over all other liens created against the purchaser, subject to the operation of the recording laws.?? DMC, at 196 (footnote and citations omitted).”
So it’s not quite as arcane as you make it out to be, and obviously it has a statutory basis.
elimination of subordinate liens - Posted by John Merchant
Posted by John Merchant on July 07, 2009 at 15:38:26:
Don’t know if this is specifically spelled out in Cal Civil Code (CCCs) but here’s what happens when 1st lien holder forecloses:
Let’s say there is a 2d and maybe even a 3d mtg lien DOT on the RE.
Then the 1st lien holder forecloses and ends up with getting title to that RE after his comopleted foreclosure.
The title he gets will have NO other DOT liens ahead of him in time, right? Right!
If there were other DOTs ahead of him, having been recorded earlier than his DOT, he would have title SUBJECT to those superior liens, right? Right!
And those, the foreclosing guy would have to pay because those liens are superior to his and are unaffected by his DOT foreclosure.
But if he’s #1, his title has come w/o any blemishes, except past due taxes and whatever other liens that state has chosen to be non-dissolvable and thus must also be paid.
If you’ll find the CCCs online and then find the RE foreclosure statutes they’ll likely spell out in ample detail how this goes in the Big Bear State.
Your last comment is my very question. I’ve talked to real estate attorneys, title officers and nobody seems to know where this statute / code is located.
Wouldn’t it be ironic if everybody just accepts that subordinate liens are wiped off by a senior foreclosing lien when there is no actual legal authority for it!
More seriously and to the my ultimate point: when there are 2 liens recorded at the same time with sequential instrument numbers (ie: a first and a HELOC) and the first forecloses, is the 2nd (HELOC) wiped off or does it survive because the law or title companies consider both liens to be equal in priority?