California Civil Code § 2943 requires that a
beneficiary of a deed of trust (normally the lender), after receiving a written
demand from an "entitled person" (the borrower a.k.a. trustor or
mortgagor), prepare and deliver a "payoff demand statement" to the
person requesting it within 21 days of the receipt of the demand. The
foreclosure process may excuse compliance depending upon when the
written demand is presented. Delivery
means by mail, or transmitted by facsimile machine, but does not include by
email.
"Payoff demand statement" means a written
statement setting forth the amounts required as of the date of its preparation
necessary to fully satisfy all obligations secured by the loan that is the
subject of the payoff demand statement.
The written statement must include information reasonably necessary to
calculate the payoff amount on a per diem basis for the period of time, not to
exceed 30 days, during which the per diem amount is not changed by the terms of
the note.
An entitled person may also make a written demand for a "beneficiary
statement" that the beneficiary must satisfy by preparing and delivering
to the person demanding it a true, correct, and complete copy of the note or
other evidence of indebtedness with any modifications thereto, and a
beneficiary statement.
The "beneficiary statement" is a written statement
showing:
a. the amount of the unpaid balance of the
obligation secured by the mortgage or deed of trust, and the interest rate,
together with the total amounts, if any, of all overdue installments of either
principal or interest, or both;
b. the amounts of periodic payments, if
any;
c. the date on which the obligation is
due in whole or in part;
d. the date to which real estate taxes and
special assessments have been paid to the extent the information is known to
the beneficiary;
e. the amount of hazard insurance in
effect, and the term and premium of that insurance to the extent the
information is known to the beneficiary;
f. the amount in an account, if any,
maintained for the accumulation of funds with which to pay taxes and insurance
premiums;
g. the nature and, if know, the amount of
any additional charges, costs, or expenses paid or incurred by the beneficiary
that have become a lien on the real property involved; and
h. whether the obligation secured by the
mortgage or deed of trust can or may be transferred to a new borrower, such as by
an assignment.
A
beneficiary must provide a "short-pay demand statement" (for a short
sale attempt) within 21 days of a request.
If a beneficiary elects not to proceed with the transaction that is the
subject of the short-pay request, it may refuse to provide a short-pay demand
statement, but it must provide written notice of that decision within 21 days
of the receipt of the short-pay request.
The
entitled person may rely on the beneficiary statement, payoff demand statement,
or short-pay demand statement, and any amendment thereof.
If a
statement is demanded that does not specify one of the three options, the
beneficiary must treat the request as a request for a payoff demand
statement.
The
beneficiary may charge up to $30 for furnishing each required statement, except
for mortgages or deeds of trust insured by the FHA or guaranteed by the
Administrator of Veterans Affairs.
If a
beneficiary for a period of 21 days after receipt of the written demand
willfully fails to prepare and deliver the statement, the beneficiary is liable
to the entitled person for all damages that the entitled person sustains by
reason of the refusal, and even if actual damages are not sustained, the
beneficiary shall forfeit to the entitled person the sum of $300. Each failure to provide and deliver that
statement constitutes a separate cause of action. The term "willfully" means an
intentional failure to comply with the requirements of statute without just
cause or excuse.
Remedy: If a beneficiary does not comply with the
statute, the entitled person should consider filing a civil lawsuit for
violation of Civil Code § 2943, and include causes of action for breach of the
promissory note and deed of trust based upon the beneficiary's breach of the
implied covenant of good faith and fair dealing in both documents. A breach of contract cause of action may
enable the recovery of attorneys fees in addition to costs, depending upon the
terms of the note and deed of trust. The
legal action may also support a request for an injunction against a foreclosure
based upon the beneficiary's failure to comply with the statute.
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