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Bankruptcy | Case Law | Equitable Subrogation

EQUITABLE SUBROGATION

In re Deuel, 594 F.3d 1073, 1079 (9th Cir. 2010)

Equitable subrogation under California law allows “ ‘[o]ne who pays, otherwise than as a

volunteer, an obligation for which another is primarily liable,’ to be ‘given by equity the protection

of any lien or other security for the payment of the debt to the creditor,’ and to ‘enforce such

security against the principal debtor or collect the obligation from him.’” The doctrine did the

unrecorded lien holder no good in this case, since it had refinanced a mortgage owed to it and

recorded a deed of reconveyance; and the doctrine does not permit an injustice to be done to other

interest holders, namely the trustee having bona fide purchaser status.

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