Wolf v. GMAC Mortgage, LLC

A trustee’s sale conducted pursuant to former ORS 86.770(1) (2011) is invalid where the trustee conducting the sale is not a validly appointed trustee as defined in former ORS 86.705(8) (2011). An invalid trustee’s sale due to lack of a validly appointed trustee cannot foreclose a person’s property interests even where the person received actual notice and did not attempt to delay or stop the sale.

Wolf borrowed money, executing a note secured by a trust deed on real property. The lender named MERS as beneficiary, and MERS appointed LSI Title Company as successor trustee. LSI executed a notice of default and election to sell the property, which were personally served on Wolf and recorded with the County. Wolf did not try to delay or stop the sale, and LSI sold the property to GMAC through a trustee’s sale; subsequently, GMAC filed an FED action against Wolf. Wolf filed an action for declaratory relief that he owned the property free of any interest by GMAC because, he alleged, the trustee’s sale violated the OTDA. Wolf’s main argument was that the sale was not conducted by a trustee as defined by the OTDA, which rendered the sale invalid. GMAC filed a motion for summary judgment, arguing former ORS 86.770(1) (2011) foreclosed and terminated Wolf’s interest in the property after the trustee sale despite any legal deficiencies in the sale and also because Wolf had actual notice of the sale and did not take steps to stop it; therefore, Wolf could not challenge any aspect of the sale once it was complete. The trial court granted summary judgment to GMAC. On appeal, Wolf argued MERS was neither the trustee of the trust deed nor a beneficiary authorized to appoint a successor trustee, lacked authority to appoint LSI as successor trustee, and ultimately lacked authority to foreclose on the deed via trustee sale. The Court held the trustee sale was invalid because a “trustee” under former ORS 86.705(8) (2011) is “a person other than the beneficiary, to whom a trust deed conveys an interest in real property, or the person’s successor in interest” and who has the sole power of sale under the OTDA. Without a validly appointed trustee there is no trustee at all according to the OTDA, and therefore no trustee’s sale with the power to foreclose Wolf’s property interest. The trial court erred in granting summary judgment to GMAC. Reversed and remanded.