Requirements to Set Aside Foreclosure

In order to set aside a foreclosure sale, the trustor under a deed of trust must “give proof before the sale is set aside that he now can redeem the property.” (United States Cold Storage v. Great W. Sav. & Loan Ass'n (1985) 165 Cal.App.3d 1214, 1225.) Plaintiff is required to allege tender of the amount of the creditor's secured indebtedness “in order to maintain any cause of action for irregularity in the sale procedure.” Abdallah v. United Sav. Bank (1996) 43 Cal.App.4th 1101, 1110. The amount of the tender must be “the full amount of the debt for which the property was security.” Fpci Re-Hab 01 v. E & G Invs. (1989) 207 Cal.App.3d 1018, 1021.

Additionally to justify setting aside a presumptively valid foreclosure sale, the claimed irregularity must arise from the foreclosure proceeding itself. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 445.)

Required Elements

“Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale are:

1. the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust;
2. the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and
3. in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.”

(Bank of America etc. Assn. v. Reidy , 15 Cal.2d 243, 248)

See also, Saterstrom v. Glick Bros. Sash, Door & Mill Co. (1931) 118 Cal.App. 379, 383 setting trustee's sale set aside where deed of trust was void because it failed to adequately describe property]; Stockton v. Newman (1957) 148 Cal.App.2d 558, 564, [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Sierra–Bay Fed. Land Bank Ass'n v. Superior Court (1991) 227 Cal.App.3d 318, 337, 277 Cal.Rptr. 753 (Sierra–Bay) [to set aside sale, “debtor must allege such unfairness or irregularity that, when coupled with the inadequacy of price obtained at the sale, it is appropriate to invalidate the sale”; ”debtor must offer to do equity by making a tender or otherwise offering to pay his debt”]; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109, 51 Cal.Rptr.2d 286 (Abdallah) [tender element]; Munger v. Moore (1970) 11 Cal.App.3d 1, 7, 89 Cal.Rptr. 323 [damages action for wrongful foreclosure]; see also 1 Bernhardt, Mortgages, Deeds of Trust, and Foreclosure Litigation (Cont.Ed.Bar 4th ed. 2011 supp.) § 7.67, pp. 580–581, and cases cited therein summarizing grounds for setting aside trustee sale.). Munger, at 104.