California Laws: Civil Code Section 2941.7

California Laws > Civil Code > Sections 2920-2944.5

Section 2941.7

Whenever the obligation secured by a mortgage or deed of
trust has been fully satisfied and the present mortgagee or
beneficiary of record cannot be located after diligent search, or
refuses to execute and deliver a proper certificate of discharge or
request for reconveyance, or whenever a specified balance, including
principal and interest, remains due and the mortgagor or trustor or
the mortgagor's or trustor's successor in interest cannot, after
diligent search, locate the then mortgagee or beneficiary of record,
the lien of any mortgage or deed of trust shall be released when the
mortgagor or trustor or the mortgagor's or trustor's successor in
interest records or causes to be recorded, in the office of the
county recorder of the county in which the encumbered property is
located, a corporate bond accompanied by a declaration, as specified
in subdivision (b), and with respect to a deed of trust, a
reconveyance as hereinafter provided.
   (a) The bond shall be acceptable to the trustee and shall be
issued by a corporation lawfully authorized to issue surety bonds in
the State of California in a sum equal to the greater of either (1)
two times the amount of the original obligation secured by the
mortgage or deed of trust and any additional principal amounts,
including advances, shown in any recorded amendment thereto, or (2)
one-half of the total amount computed pursuant to (1) and any accrued
interest on such amount, and shall be conditioned for payment of any
sum which the mortgagee or beneficiary may recover in an action on
the obligation secured by the mortgage or deed of trust, with costs
of suit and reasonable attorneys' fees.  The obligees under the bond
shall be the mortgagee or mortgagee's successor in interest or the
trustee who executes a reconveyance under this section and the
beneficiary or beneficiary's successor in interest.
   The bond recorded by the mortgagor or trustor or mortgagor's or
trustor's successor in interest shall contain the following
information describing the mortgage or deed of trust:
   (1) Recording date and instrument number or book and page number
of the recorded instrument.
   (2) Names of original mortgagor and mortgagee or trustor and
beneficiary.
   (3) Amount shown as original principal sum secured thereby.
   (4) The recording information and new principal amount shown in
any recorded amendment thereto.
   (b) The declaration accompanying the corporate bond recorded by
the mortgagor or trustor or the mortgagor's or trustor's successor in
interest shall state:
   (1) That it is recorded pursuant to this section.
   (2) The name of the original mortgagor or trustor and mortgagee or
beneficiary.
   (3) The name and address of the person making the declaration.
   (4) That either the obligation secured by the mortgage or deed of
trust has been fully satisfied and the present mortgagee or
beneficiary of record cannot be located after diligent search, or
refuses to execute and deliver a proper certificate of discharge or
request for reconveyance as required under Section 2941; or that a
specified balance, including principal and interest, remains due and
the mortgagor or trustor or mortgagor's or trustor's successor in
interest cannot, after diligent search, locate the then mortgagee or
beneficiary.
   (5) That the declarant has mailed by certified mail, return
receipt requested, to the last address of the person to whom payments
under the mortgage or deed of trust were made and to the last
mortgagee or beneficiary of record at the address for such mortgagee
or beneficiary shown on the instrument creating, assigning, or
conveying the interest, a notice of recording a declaration and bond
under this section and informing the recipient of the name and
address of the mortgagor or trustee, if any, and of the right to
record a written objection with respect to the release of the lien of
the mortgage or, with respect to a deed of trust, notify the trustee
in writing of any objection to the reconveyance of the deed of
trust.  The declaration shall state the date any notices were mailed
pursuant to this section and the names and addresses of all persons
to whom mailed.
   The declaration provided for in this section shall be signed by
the mortgagor or trustor under penalty of perjury.
   (c) With respect to a deed of trust, after the expiration of 30
days following the recording of the corporate bond and accompanying
declaration provided in subdivisions (a) and (b), and delivery to the
trustee of the usual reconveyance fees plus costs and a demand for
reconveyance under this section, the trustee shall execute and
record, or otherwise deliver as provided in Section 2941, a
reconveyance in the same form as if the beneficiary had delivered to
the trustee a proper request for reconveyance, provided that the
trustee has not received a written objection to the reconveyance from
the beneficiary of record.  No trustee shall have any liability to
any person by reason of its execution of a reconveyance in reliance
upon a trustor's or trustor's successor's in interest substantial
compliance with this section.  The sole remedy of any person damaged
by reason of the reconveyance shall be against the trustor, the
affiant, or the bond.  With respect to a mortgage, a mortgage shall
be satisfied of record when 30 days have expired following
recordation of the corporate bond and accompanying declaration,
provided no objection to satisfaction has been recorded by the
mortgagee within that period.  A bona fide purchaser or encumbrancer
for value shall take the interest conveyed free of such mortgage,
provided there has been compliance with subdivisions (a) and (b) and
the deed to the purchaser recites that no objections by the mortgagee
have been recorded.
   Upon recording of a reconveyance under this section, or, in the
case of a mortgage the expiration of 30 days following recordation of
the corporate bond and accompanying declaration without objection
thereto having been recorded, interest shall no longer accrue as to
any balance remaining due to the extent the balance due has been
alleged in the declaration recorded under subdivision (b).
   The sum of any specified balance, including principal and
interest, which remains due and which is remitted to any issuer of a
corporate bond in conjunction with the issuance of a bond pursuant to
this section shall, if unclaimed, escheat to the state after three
years pursuant to the Unclaimed Property Law.  From the date of
escheat the issuer of the bond shall be relieved of any liability to
pay to the beneficiary or his or her heirs or other successors in
interest the escheated funds and the sole remedy shall be a claim for
property paid or delivered to the Controller pursuant to the
Unclaimed Property Law.
   (d) The term "diligent search," as used in this section, shall
mean all of the following:
   (1) The mailing of notices as provided in paragraph (5) of
subdivision (b), and to any other address that the declarant has used
to correspond with or contact the mortgagee or beneficiary.
   (2) A check of the telephone directory in the city where the
mortgagee or beneficiary maintained the mortgagee's or beneficiary's
last known address or place of business.
   (3) In the event the mortgagee or beneficiary or the mortgagee's
or beneficiary's successor in interest is a corporation, a check of
the records of the California Secretary of State and the secretary of
state in the state of incorporation, if known.
   (4) In the event the mortgagee or beneficiary is a state or
national bank or a state or federal savings and loan association, an
inquiry of the regulatory authority of such bank or savings and loan
association.
   (e) This section shall not be deemed to create an exclusive
procedure for the issuance of reconveyances and the issuance of bonds
and declarations to release the lien of a mortgage and shall not
affect any other procedures, whether or not such procedures are set
forth in statute, for the issuance of reconveyances and the issuance
of bonds and declarations to release the lien of a mortgage.
   (f) For purposes of this section, the trustor or trustor's
successor in interest may substitute the present trustee of record
without conferring any duties upon the trustee other than those that
are incidental to the execution of a reconveyance pursuant to this
section if all of the following requirements are met:
   (1) The present trustee of record and the present mortgagee or
beneficiary of record cannot be located after diligent search.
   (2) The declaration filed pursuant to subdivision (b) shall state
in addition that it is filed pursuant to this subdivision, and shall,
in lieu of the provisions of paragraph (4) of subdivision (b), state
that the obligation secured by the mortgage or deed of trust has
been fully satisfied and the present trustee of record and present
mortgagee or beneficiary of record cannot be located after diligent
search.
   (3) The substitute trustee is a title insurance company that
agrees to accept the substitution.  This subdivision shall not impose
a duty upon a title insurance company to accept the substitution.
   (4) The corporate bond required in subdivision (a) is for a period
of five or more years.

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