subordination clause in California

1971(Cal. Real Estate Secured Transactions (Cont.Ed.Bar) *1036 supra, § 5.16 at p. 217; Comment, Subordination of Purchase-Money Security, 52 Cal.L.Rev. 157, 164-170.) Finally, in our opinion strong public policy reasons to protect the seller in subordination situations are set out in Handy v. Gordon, supra, 65 Cal. 2d 578 , 581: “Although the parties to a contract of sale containing a subordination clause may delegate to the vendee or third party lenders power to determine the details of subordinating loans, an enforceable subordination clause must contain terms that will define and minimize the

1967“Although the parties to a contract of sale containing a subordination clause may delegate to the vendee or third *529 party lenders power to determine the details of subordinating loans, an enforceable subordination clause must contain terms that will define and minimize the risk that the subordinating liens will impair or destroy the seller’s security.” (Handy v. Gordon, 65 Cal.2d 578, 581 [ 55 Cal.Rptr. 769 , 422 P.2d 329 ].) The deposit receipt refers to the construction loan only in this language: ‘ ‘. . . said first trust deed and note will be made second to a new construction and or imp

2026(See fn. 2, ante.) Although loss of lien priority is not loss of money, to have an instrument adjudged void “[i]t is not necessary to allege or prove any pecuniary loss so long as the record indicates there was injury or prejudice resulting from the fraud. [Citation.] It is sufficient to show that the plaintiff is in a worse position than he otherwise would have been.” (Turner v. Turner (1959) 167 Cal.App.2d 636, 641 (Turner).) Here, a golf course was purchased in 2007 for $2.2 million but its condition is now greatly deteriorated.

2026(See fn. 2, ante.) Although loss of lien priority is not loss of money, to have an instrument adjudged void “[i]t is not necessary to allege or prove any pecuniary loss so long as the record indicates there was injury or prejudice resulting from the fraud. [Citation.] It is sufficient to show that the plaintiff is in a worse position than he otherwise would have been.” (Turner v. Turner (1959) 167 Cal.App.2d 636, 641 (Turner).) Here, a golf course was purchased in 2007 for $2.2 million but its condition is now greatly deteriorated.

2014(See Tesco Controls, Inc. v. Monterey Mechanical Co. (2004) 124 Cal.App.4th 780, 789 [ 21 Cal.Rptr.3d 751 ] (Tesco Controls); see also Lamar Center Outdoor, LLC v. Department of Transportation (2013) 221 Cal.App.4th 810, 821 [ 164 Cal.Rptr.3d 567 ] [“The interpretation of a statute is a question of law which we review de novo.”].) In the absence of conflicting extrinsic evidence, we review the trial court’s interpretation of the relevant agreements, including the subordination clause, de novo as well.

2014(See Tesco Controls, Inc. v. Monterey Mechanical Co. (2004) 124 Cal.App.4th 780, 789 [ 21 Cal.Rptr.3d 751 ] (Tesco Controls); see also Lamar Center Outdoor, LLC v. Department of Transportation (2013) 221 Cal.App.4th 810, 821 [ 164 Cal.Rptr.3d 567 ] [“The interpretation of a statute is a question of law which we review de novo.”].) In the absence of conflicting extrinsic evidence, we review the trial court’s interpretation of the relevant agreements, including the subordination clause, de novo as well.

2014(See Tesco Controls, Inc. v. Monterey Mechanical Co. (2004) 124 Cal.App.4th 780, 789 [ 21 Cal.Rptr.3d 751 ] (Tesco Controls); see also Lamar Center Outdoor, LLC v. Department of Transportation (2013) 221 Cal.App.4th 810, 821 [ 164 Cal.Rptr.3d 567 ] [“The interpretation of a statute is a question of law which we review de novo.”].) In the absence of conflicting extrinsic evidence, we review the trial court’s interpretation of the relevant agreements, including the subordination clause, de novo as well.

2014(See Tesco Controls, Inc. v. Monterey Mechanical Co. (2004) 124 Cal.App.4th 780, 789 [ 21 Cal.Rptr.3d 751 ] (Tesco Controls); see also Lamar Center Outdoor, LLC v. Department of Transportation (2013) 221 Cal.App.4th 810, 821 [ 164 Cal.Rptr.3d 567 ] [“The interpretation of a statute is a question of law which we review de novo.”].) In the absence of conflicting extrinsic evidence, we review the trial court’s interpretation of the relevant agreements, including the subordination clause, de novo as well.

