Citrus El Dorado, LLC v. Chicago Title Company

Facts: A developer takes out a mortgage to fund construction on an unimproved parcel of land. The developer goes into default. The mortgage is assigned to a new mortgage holder. The mortgage holder gives the developer a short period of time to pay the mortgage back in its entirety. The developer does not pay, and the mortgage holder forecloses on the property through a trustee. A substitute trustee is later appointed under a trust deed, and the property is sold in a trustee’s sale.

Claim: The developer seeks to retain possession of the property, claiming the foreclosure is invalid since the substitute trustee did not verify the mortgage was assigned properly.

Counterclaim: The substitute trustee claims the foreclosure is valid since the trustee had no obligation to ensure the mortgage assignment was valid.

Holding: A California appeals court holds the foreclosure is valid since the substitute trustee had no obligation to verify any information about the underlying mortgage assignment.  [Citrus El Dorado, LLC v. Chicago Title Company (March 5, 2019)­_CA6th_]

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