Chase v. Bank of America

California Court of Appeal May 18, 1964 No. Civ. 21471Published

Before: Agee

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Holding. The court held that excess proceeds from a forced sale of homesteaded property must be distributed according to the priority set forth in Civil Code section 1256, which grants the homestead claimant priority over a judgment creditor. Furthermore, the six-month exemption period for such proceeds under Civil Code section 1257 commences upon the actual payment of funds to the claimant, not the date of the sale.

Issues

Whether excess proceeds from a forced sale of homesteaded property are subject to the distribution priorities of Civil Code section 1256.
Whether the six-month exemption period for excess proceeds from an involuntary sale begins at the time of sale or upon payment to the claimant.

Disposition. reversed

Quotations verified verbatim against the opinion

“In the event of an involuntary sale, said period commences when the money is paid to the homestead claimant.”

[261]

AGEE, J.

On February 20, 1956, plaintiff and her then husband declared a homestead on certain real property (Civ. Code, §§ 1262-1264). On July 22, 1958, they executed a deed of trust thereon as security for a loan. On December 14,1958, the husband died.

On February 27, 1961, defendant-respondent, Bank of America, filed suit against plaintiff on an unsecured obligation and attached said real property. The bank thereafter obtained judgment for $2,010.48.

On July 14, 1961, after due proceedings, the real property was sold at a trustee’s sale to satisfy the debt for which the deed of trust was security. After such satisfaction, a balance of $6,698.02 remained in the hands of the trustee.

On August 10, 1962, plaintiff filed the instant action to obtain this balance as part of her $12,500 homestead exemption. Respondent bank then caused a writ of execution to be issued on its judgment and levied upon the trustee. The latter deposited the money in court.

Plaintiff appeals from the judgment herein, which orders that the bank’s judgment should be first satisfied out of the excess proceeds of the trustee’s sale and the balance paid to her.

The parties agree that the trustee’s sale herein is a “forced sale” of the class designated in section 1241, subdivision 3, of the Civil Code, which provides in part that the homestead is subject “to execution or forced sale” in satisfaction of “debts secured by encumbrances on the premises executed and acknowledged by husband and wife,...”

Appellant contends, and respondent denies, that the disposition of the proceeds of this “forced sale” is governed by the provisions of section 1256 of the Civil Code.

This section provides: “If the sale is made, the proceeds thereof must be applied in the following order of priority, first, to the discharge of all liens and encumbrances, if any, on the property, second, to the homestead claimant to the amount of the homestead exemption, third, to the satisfaction of the execution, and fourth, the balance, if any, to the homestead claimant.”

Respondent, on the other hand, contends that section 1256 applies

Chase v. Bank of America

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AGEE, J.

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