Section 1586 Of Article 4. Investments From California Financial Code >> Division 1.1. >> Chapter 16. >> Article 4.
1586
. With regard to any participation certificates heretofore
issued by any trust company, secured by a trust deed or mortgage, the
full legal title in the deed or mortgage and debt (referred to in
this section as "security") shall be held by the trust company
issuing the certificates as trustee of an express trust, with all
powers necessary to extend, renew, enforce, collect, and liquidate
the same, acquire title to the property covered thereby either
through foreclosure or by voluntary conveyance; manage, lease, sell
(either for cash or upon deferred payments), exchange, or otherwise
realize upon the security or property and distribute the net proceeds
thereof. All sums so realized shall, as and when received by such
trustee, after payment of its compensation and all costs, charges,
and expenses, including brokers' commissions and advances for taxes
and assessments, incurred or made in connection with the protection,
administration, and liquidation of the security or property, be
distributed to the trusts or persons who are beneficiaries of the
trust, as their interests may appear therein. The rights and
interests therein of any such beneficiary failing to contribute on
demand its or his pro rata of sums advanced, expended, or required by
the trust company in the protection, administration, or liquidation
of the trust shall be subject to a lien for all sums, with legal
interest thereon advanced, expended, or required for any of such
purposes by the trustee or by any other beneficiary of the trust.
The trust in such security or property shall continue in the trust
company so long as any of the certificates are outstanding,
irrespective of any distribution of the certificates from the trust
in which the same are held.
The purpose of this section is to define and clarify the rights
and obligations of trust companies and of all persons and trusts
interested in participation certificates issued under any authority
of law.