2016(Spangler, at p. 611.) However, “if the transaction in question is a variation on the standard purchase money mortgage or deed of trust transaction, it should be examined so as to determine whether it subserves the purposes of section 580b as explicated by us in Roseleaf and Bargioni.” (Spangler, supra, 7 Cal.3d at p. 611 .) Applying this inquiry, we concluded that “the subordination clause situation is sufficiently different from the standard purchase money mortgage situation to remove it from automatic application of section 580b.” (Id. at pp. 611-612.) We went on to explain that the purpose

2000(Spangler, supra, 7 Cal.3d at p. 611 .) That value depends on the success of the commercial venture, which depends on the “competence, diligence and good faith of the developing purchaser.” (Id. at p. 613.) In such a case, the purchaser, not the vendor, should “bear the risk of failure, particularly since in the event of default, the junior lienor vendor will lose both the land and the purchase price.” (Ibid.) Continuing, the court observed that in a subordination clause situation, the amount of the construction loan is usually very large and the typical vendor cannot raise the cash to bid at

1967Co. v. Reed, supra, at page 238; Gould v. Callan, 127 Cal.App.2d 1,6 [ 273 P.2d 93 ].) Appellants argue that even if the contract is void, their agreement to eliminate and waive the subordination clause rendered the contract enforceable.

1967Co. v. Reed, supra, at page 238; Gould v. Callan, 127 Cal.App.2d 1,6 [ 273 P.2d 93 ].) Appellants argue that even if the contract is void, their agreement to eliminate and waive the subordination clause rendered the contract enforceable.

1964Similarly, in Roven v. Miller, 168 Cal.App.2d 391 [ 335 P.2d 1035 ], a purchase option contract between the parties contained the following provision: “ ‘ “This Deed of Trust will be subordinated to a First Deed of Trust to secure a construction loan which will be placed upon the property by the Trustor, or his successors and assigns, given to a recognized Savings and Loan Association or bank for the purpose of securing a loan to be used for the construction of residences and improvements on said property.” . . ” (Fn. 1, p. 394.) The reviewing court, observing that the subordination clause con

1964Similarly, in Roven v. Miller, 168 Cal.App.2d 391 [ 335 P.2d 1035 ], a purchase option contract between the parties contained the following provision: “ ‘ “This Deed of Trust will be subordinated to a First Deed of Trust to secure a construction loan which will be placed upon the property by the Trustor, or his successors and assigns, given to a recognized Savings and Loan Association or bank for the purpose of securing a loan to be used for the construction of residences and improvements on said property.” . . ” (Fn. 1, p. 394.) The reviewing court, observing that the subordination clause con

2014(Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [ 44 Cal.Rptr. 767 , 402 P.2d 839 ].) We review the trial court’s factual findings for substantial evidence.

2014(Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [ 44 Cal.Rptr. 767 , 402 P.2d 839 ].) We review the trial court’s factual findings for substantial evidence.

1982For example, in Magna Development Co. v. Reed (1964) 228 Cal.App.2d 230 , at page 236 [ 39 Cal.Rptr. 284 ], the court stated: “Turning to the subordination provision in the instant cáse we find that it provides essentially as follows: ‘Said Deed of Trust, ... will contain a subordination clause which will provide that Sellers ... will agree that said Deed of Trust may be subordinated to a Deed of Trust securing a construction and/or take-out loan thereon....’ It is apparent that this provision does not state the amount of the construction loan which would be placed on the property, nor any of

1982For example, in Magna Development Co. v. Reed (1964) 228 Cal.App.2d 230 , at page 236 [ 39 Cal.Rptr. 284 ], the court stated: “Turning to the subordination provision in the instant cáse we find that it provides essentially as follows: ‘Said Deed of Trust, ... will contain a subordination clause which will provide that Sellers ... will agree that said Deed of Trust may be subordinated to a Deed of Trust securing a construction and/or take-out loan thereon....’ It is apparent that this provision does not state the amount of the construction loan which would be placed on the property, nor any of

1965The subordination clause herein involved is, in substance, identical with that considered in Stockwell v. Lindeman (1964) 229 Cal.App.2d 750 [ 40 Cal.Rptr. 555 ], and the validity and enforceability of that language was there upheld against the same contentions as Mrs. Gates makes here.

