Can a borrower cancel a deed of trust for a fundamental breach of contract?

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Can a borrower cancel a deed of trust for a fundamental breach of contract?

The bank interfered with my ability to fulfill loan obligations by misrepresentations of material facts. They offered a modification when (it turns out) they lack the contractual authority from the investor and told me not to make payments then initiated foreclosure with multiple procedural violations. The Assignment filed indicates the note and deed have been separated for many years which in effect unsecured the note and voided the deed. Would this also be a breach? Could I file a notice of default on my lender? Could it be done non-judicially by filing documents in the county recorders?

Asked on August 6, 2012 under Real Estate Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Whether or not a borrower can cancel a trust deed due to a breach of the loan agreement depends upon what the ultimate decision by the court would be. If there is a perceived breach of the loan agreement, the borrower should consult with a real estate attorney about whether or not to file a lawsuit against the lender for breach of contract. A lawsuit must be filed to get the relief you seek.


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