b'COVID-19 continued from page 8Can a private lender record aCan a private lender proceed Notice of Default in California? with the foreclosure sale? Yes.Loans owned by non-government andCompletion of a foreclosure sale with private investors are not subject to expressrespect to private lenders (if the default governmental prohibitions regardingwas caused, or the cure of the default foreclosure at this time (the Governorswas prevented, by COVID-19-related Order is only a request and the DBOissues) controverts the intention of the Letter is guidance) and can direct theirGovernors Orders issued March 16 and 19, own portfolios, even where the defaulthis March 25 Press Release and any local was caused by COVID-19.However,Shelter in Place Orders, even if the Orders consideration should be given to legitimateare arguably not binding on the essential requests from borrowers for relief.Thatbusiness operation of a private lender.In said, it may be difficult to determine thethe current environment, a private lender extent to which loan defaults and inabilityshould appreciate and evaluate the risk that to pay or cure are caused by COVID-19,a borrower may file litigation challenging such that borrowers could challengethe validity of a foreclosure sale conducted the validity of a Notice of Default andduring the pendency of such orders. subsequent foreclosure on equitableTheories could include, among others: (1) grounds.Each loan should be evaluated onthe sale was conducted in violation of the a case-by-case basis to determine whetherGovernors Executive Order requesting it is prudent to proceed.In addition, thereforeclosure and eviction moratoria or may be other practical considerations, suchthe Governors Stay at Home Order; (2) as whether the title company will issue aCOVID-19 caused or contributed to the Trustee Sale Guaranty (we have been toldBorrowers inability to cure the default or that some title companies are hesitant topayoff the loan; (3) the sale was conducted issues TSGs given the limitations on Countyin violation of a local Shelter in Place Order Recorder services). prohibiting public gatherings in excess of the specified number of people; (4) the Can a private lender recordsale was invalid due to the restraint or lack a Notice of Sale on a pre- based on media coverage of moratoria,of robust competitive bidding due to the existing default? borrowers may be under the mistakenforegoing Orders in violation of Civil Code impression that all foreclosure activitysection 2924h(g); (5) equitable arguments Yes.Because loans owned by non- is banned, and it may be difficult toinvolving the borrowers reasonable government and private investors are notdetermine the extent to which loanbelief due to media coverage that no sale currently subject to express governmentaldefaults and inability to pay or cure thewould occur under the circumstances. prohibitions regarding foreclosure, there isdefault is caused by COVID-19 impacts,Even if the private lender ultimately prevails no direct prohibition on recording Noticessuch that borrowers could challenge thein the litigation, the delay and cost may not of Sale.In addition, since the Governorsvalidity of a Notice of Sale and subsequentbe worth the upside with going to sale.request and DBOs guidance only relatedforeclosure on equitable grounds.Lastly, as to defaults caused by COVID-19, oneexplained below, a lender may be unable toMoreover, lenders may be unwillingly could argue that recording a Notice of Salecomplete the actual foreclosure sale.If oneforced into the role of landlord if the on a pre-COVID-19 default does not fallcannot complete the sale, then recordingeviction process cannot promptly be within the purview of the governmentsthe Notice of Sale may be pointless. completed, as discussed in further detail recommendations.Nevertheless, therebelow.Being unable to evict the occupants are several practical considerations.InFor defaults arguably caused byand sell the property could cause added light of the various Shelter in Place OrdersCOVID-19, there are no specific restrictionsfinancial concerns if the property is in many local jurisdictions, it may beon recording notices of sale.As a result,subject to a 1st lien!Thus, care should be difficult for local vendors to complete thethe same analysis provided above appliestaken in evaluating whether proceeding necessary posting of the Notice of Sale on(both as to the NOD and NOS).However,with a foreclosure sale in a particular the subject property in those areas.Ourplease keep in mind that recording thejurisdiction is warranted in light of these firm has received reports of local sheriffsNotice of Sale on a virus-related defaultrisks.In addition, even if a lender opts prohibiting private process servers andwould be subject to even more scrutinyto proceed with the foreclosures sale, posting agents from completing servicethan proceeding on a non-COVID-related or postings in some areas.Moreover,default. continued on page 10Points of InterestSpring 2020Page 9'