1965The subordination clause herein involved is, in substance, identical with that considered in Stockwell v. Lindeman (1964) 229 Cal.App.2d 750 [ 40 Cal.Rptr. 555 ], and the validity and enforceability of that language was there upheld against the same contentions as Mrs. Gates makes here.

2015Co. v. United States (1962) 57 Cal.2d 621, 625 ["It is established in California . . . that a recorded deed of trust given as security for the purchase price of property or for other purposes, such as a construction loan, has priority over subsequent mechanics' liens and that a trustee's sale of the property covered by the deed of trust extinguishes such liens."]; Moorefield Construction, Inc. v. Intervest-Mortgage Investment Co. (2014) 230 Cal.App.4th 146, 163 ["Because we conclude the subordination clause is valid, Moorefield's mechanic's lien was subordinated to the Intervest deed of trust

2015Co. v. United States (1962) 57 Cal.2d 621, 625 ["It is established in California . . . that a recorded deed of trust given as security for the purchase price of property or for other purposes, such as a construction loan, has priority over subsequent mechanics' liens and that a trustee's sale of the property covered by the deed of trust extinguishes such liens."]; Moorefield Construction, Inc. v. Intervest-Mortgage Investment Co. (2014) 230 Cal.App.4th 146, 163 ["Because we conclude the subordination clause is valid, Moorefield's mechanic's lien was subordinated to the Intervest deed of trust

1997However, since it is common for attornment clauses to coexist with subordination and nondisturbance clauses ( Chumash Hill Properties, Inc. v. Peram (1995) 39 Cal. App.4th 1226, 1230-1231, 1233 [ 46 Cal. Rptr.2d 366 ]), it is more likely that there was an attornment clause in the Dover lease, but the court did not discuss it because no one thought to give it the undue emphasis and strained construction given the attornment clause here. ( Dover Mobile Estates v. Fiber Form Products, Inc., supra, 220 Cal. App.3d 1494, 1496, fn. 1 , and 1499.) What is clear is that the subordination clause in Dov

1997(Dover Mobile Estates v. Fiber Form Products, Inc., supra, 220 Cal.App.3d 1494, 1496 , fin. 1, and 1499.) What is clear is that the subordination clause in Dover was, except for the nondisturbance clause, essentially identical to the subordination clause here.

1997However, since it is common for attornment clauses to coexist with subordination and nondisturbance clauses ( Chumash Hill Properties, Inc. v. Peram (1995) 39 Cal. App.4th 1226, 1230-1231, 1233 [ 46 Cal. Rptr.2d 366 ]), it is more likely that there was an attornment clause in the Dover lease, but the court did not discuss it because no one thought to give it the undue emphasis and strained construction given the attornment clause here. ( Dover Mobile Estates v. Fiber Form Products, Inc., supra, 220 Cal. App.3d 1494, 1496, fn. 1 , and 1499.) What is clear is that the subordination clause in Dov

1997However, since it is common for attornment clauses to coexist with subordination and nondisturbance clauses ( Chumash Hill Properties, Inc. v. Peram (1995) 39 Cal. App.4th 1226, 1230-1231, 1233 [ 46 Cal. Rptr.2d 366 ]), it is more likely that there was an attornment clause in the Dover lease, but the court did not discuss it because no one thought to give it the undue emphasis and strained construction given the attornment clause here. ( Dover Mobile Estates v. Fiber Form Products, Inc., supra, 220 Cal. App.3d 1494, 1496, fn. 1 , and 1499.) What is clear is that the subordination clause in Dov

1967(Stockwell v. Lindeman, 229 Cal.App.2d 750, 758 [ 40 Cal.Rptr. 555 ] ; Magna Development Co. v. Reed, 228 Cal.App.2d 230, 236 [ 39 Cal.Rptr. 284 ]; Burrow v. Timmsen, 223 Cal.App.2d 283, 289-290 [ 35 Cal.Rptr. 668 , 100 A.L.R.2d 544 ] ; Roven v. Miller, 168 Cal.App.2d 391, 398 [ 335 P.2d 1035 ].) Such terms may include limits on the use to which the proceeds may be put to insure that their use will improve the value of the land, maximum amounts so that the loans will not exceed the contemplated value of the improvements they finance, requirements that the loans do not exceed some specified per

