Karoutas

—This appeal involves the right to sell property under a deed of trust after the borrower’s default. We must determine whether a beneficiary with actual knowledge of facts materially affecting the value of property has a duty to disclose those facts to prospective bidders at a trustee’s sale. George A. and Anastasios A. Karoutas (the Karoutases) were successful bidders at a trustee’s foreclosure sale. They later filed a complaint seeking rescission or damages in connection with their purchase. Tie trial court sustained, without leave to amend, the general demurrer of HomeFed Bank (HomeFed) to the Karoutases’ complaint. On appeal, the Karoutases argue that the complaint stated facts sufficient to constitute a cause of action in alleging that HomeFed failed to comply with its duty to disclose to the Karoutases information within its possession that materially affected the value of the property. We agree. Therefore, we reverse.

Factual and Procedural Background

HomeFed was the successor in interest to Columbus Savings and Cal America Savings and Loan Association (Cal America). It was the beneficiary under a deed of trust on real property, including a residence, owned by…