Saucedo

In this appeal we are asked to reconsider our decision in Pas v. Hill (1978) 87 Cal.App.3d 521 [ 151 Cal.Rptr. 98 ], insofar as it held that a “subject-to” purchaser (or nonassuming grantee) of property encumbered by a deed of trust is not entitled to recover attorney fees under Civil Code section 1717 in a successful suit to enjoin the trust deed holder from enforcing a due-on-sale clause in the promissory note secured by the deed of trust. Upon reexamination and reconsideration of the problem we conclude that on this point Pas v. Hill was incorrectly decided and we overrule that decision to the extent it is inconsistent herewith. Plaintiffs Gilbert and Angelina Saucedo will be referred to as plaintiffs; their predecessors in interest, James M. and Christine H. McKernie, the original borrowers, will be referred to as the McKernies; Mercury Savings and Loan Association will be referred to as Mercury, and Mercury and the trustee collectively will be referred to as defendants.

In September 1973 Mercury loaned $25,800 to the McKernies for the purchase of a residence located at 9635 Drake Place, Riverside. The McKernies executed a promissory note and a deed of trust on the…