Opinion ID: 1158283
Heading Depth: 4
Heading Rank: 1

Heading: Mortgages and Deeds of Trust

Text: A real property loan generally involves two documents, a promissory note and a security instrument. The security instrument secures the promissory note. This instrument entitles the lender to reach some asset of the debtor if the note is not paid. In California, the security instrument is most commonly a deed of trust (with the debtor and creditor known as trustor and beneficiary and a neutral third party known as trustee). The security instrument may also be a mortgage (with mortgagor and mortgagee, as participants). In either case, the creditor is said to have a lien on the property given as security, which is also referred to as collateral. (Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar 2d ed. 1990) § 1.3, p. 5, italics removed.) [2] A security interest cannot exist without an underlying obligation, and therefore a mortgage or deed of trust is generally extinguished by either payment or sale of the property in an amount which satisfies the lien. (Civ. Code, §§ 2909, 2910; [3] see Cornelison v. Kornbluth (1975) 15 Cal.3d 590, 606 [125 Cal. Rptr. 557, 542 P.2d 981]; Bernhardt, Cal. Mortgage and Deed of Trust Practice, supra, § 1.10, p. 15; id., § 6.16, p. 292.) In addition, merger of the lien and ownership of the property in one person or entity extinguishes the lien, unless it is necessary for the protection of the buyer's rights that the lien be sustained. ( Ralph C. Sutro Co. v. Paramount Plastering, Inc. (1963) 216 Cal. App.2d 433, 438 [31 Cal. Rptr. 174]; see First American Title Ins. Co. v. U.S. (9th Cir.1988) 848 F.2d 969, 971, applying California law [The theory is that the mortgagee's lesser interest (the lien) has `merged' into the greater interest (the fee).].)