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

UPDATED: Aug 6, 2012

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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


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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