This California case is at the intersection of interpleader and foreclosure litigation. A foreclosure trustee interpleaded surplus funds following a foreclosure sale that was challenged by the borrower in a wrongful foreclosure action.  It shouldn’t have.  An interpleader lies only where the holder of third-party funds may face multiple liabilities, but Civil Code section 2924k sets forth exactly how surplus proceeds should be distributed so there was no such risk.  A good reminder that bank attorneys facing multiple demands on escrow or trust funds cannot automatically interplead the funds!

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