1967(Stockwell v. Lindeman, 229 Cal.App.2d 750, 758 [ 40 Cal.Rptr. 555 ] ; Magna Development Co. v. Reed, 228 Cal.App.2d 230, 236 [ 39 Cal.Rptr. 284 ]; Burrow v. Timmsen, 223 Cal.App.2d 283, 289-290 [ 35 Cal.Rptr. 668 , 100 A.L.R.2d 544 ] ; Roven v. Miller, 168 Cal.App.2d 391, 398 [ 335 P.2d 1035 ].) Such terms may include limits on the use to which the proceeds may be put to insure that their use will improve the value of the land, maximum amounts so that the loans will not exceed the contemplated value of the improvements they finance, requirements that the loans do not exceed some specified per

1965See Richter v. Walker (1951) 36 Cal.2d 634, 640 [ 226 P.2d 593 ], holding, “It is also to be noted that while full findings *831 are required upon all material issues a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by necessary implication from the express findings which are made. [Citation.]”; and Spaziani v. Millar (1963) 215 Cal.App.2d 667, 678-679 [ 30 Cal.Rptr. 658 ], “The finding on the ultimate fact in the fraud issues herein, impliedly constitutes a finding of the nonexi

1965See Richter v. Walker (1951) 36 Cal.2d 634, 640 [ 226 P.2d 593 ], holding, “It is also to be noted that while full findings *831 are required upon all material issues a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by necessary implication from the express findings which are made. [Citation.]”; and Spaziani v. Millar (1963) 215 Cal.App.2d 667, 678-679 [ 30 Cal.Rptr. 658 ], “The finding on the ultimate fact in the fraud issues herein, impliedly constitutes a finding of the nonexi

1965See Richter v. Walker (1951) 36 Cal.2d 634, 640 [ 226 P.2d 593 ], holding, “It is also to be noted that while full findings *831 are required upon all material issues a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by necessary implication from the express findings which are made. [Citation.]”; and Spaziani v. Millar (1963) 215 Cal.App.2d 667, 678-679 [ 30 Cal.Rptr. 658 ], “The finding on the ultimate fact in the fraud issues herein, impliedly constitutes a finding of the nonexi

1965See Richter v. Walker (1951) 36 Cal.2d 634, 640 [ 226 P.2d 593 ], holding, “It is also to be noted that while full findings *831 are required upon all material issues a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by necessary implication from the express findings which are made. [Citation.]”; and Spaziani v. Millar (1963) 215 Cal.App.2d 667, 678-679 [ 30 Cal.Rptr. 658 ], “The finding on the ultimate fact in the fraud issues herein, impliedly constitutes a finding of the nonexi

1964(California Lettuce Growers, Inc. v. Union Sugar Co., 45 Cal.2d 474, 481-485 [ 289 P.2d 785 , 49 A.L.R. 2d 496 ]; Martin v. Baird, supra, at p. 601 ; King v. Stanley, supra, at p. 588 .) Turning to the subordination provision in the instant case we find that it provides essentially as follows: ‘' Said Deed of Trust . . . will contain a subordination clause which will provide that Sellers . . . will agree that said Deed of Trust may be subordinated to a Deed of Trust securing a construction and/or take-out loan thereon. . . .” It is apparent that this provision does not state the amount of the

1964(California Lettuce Growers, Inc. v. Union Sugar Co., 45 Cal.2d 474, 481-485 [ 289 P.2d 785 , 49 A.L.R. 2d 496 ]; Martin v. Baird, supra, at p. 601 ; King v. Stanley, supra, at p. 588 .) Turning to the subordination provision in the instant case we find that it provides essentially as follows: ‘' Said Deed of Trust . . . will contain a subordination clause which will provide that Sellers . . . will agree that said Deed of Trust may be subordinated to a Deed of Trust securing a construction and/or take-out loan thereon. . . .” It is apparent that this provision does not state the amount of the