Rossberg v. Bank of America is a case about factual allegations which will not win the day in a suit to enjoin a nonjudicial foreclosure sale. The Rossbergs attempted to allege defects sufficient to invalidate the recorded Notice of Default and sought to enjoin the foreclosure sale of their residence. The take-a-ways:

– They alleged that they had not been contacted within 30 days prior to the recording of Notice of Default. Civil Code section 2923.5 requires that a lender, or lender’s agent, contact a borrower, or otherwise make required efforts to contact the borrower, at least 30 days prior to the recording of a notice of default to assess the borrower’s financial situation and to explore the borrower’s options to avoid foreclosure. A borrower may state a cause of action under section 2923.5 by alleging the lender did not actually contact the borrower or make the required efforts to contact the borrower despite a contrary declaration in the recorded notice of default. That contact, however, may take many forms. Telephone conversations with the lender or lender’s agent to discuss loan modification and letters sent to the borrower regarding loan modification at least 30 days prior to the recording of a Notice of Default satisfy this requirement. There is no requirement that the contact take place within 30 days of the recording of the Notice of Default. The factual allegations in the complaint and attached documents proved the requirements of section 2923.5 had been satisfied.

– A Notice of Default recorded by a trustee is valid pursuant to Civil Code section 2934a if executed after a substitution of trustee is executed and prior to the trustee recording the Notice of Default. This is true even if the substitution of trustee is notarized and recorded after the Notice of Default records. Section 2934a states: “[a] trustee named in a recorded substitution of trustee shall be deemed to be authorized to act as the trustee under the . . . deed of trust for all purposes from the date the substitution is executed . . . .”  That statute also specifically provides a substituted trustee may record a notice of default before the substitution empowering the trustee to act is recorded so long as a copy of the substitution of trustees is mailed to all persons entitled to notice of default. (See, Civil Code section 2934a(b).)

– A Notice of Default may be acknowledged by a notary after it is executed. Nothing requires a notary to acknowledge a document at the same time it is executed: even a lengthy delay between the execution of the document and its acknowledgment does not invalidate it.

– Civil Code section 2924 authorizes a notice of default to be recorded by the “trustee, mortgagee, or beneficiary, or any of their authorized agents.” An allegation that the entity executing the Notice of Default lacked authority to execute it must affirmatively allege facts showing that the entity was not the trustee, mortgagee, beneficiary, or any of their authorized agents: merely alleging that the trustee was not the trustee or beneficiary is insufficient.

– A Notice of Default may be recorded prior to the recording of a Notice of Assignment of Deed of Trust, contrary to Civil Code section 2932.5, which appears to provide otherwise, because that section applies only to mortgages, not deeds of trust. Section 2932.5 requires the recorded assignment of a mortgage so that a prospective purchaser knows that the mortgagee has the authority to exercise the power of sale.  This is not necessary when a deed of trust is involved, as the trustee conducts the sale and transfers title – thus different recording requirements than those required of mortgagees under section 2932.5.

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