Zieve, Brodnax & Steele, LLP v. DhindsaAnnotate this Case
The owner of the unencumbered 25 percent interest in the real property is entitled to a proportionate share of surplus proceeds. The Court of Appeal's conclusion is based on Caito v. United California Bank (1978) 20 Cal.3d 694. The court held that the 1990 enactment of Civil Code section 2924k did not change the principles set forth in Caito.
Applying this principle about the rights of junior lienors to the undisputed facts of this case, the court held that the creditor holding the second deed of trust encumbering an undivided 75 percent interest in the real property was entitled only to a 75 percent share of the surplus funds. The court held that the remaining 25 percent must be distributed to the person who owned the interest that was not encumbered by the second deed of trust. Accordingly, the court reversed the trial court's judgment.