Facts: An owner of residential property and undeveloped land took out a loan secured by a trust deed on both. In the event of default, the trust deed stated the properties were to be foreclosed on in any order. However, the lender verbally assured the owner the undeveloped land was to be foreclosed on first. The owner defaulted on the loan and the lender foreclosed on the residential property.
Claim: The owner sought to pursue money damages from the lender, claiming the lender engaged in unfair business practices since it foreclosed on the residential property first after verbally informing the owner it would foreclose on the other security in the event of default.
Counterclaim: The lender claimed it had not engaged in unfair business practices since the terms of the trust deed stated the properties were to be foreclosed on in any order.
Holding: A California court of appeals held the owner may not pursue money damages from the lender since the terms of the trust deed stated the properties were to be foreclosed on in any order as determined by the lender. [Wilson v. Hynek (2012) 207 CA4th 999]
Editor’s note – This case serves as another reminder that a lender’s word is only as good as smoke and mirrors if the fine print says something else.
