Real Estate Litigation – General Duty of Care

Our Firm represented a hard money lender and the holder of the second deed of trust on a home in Los Angeles County where the first deed of trust holder foreclosed on the house. The former homeowner sued the client, the first lender, and the loan servicer, alleging, negligence in providing allegedly faulty information regarding the foreclosure status of the home. Our Firm prevailed on a motion for summary judgment, successfully arguing that the current state of the law in California is that a lender in an arms’-length transaction owes a borrower no general duty of care, and that the client did not make any misrepresentations regarding the foreclosure.  

The other defendants had prevailed on similar arguments, and the first lender’s summary judgment order is currently on appeal at the California Supreme Court, where the state of the law regarding a lender’s duty of care could be radically transformed overnight, which could have tremendous consequences for the entirety of the California real estate and financing industry.