Fisher Law Corporation’s Frequently Asked Questions

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Notice: The information contained in these articles is designed to provide accurate information in regard to the subject matters covered and is made available with the understanding that the information provided does not constitute the rendering of legal or professional services. All information is of a general nature, is specific to California law only, and is not intended to to replace professional or legal advice. Each person’s situation is unique and the information contained herein cannot be applied to any individual’s situation. If legal advise is required, the services of a professional should be sought.

What is an all-inclusive deed of trust? »

What is CERCLA? »

How does a condominium differ from a house? »

What are Covenants that run with the land? »

What is a deed in lieu of foreclosure? »

What are easements? »

What are Encroachments? »

How does escrow work? »

What is fire and flood insurance? »

How do foreclosures work? »

What are the different forms of doing business? »

What do trade terms mean? »

What are liquidated damages in real property contracts? »

What is a Lis Pendens? »

How do loan modifications work? »

What is a Mechanic’s Lien? »

How does a Multiple Listing Service work? »

What is an off-shore trust? »

How do real property taxes work? »

What is Procuring Cause? »

What is a Quitclaim Deed? »

What is RESPA? »

Who bears the risk of loss during escrow? »

What are second deeds of trust? »

What is the Statute of Frauds? »

What is Statute of Limitations on Debts Secured By a Mortgage? »

Does a buyer’s broker have a duty to inspect? »

What is The Parol Evidence Rule? »

What is Adverse Possession? »


Q. What is Statute of Limitations on Debts Secured By a Mortgage?

A. A mortgage or deed of trust only creates a lien as security for payment of a debt or other obligation, and each debt or obligation is subject to a period of limitations beyond which it cannot be enforced, unless there has been an extension or renewal of the obligation. A mortgage or an equitable mortgage which secures a debt or obligation which is unenforceable because of the expiration of the period of limitations cannot be enforced by either court foreclosure proceedings or by the exercise of the power of sale.

On the other hand, except in the case of an “ancient mortgage,” even though the lien cannot be foreclosed by the mortgagee, the mortgagor cannot quiet his the lien cannot be foreclosed by the mortgagee, the mortgagor cannot quiet his title against the lien unless and until he pays or offers to pay the debt. Although the debt is barred by law, a quiet title action is an equitableremedy, and the trustor is still morally obligated to pay the debt.

A bona fide purchaser, who receives title “subject to” the mortgage lienbefore it becomes barred by the statute of limitations also must pay or offer to pay the underlying debt before he can clear his title to the property, unless the mortgage becomes an “ancient mortgage.” In contrast, the grantee who purchases the property after the debt has become barred by the statutory period of limitations can quiet his title against the lien without paying the debt, whether or not he is a bona fide purchaser, since he is neither legally nor morally obligated to pay the debt.

An agreement between the mortgagor and mortgagee to extend the statute of limitations for the enforcement of the secured debt cannot affect the rights of any junior lienor who has a lien on the property at the time of the agreement, or the rights of a junior lienor whose interest is acquired thereafter without knowledge of the prior agreement; in either case the junior lienor can raise the defense of the expiration of the limitations period on the senior lien in the senior lienor’s action to enforce the debt. Thus, a mortgage lien securing a debt which is barred by the statute oflimitations becomes junior to junior liens; the junior liens take priority over the prior mortgage even though the statute of limitations may have been tolled, and the mortgage is still enforceable between the mortgagee and mortgagor.

When the mortgagee has acquired possession of the property lawfully or with the consent of the mortgagor before the statutory period has expired, neither the mortgagor nor his successor can recover possession of the property while the mortgage debt is unpaid, even though an action by the mortgagee is barred by the statute of limitations. On the other hand, when the mortgagee gains possession after the debt is barred by the statute of limitations, a bona fide purchaser can quiet title to the property and recover possession.

These principles apply to the enforcement of a mortgage when the period of limitations has expired on the underlying debt or obligation unless the obligation is so old that it becomes an “ancient mortgage.” A mortgage lien expires when the period of limitations has elapsed for the enforcement of the secured debt, but in any event the lien is unenforceable ten years after the maturity date, or ten years after the last date for payment or performance of the obligation, if this date is ascertainable from the recorded document; if this date is not ascertainable from the public records, the lien is unenforceable 60 years after the security instrument was recorded.

These times can be extended either by a written waiver signed by both the obligor and obligee and recorded prior to the time the lien would otherwise expire, or by the recordation by the obligee of a notice of intent to preserve the security interest prior to the time the lien would otherwise expire. Upon recordation of a notice of intent to preserve, the period of expiration is extended until ten years after the notice is recorded.

7. The “notice of intent to preserve interests” must substantially comply with the statutory form, and it must be recorded prior to the time that the interest would otherwise expire. The notice must describe the name and address of the claimant and any agent acting on behalf of the claimant, the character of the interest claimed, its location in the public records, and a legal description of the property. It must be signed and verified and contain a statement under penalty of perjury that the information in the notice is true and that the notice is not recorded for the purpose of slandering title. The notice is recorded in the county where the property security is located and the name of the claimant is indexed by the Recorder’s office in the Grantor Index. If a court finds that the notice was recorded with the purpose of slandering title, the claimant will be liable for all damages caused by recording the notice, and the costs of the quiet title action, including attorneys’ fees.

Consistent with the policy to outlaw “ancient mortgages,” these periods of limitation are absolute and not tolled because of disability, or otherwise, unless an action is filed within the period to quiet title or otherwise enforce the interest, and a lis pendens is recorded. Otherwise, on the expiration of the prescribed period, the lien is unenforceable by any means, including the power of sale, and it “is equivalent for all purposes to a certificate of satisfaction, reconveyance, release, or other discharge of the security interest, and the execution and recording of a certificate of satisfaction, reconveyance, release, or other discharge is not necessary to terminate or evidence the termination of the security interest.

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