Opinion ID: 1404309
Heading Depth: 2
Heading Rank: 1

Heading: General Scheme

Text: In each case, Pyramid contracted to purchase real property from an unsophisticated seller for a low down payment and agreed to secure the balance of the purchase price with a note secured by a deed of trust. In each case, the seller agreed to subordinate the purchase money deed of trust to a loan that Pyramid was to obtain. For summary judgment purposes, we must assume that the seller was led to believe the loan would be used to finance construction on the property being sold. Although Pyramid supplied the seller with a letter of intent describing the construction it contemplated financing, the letter avoided any express commitment to use the loan proceeds for that purpose. Pyramid, indeed, obtained a loan on each parcel, usually for at least fifty percent of the total sale price of the property, and, in each instance, the seller's deed of trust was subordinated and priority given to the lien of the buyer's lender. No construction was ever commenced. [2] The buyer defaulted on each note and deed of trust sometime after closing and walked away from its obligations. This left the seller's purchase money obligations in second position. The construction loan was actually used to finance the down payment. Worse, the escrow agent disbursed the remainder of each loan to the buyer without restriction, and the money presumably wound up in the buyer's pocket. In at least six of these transactions, including the three before us, Ticor was the escrow agent. The transaction in this case was the third in the series.