Second Mortgage in Los Angeles

Mostly not, because they are built around the home you live in. California's homestead exemption protects the debtor's principal dwelling from judgment creditors, and by statute the exemptions do not apply to the foreclosure of a deed of trust at all. The Homeowner Bill of Rights is limited to owner-occupied first liens securing a loan made for personal, family or household purposes, so a business-purpose second on a rental sits outside it on both counts. One rule does reach rentals: Code of Civil Procedure section 580e bars a deficiency after a lender-approved short sale of a dwelling of up to four units with no occupancy test, but it does not apply when the borrower is a corporation, LLC or limited partnership, so how you hold title matters. This is not legal advice; your attorney or title company has the final say. See the second mortgage program page for terms.

The second lender gets notice, a chance to cure, and a place in line for any surplus. California deeds of trust are usually foreclosed by trustee sale under the power of sale, and at least three months must pass after the notice of default is recorded before notice of sale can be given. Civil Code section 2924b requires notice of the default to be mailed, within one month of recording it, to the holder of any later-recorded deed of trust, and notice of the sale at least 20 days before it. Under section 2924c a junior lienholder can reinstate the senior loan until five business days before the sale date in the first notice of sale. If the sale brings more than the senior debt and costs, section 2924k pays junior liens in order of priority before anything goes to the owner. Under section 2924m a trustee sale of a 1 to 4 unit property is not final at the gavel, because eligible bidders such as tenants and prospective owner-occupants get a window after the sale. The sale must be held in Los Angeles County, between 9 a.m. and 5 p.m. on a business day, and the recorded notice of sale names the place for each property. Read lien position explained before you stack debt.

No. Both are taxes on sales, not on a loan. California's documentary transfer tax does not apply to an instrument given to secure a debt, and the state charges no mortgage tax, so recording a deed of trust on its own triggers neither. Measure ULA is a City of Los Angeles tax on the whole sale price, paid by the seller on transfers above an annually indexed threshold, so it does not reach a second lien recorded without a sale. What a standalone second can carry is the state's $75 SB 2 Building Homes and Jobs Act recording fee: it exempts a recording tied to a transfer that pays transfer tax and a transfer of a home to an owner-occupier, and a cash-out second on a rental fits neither on its face. Every deal in any of the county's 88 cities or its unincorporated areas records with the one Los Angeles County Registrar-Recorder/County Clerk, which takes documents by in-person appointment or by mail to its Norwalk office. Ask your title company for the current county recording charges on your documents.

No. In the City of Los Angeles a short-term rental has to be the host's own home. The city's Home-Sharing Ordinance defines home-sharing as an accessory use of the host's primary residence for a maximum of 120 days in a calendar year, and a primary residence as the host's sole residence, lived in for more than six months of the year. An investor rental you do not live in has no lawful short-term rental use there, so we do not underwrite short-term rental income on it; size the second on long-term rent. Other Los Angeles County cities set their own rules, which are not covered here. Separately, California lets a homeowners association ban rentals of 30 days or less even though it cannot ban renting outright (Civil Code section 4741).

The build date and the city line decide it. In the City of Los Angeles, rental units with a certificate of occupancy on or before October 1, 1978 fall under the Rent Stabilization Ordinance, a separate local regime from state law. Newer units generally fall under the statewide Tenant Protection Act (AB 1482, Civil Code section 1947.12), which caps increases at 5% plus the change in the cost of living, or 10%, whichever is lower, and adds just cause after 12 months. Unincorporated Los Angeles County runs its own rent stabilization ordinance. Watch how you hold title: a single-family home or condo is exempt from AB 1482 only if the owner is not a REIT, a corporation, or an LLC with at least one corporate member, so an LLC with a corporate member loses the exemption. Check the regime before you count a rent increase toward a second payment, and test the numbers in the second mortgage calculator.

California draws the line by definition, and business-purpose lending is still a licensed activity. The California Financing Law covers commercial loans of $5,000 or more whose proceeds are for other than personal, family or household use, and the state says it applies to commercial lending including loans secured by residential real estate; the lawful routes are a CFL license or a real estate broker license. Separately, the Residential Mortgage Lending Act defines a residential mortgage loan by the federal RESPA term, a federally related mortgage loan, which covers first or subordinate liens on 1 to 4 unit residential property made by covered lenders. RESPA itself exempts credit extended primarily for a business, commercial or agricultural purpose, but no state guidance we found says whether that carve-out carries into the California definition. That is why we ask what the funds are for and whether you live in the property. This is not legal advice; your attorney has the final say on your own structure.