BILL NUMBER: SB 412	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 21, 2011

INTRODUCED BY   Senator Vargas

                        FEBRUARY 16, 2011

   An act to amend Section 580e of the Code of Civil Procedure,
relating to mortgages.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 412, as amended, Vargas. Mortgages: deficiency judgments.
   Existing law prohibits a deficiency judgment if real property or
an estate for years has been sold by the mortgagee or trustee under
power of sale in the mortgage or deed of trust. Existing law also
prohibits a deficiency judgment under a note secured by a first deed
of trust or first mortgage for a dwelling of not more than 4 units in
any case in which the trustor or mortgagor sells the dwelling for
less than the remaining amount of the indebtedness due at the time of
sale with the written consent of the holder of the first deed of
trust or first mortgage, and provides that written consent of the
holder of the first deed of trust or first mortgage to that sale
obligates the holder to accept the sale proceeds as full payment and
to fully discharge the remaining amount of the indebtedness on the
first deed of trust or first mortgage.
   This bill would  define "note" for these purposes as one
made by a natural person, as specified   delete the
provisions regarding written consent of the holder of the deed of
trust or mortgage obligating the holder to accept the sale proceeds
as full payment, as described above. The bill would instead require
that, following transfer of title by an instrument recorded in the
county where the real property is located and the tender of the sale
proceeds, as agreed, the rights, remedies, and obligations of the
relevant parties pursuant to the instrument be treated and determined
as if the dwelling had been sold through foreclosure under a power
of sale contained in the deed of trust or mortgage, as specified. The
bill would except certain parties from the application of these
provisions, including if the trustor or mortgagor is a limited
liability company or partnership or if a public utility, as
specified, made the mortgage or deed of trust. The bill would require
that any waiver of these provisions is void   and against
public policy  .
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 580e of the Code of Civil Procedure is amended
to read:
   580e.  (a) No judgment shall be rendered for any deficiency
 under   upon  a note secured by a first
deed of trust or first mortgage for a dwelling of not more than four
units, in any case in which the trustor or mortgagor sells the
dwelling for  a sale price  less than the remaining amount
of the indebtedness  due   outstanding  at
the time of sale  , in accordance  with the written consent
of the holder of the first deed of trust or first mortgage. 
Written consent of the holder of the first deed of trust or first
mortgage to that sale shall obligate that holder to accept the sale
proceeds as full payment and to fully discharge the remaining amount
of the indebtedness on the first deed of trust or first mortgage.
  Following the voluntary transfer of title to a buyer
by grant deed or by other document of conveyance recorded in the
county where all or part of the real property is located and the
tender to the mortgagee, beneficiary, or the agent of the mortgagee
or beneficiary of the sale proceeds, as agreed, the rights, remedies,
and obligations of any holder,   beneficiary, mortgagee,
trustor, mortgagor, obligor, obligee, or guarantor of such note, deed
of trust, or mortgage, and with respect to any other property that
secures such note, shall be treated and determined as if such
dwelling had been sold through foreclosure under a power of sale
contained in the deed of trust or mortgage for a price equal to the
sale proceeds received by the holder, in the manner contemplated by
Section 580d. 
   (b) If the trustor or mortgagor commits either fraud with respect
to the sale of, or waste with respect to, the real property that
secures the first deed of trust or first mortgage, this section shall
not limit the ability of the holder of the first deed of trust or
first mortgage to seek damages and use existing rights and remedies
against the trustor or mortgagor or any third party for fraud or
waste.
   (c) This section shall not apply if the trustor or mortgagor is a
corporation  , limited liability company, limited partnership,
 or political subdivision of the state.  This section shall
also not apply to any deed of trust, mortgage, or other lien given to
secure the payment of bonds or other evidence of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or which is made by a public utility subject to the
Public Utilities Act (Part 1 (commencing with Section 201) of
Division 1 of the Public Utilities Code).  
   (d) For purposes of this section, "note" means a note made by a
natural person or by a trustee of a trust created by a natural person
for a loan made primarily for personal, family, or household
purposes. "Note" does not include a note made for a loan primarily
for agricultural, business, or commercial purposes, including a loan
to finance the construction of a residential subdivision. 

   (d) Any purported waiver of the provisions of subdivision (a) by a
person covered by this section shall be void and against public
policy.