Judge Peter A. Hernandez, Case Number: 23PSCP00298, Date: 2023-10-05 Tentative Ruling

Petitioner Quality Loan Service Corp.’s Motion to Deposit Surplus Funds Pursuant to Civil Code § 2924j and to Discharge Petitioner is GRANTED.

On July 6, 2023, Quality Loan Service Corp. (“Quality”) filed a “Petition and Declaration Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of Trustee’s Sale” (“Petition”). Quality is the trustee under the deed of trust executed on August 19, 2020 and recorded on August 26, 2020, which encumbered the real property commonly known as 122 E. 5^th St., San Dimas, CA 91773 (“subject property”). The subject property was sold at a March 23, 2023 trustee’s sale. Quality’s Petition seeks a determination of claims to surplus proceeds.

Unless an interpleader action has been filed, within 30 days of the execution of the trustee’s deed resulting from a sale in which there are proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k, the trustee shall send written notice to all persons with recorded interests in the real property as of the date immediately prior to the trustee’s sale who would be entitled to notice pursuant to subdivisions (b) and (c) of Section 2924b. The notice shall be sent by first-class mail in the manner provided in paragraph (1) of subdivision (c) of Section 2924b and inform each entitled person of each of the following:

(2) That the noticed person may have a claim to all or a portion of the sale proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k.

(3) The noticed person may contact the trustee at the address provided in the notice to pursue any potential claim.

(4) That before the trustee can act, the noticed person may be required to present proof that the person holds the beneficial interest in the obligation and the security interest therefor. In the case of a promissory note secured by a deed of trust, proof that the person holds the beneficial interest may include the original promissory note and assignment of beneficial interests related thereto. The noticed person shall also submit a written claim to the trustee, executed under penalty of perjury, stating the following:

(C) That claims must be received by the trustee at the address stated in the notice no later than 30 days after the date the trustee sends notice to the potential claimant.

“The trustee shall exercise due diligence to determine the priority of the written claims received by the trustee to the trustee’s sale surplus proceeds from those persons to whom notice was sent pursuant to subdivision (a). In the event there is no dispute as to the priority of the written claims submitted to the trustee, proceeds shall be paid within 30 days after the conclusion of the notice period. If the trustee has failed to determine the priority of written claims within 90 days following the 30-day notice period, then within 10 days thereafter the trustee shall deposit the funds with the clerk of the court pursuant to subdivision (c) or file an interpleader action pursuant to subdivision (e). Nothing in this section shall preclude any person from pursuing other remedies or claims as to surplus proceeds.” (Civ. Code § 2924j, subd. (b).)

“If, after due diligence, the trustee is unable to determine the priority of the written claims received by the trustee to the trustee’s sale surplus of multiple persons or if the trustee determines there is a conflict between potential claimants, the trustee may file a declaration of the unresolved claims and deposit with the clerk of the superior court of the county in which the sale occurred, that portion of the sales proceeds that cannot be distributed, less any fees charged by the clerk pursuant to this subdivision. The declaration shall specify the date of the trustee’s sale, a description of the property, the names and addresses of all persons sent notice pursuant to subdivision (a), a statement that the trustee exercised due diligence pursuant to subdivision (b), that the trustee provided written notice as required by subdivisions (a) and (d) and the amount of the sales proceeds deposited by the trustee with the court. Further, the trustee shall submit a copy of the trustee’s sales guarantee and any information relevant to the identity, location, and priority of the potential claimants with the court and shall file proof of service of the notice required by subdivision (d) on all persons described in subdivision (a).

“The clerk shall deposit the amount with the county treasurer or, if a bank account has been established for moneys held in trust under paragraph (2) of subdivision (a) of Section 77009 of the Government Code, in that account, subject to order of the court upon the application of any interested party . . . Upon deposit of that portion of the sale proceeds that cannot be distributed by due diligence, the trustee shall be discharged of further responsibility for the disbursement of sale proceeds . . .” (Civ. Code § 2924j, subd. (c).)

“Before the trustee deposits the funds with the clerk of the court . . ., the trustee shall send written notice by first-class mail, postage prepaid, to all persons described in subdivision (a) informing them that the trustee intends to deposit the funds with the clerk of the court and that a claim for the funds must be filed with the court within 30 days from the date of the notice, providing the address of the court in which the funds were deposited, and a telephone number for obtaining further information.

“Within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court, the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustee’s declaration at the addresses specified therein . . .” (Civ. Code § 2924j, subd. (d).)

Quality moves the court to deposit surplus funds and to be discharged from further responsibility for disbursement of the funds.

On July 6, 2023, Quality filed a Petition in compliance with Civil Code § 2924j, subdivision (c).

Quality is the trustee under the deed of trust executed by William Eugene Wantland and recorded on August 26, 2020, which encumbered the property located at 122 E. 5^th St., San Dimas, CA 91773 (“subject property”). The subject property was sold at a trustee’s sale on March 23, 2023.

The motion is granted. Quality is ordered to deposit surplus funds from the trustee’s sale in the amount of $217,640.50 (i.e., $220,764.32[1] minus $2,688.82 in costs and expenses pursuant to Civil Code § 2924k, subd. (b)[2] and $435.00 filing fee) with the court. Quality is ordered discharged of further responsibility for the disbursement of sale proceeds pursuant to Civil Code § 2924j, subdivision (c) and is not required to make further appearances in this matter.

It is further ordered that, within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the Court pursuant to Civil Code section 2924j, subdivision (d). The clerk shall schedule and serve written notice of the hearing by first-class mail on all claimants identified in Quality’s declaration at the addresses specified therein. The clerk is to give notice.

[1] Identified in Paragraphs 7 and 16 of the Petition.

[2] Civil Code § 2924k, subdivision (b) provides, in relevant part, as follows: “A trustee may charge costs and expenses incurred for such items as mailing and a reasonable fee for services rendered in connection with the distribution of the proceeds from a trustee's sale, including, but not limited to, the investigation of priority and validity of claims and the disbursement of funds.” Quality identified its fees and expenses in Paragraph 15 of the Petition.