Balancing the Scales of Justice for Pro Se Homeowners

Did your Notice of Default fail to meet a “Condition Precedent”?

Posted by on Sep 24, 2012

Recently we have been discussing and exploring Paragraph 22 of Deed of Trust’s that discusses the requirement for the Bank to inform the borrower of their right to “bring forth an action to dispute the default and any other defense to the acceleration and sale”.  It appears from research, that when the Bank does not inform you of this right in the Deed of Trust this is a “Failure to Meet a Condition Precedent”.

When parties enter  a “contract” such as a Note or Deed of Trust, there are certain conditions in those agreements that must be met; if those conditions are not met, they can result in a “breach of contract”.  Typical conditions are – I loan you money, you agree to pay that money back at a certain rate per month, for a certain period of time.  (I loan you 100k, you agree to pay me back over a 30 year period at the interest rate of 6%) If you do not make a payment, you fail to meet a “condition” of the contract and are therefore are in “breach” of that contract and I can now liquidate (sell) your property to satisfy the debt.

Where this gets tricky (and I am sure there will be arguments to this effect) is – if you as the borrower first failed to meet a condition of the agreement, can you then enforce the rest of the agreement?  Frankly, I think in this particular situation you can.   Because the agreement says that WHEN the condition of making a payment is not met, the bank has additional conditions which are 1) to inform you they believe you are in default, and 2) inform you that you can sue them disputing that default BEFORE they can go forth with a Trustee Sale.

Yet I have NEVER read a  Notice of Default where it every says anything close to, “ the way, you can bring forth an action to dispute this default” .  Doesn’t this mean the bank has failed to meet the Condition Precedent?  If they went forward with the Trustee Sale without informing you, then hasn’t the bank breached the contract?  And if they breached the contract, how can they enforce the contract?

So I am trying to work this out in mind –

Bank loans money – Condition

Borrower agrees to make monthly payments – Condition

Borrower fails to make payment, Bank start foreclosure – Condition

Before foreclosure, bank must inform borrower of the default

and borrowers right to sue  – Condition

 The above conditions have to be met before the Trustee Sale can take place.  If the Bank failed to “meet a condition precedent” then do you not have the right to set aside the Trustee Sale for their failure to meet a condition precedent?  How can the bank enforce the contract if they did not adhere to the terms of the agreement?

There was an interesting case in Virgina (I am looking for California cases, so hang tight with me as I research that).  In Richard Mathews, et al v PHH Mortgage Corporation, Record No. 110968 (April 20, 2012)  the bank argued that the Mathews first failed to meet the terms of the agreement by failing to make payments (albeit this is also an argument) – and that according to Viriginia common law, the breaching party cannot enforce the contract. The Trial Court agreed with PHH;  HOWEVER, the Court of Appeals disagreed AND REVERSED in favor of Mathews.   Here is an excerpt from their legal reasoning:

Nevertheless, the Mathewses argue that under Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114, 654 S.E.2d 898 (2008), a lender must comply with all conditions precedent to foreclosure in a deed of trust even if the borrowers are in arrears.   We agree.

In Bayview, the borrower was in arrears.   Consequently, the lender accelerated repayment under the note and directed the trustee under the deed of trust to begin foreclosure proceedings.   Thereafter, the parcel was sold at a foreclosure auction and the borrower filed a suit for damages alleging breach of the deed of trust.  Id. at 117–18, 654 S.E.2d at 899.   We determined that the sale was improper because Bayview had failed to provide a pre-acceleration notice, which was a condition precedent to acceleration under the deed of trust.   By failing to provide the notice, Bayview breached the deed of trust by accelerating repayment and foreclosing:

Because Bayview did not comply with the specific condition precedent under the Deed of Trust, prior to the notice of foreclosure sale by [the trustee], Bayview had not acquired the right to accelerate payment under the terms of the Deed of Trust.   Thus, [the trustee] could exercise no right of acceleration because no such right had then accrued to Bayview․

While Code § 55–59.1(A) does allow a proper notice of foreclosure sale to exercise an accrued right of acceleration, Bayview failed to fulfill the contractual condition precedent that would have given it such a right.


I say people, we NEED TO BE ARGUING THIS IN EVERY SINGLE COMPLAINT because not a single solitary Notice of Default contains that CONDITION PRECEDENT.  Discuss it with your attorney…. In the meantime I will be searching for California law to support this argument.



 LEGAL DISCLAIMER:  I am not an attorney and this is not legal advice.  These are musings about the goings on in the legal battles against banksters who steal peoples homes.  This is intended for  educational and informational purposes only.  Take NO action on this information without consulting an attorney in your jurisdiction.     


Join the conversation and post a comment.

  1. Matthew R Giese

    m very happy to see your article. Thanks so much and i am taking a look forward to contact you.

  2. Roungunny

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  3. joanna jensen

    Homeowners have the right to dispute a nod. Additionally, it is very important to open your mail.

    Typically a servicer is required to send an acceleration demand, stating your in default, you have to bring the loan current or we will initiate foreclosure proceedings.

    Additionally there are very important things that have to be done to make sure the correct entity is foreclosing.

    The trustee on the nod has to be the same trustee that is on your deed of trust. If there is a new trustee, they have to be substituted in at your local county recorders office BEFORE THE NOTICE OF SALE IS RECORDED.

    this is important, because only the original beneficiary or their agent can initiate foreclosure. Open your mail, check to make sure the correct beneficiary and trustee are listed if not make sure the substitution of trustee is recorded before the notice of sale!

    I would definately send a dispute and qwr to the trustee and servicer disputing the following:

    1) qwr per tila – who owns my mortgage and has the legal authority to foreclose?

    2) Dispute per FDCPA dispute your balance, dispute charges ask for life of loan history and how all charges and payments were applied to your account.

    3) Per FCRA, make sure if you send a dispute the servicer shows your account as disputed on your credit report. the creditor is required to report your account accurately or they must remove the account from your credit report.

    Please open your mail, hold the servicers toes to the fire.

    We have consumer protection laws that are very helpful.

    I disputed my own personal loan, have since not only had the nod rescinded and all derogatory info removed from my credit report but forced the lender to modify my loan.

    Before $1,000,000 loan payment of approx $5500 piti

    now loan balance reduces, new payment of $2852 piti.

    I know some people want the home free and clear which may be hard to do but I am ok with owning my home at a reasonable payment we can afford with a fixed piti payment. I can not rent in my neighborhood for this price, so for me this payment makes sense.

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