BILL NUMBER: SB 412	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 11, 2011
	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 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 make those provisions applicable to every holder
of a deed of trust or mortgage rather than the holder of only the
first deed of trust or first   mortgage.  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 upon a
note secured by a  first deed of trust or first 
 deed of trust or  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 outstanding at the time of sale, in accordance with the
written consent of the holder of the  first deed of trust or
first   deed of   trust or  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   the  note,
deed of trust, or mortgage, and with respect to any other property
that secures  such   the  note, shall be
treated and determined as if  such   the 
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   deed
of trust or  mortgage, this section shall not limit the ability
of the holder of the  first deed of trust or first 
 deed of trust or  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) Any purported waiver of the provisions of subdivision (a) by a
person covered by this section shall be void and against public
policy.