BILL NUMBER: SB 412	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 25, 2011
	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.   expand the provisions
described above to prohibit a deficiency judgment upon a note
secured solely by a deed of trust or mortgage for a dwelling of not
more than 4 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
deed of trust or mortgage if the title has been voluntarily
transferred to a buyer by grant deed or by other document that has
been recorded and the proceeds of the sale are tendered as agreed.
The bill would also provide that, in other circumstances, when the
note is not secured solely by a deed of trust or mortgage for a
dwelling of not more than 4 units, no judgment shall be rendered for
any deficiency upon a note secured by a deed of trust or mortgage for
a dwelling of not more than 4 units, if the trustor or mortgagor
sells the dwelling for a sale price less than the remaining amount of
the indebtedness, in accordance with the written consent of the
holder of the deed of trust or mortgage. The bill would provide,
following the sale, in accordance with the written consent, the
voluntary transfer of title to a buyer, as specified, and the tender
of the sale proceeds, the rights, remedies, and obligations of any
  holder, beneficiary, mortgagee, trustor, mortgagor,
obligor, obligee, or guarantor of the note, deed of trust, or
mortgage, and with respect to any other property that secures the
note, shall be treated and determined as if the dwelling had been
sold through foreclosure under a power of sale, 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)  (1)    No  deficiency shall be
owed or collected, and no deficiency  judgment shall be 
requested or  rendered for any deficiency upon a note secured
 solely  by a 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 deed of trust or  mortgage. Following  
mortgage, provided that both of the following have occurred: 

    (A) Title has been voluntarily transferred to a buyer by grant
deed or by other document of conveyance that has been recorded in the
county where all or part of the real property is located.  

    (B) The proceeds of the sale have been tendered to the mortgagee,
beneficiary, or the agent of the mortgagee or beneficiary, in
accordance with the parties' agreement. 
    (2)     In circumstances not described in
paragraph (1), when a note is not secured solely by a deed of trust
or mortgage for a dwelling of not more than four units, no judgment
shall be rendered for any deficiency upon a note secured by a deed of
trust or mortgage for a dwelling of not more than four units, if 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
deed of trust or mortgage. Following the sale, in accordance with the
holder's written consent,  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 the
note, deed of trust, or mortgage, and with respect to any other
property that secures the note, shall 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 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 deed of trust or mortgage, this section shall not limit
the ability of the holder of the 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.