Havis

Before escrow closed on the sale of a developed parcel of real property, California National Bank (Bank) sent a letter to the escrow agent handling the sale stating that it had received “payoff funds” for the secured promissory note that it then held. The trial court interpreted that letter as a payoff demand statement under Civil Code section 2943, concluded that Bank had made a binding acknowledgement that its outstanding note had been paid off, and held that Bank’s secured interest in the property had been extinguished.

In this appeal by Bank from the resulting adverse summary judgment, we must determine first whether, as a matter of law, the letter actually meets the statutory requirements of a payoff demand statement. If not, we must then consider whether the parties reasonably could have relied on the contents of that letter to close escrow. As will be discussed, we conclude that, as a matter of law, Bank’s letter was not a payoff demand statement. The use of the term “payoff funds” in the letter was not sufficient to transform a letter advising the escrow agent of the status of the transaction into a payoff demand statement binding on the Bank. We further conclude…