Senate BillNo. 426


Introduced by Senator Corbett

February 21, 2013


An act to amend Sections 580b and 580e of the Code of Civil Procedure, relating to deficiency judgments.

LEGISLATIVE COUNSEL’S DIGEST

SB 426, as introduced, Corbett. Civil procedure: deficiency judgments.

Existing law provides that no deficiency judgment shall lie following a judicial foreclosure with respect to certain enumerated circumstances, including, among others, after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale. Existing law prohibits a judgment to be rendered for a deficiency on a note secured by a deed of trust or mortgage on real property or an estate for years therein, as specified.

This bill would prohibit a deficiency from being owed or collected following a judicial foreclosure with respect to the enumerated circumstances. The bill also would prohibit a deficiency from being owed or collected for a deficiency on a note secured by a deed of trust or mortgage on real property or an estate for years therein, as specified, and would make nonsubstantive changes to these provisions.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P1    1

SECTION 1.  

Section 580b of the Code of Civil Procedure is
2amended to read:

P2    1

580b.  

(a) No deficiencybegin insert shall be owed or collected, and no
2deficiencyend insert
judgment shall liebegin delete in any eventend delete forbegin insert any ofend insert the following:

3(1) After a sale of real property or an estate for years therein
4for failure of the purchaser to complete his or her contract of sale.

5(2) Under a deed of trust or mortgage given to the vendor to
6secure payment of the balance of the purchase price of that real
7property or estate for years therein.

8(3) Under a deed of trust or mortgage on a dwelling for not more
9than four families given to a lender to secure repayment of a loan
10begin delete whichend deletebegin insert thatend insert wasbegin delete in factend delete used to pay all or part of the purchase price
11of that dwelling, occupied entirely or in part by the purchaser.

12begin delete(b)end deletebegin deleteend deleteFor purposes of subdivisionbegin delete (c),end deletebegin insert (b),end insert a loan described inbegin insert thisend insert
13 paragraphbegin delete (3) of subdivision (a)end delete is a “purchase money loan.”

begin delete

14(c)

end delete

15begin insert(b)end insert No deficiency judgment shall liebegin delete in any eventend delete onbegin delete anyend deletebegin insert aend insert loan,
16refinance, or other credit transaction (collectively, a “credit
17transaction”)begin delete whichend deletebegin insert thatend insert is used to refinance a purchase money
18loan, or subsequent refinances of a purchase money loan, except
19to the extent that in a credit transactionbegin delete,end delete the lender or creditor
20advances new principal (hereafter “new advance”)begin delete whichend deletebegin insert thatend insert is
21not applied tobegin delete anyend deletebegin insert anend insert obligation owed or to be owed under the
22purchase money loan, or to fees, costs, or related expenses of the
23credit transaction.begin delete Anyend deletebegin insert Aend insert new credit transaction shall be deemed
24to be a purchase money loan except as to the principal amount of
25begin delete anyend deletebegin insert aend insert new advance. For purposes of this section, any payment of
26principal shall be deemed to be applied first to the principal balance
27of the purchase money loan, and then to the principal balance of
28begin delete anyend deletebegin insert aend insert new advance, and interest payments shall be applied to any
29interest due and owing.begin delete The provisions of thisend deletebegin insert Thisend insert subdivision
30begin delete shallend deletebegin insert appliesend insert onlybegin delete applyend delete to credit transactions that are executed on
31or after January 1, 2013.

begin delete

32(d) Where

end delete

33begin insert(c)end insertbegin insertend insertbegin insertWhenend insert both a chattel mortgage and a deed of trust or mortgage
34have been given to secure payment of the balance of the combined
35purchase price of both real and personal property, no deficiency
36judgment shall liebegin delete at any timeend delete under any one thereof if no
37deficiency judgment would lie under the deed of trust or mortgage
38on the real property or estate for years therein.

39

SEC. 2.  

Section 580d of the Code of Civil Procedure is
40amended to read:

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580d.  

begin deleteNo end deletebegin insert(a)end insertbegin insertend insertbegin insertNo deficiency shall be owed or collected, and
2no deficiencyend insert
judgment shall be rendered forbegin delete anyend deletebegin insert aend insert deficiencybegin delete uponend delete
3begin insert onend insert a note secured by a deed of trust or mortgagebegin delete uponend deletebegin insert onend insert real
4property or an estate for years thereinbegin delete hereafterend delete executed in any
5case in which the real property or estate for years therein has been
6sold by the mortgagee or trustee under power of sale contained in
7the mortgage or deed of trust.

begin delete

8This

end delete

9begin insert(b)end insertbegin insertend insertbegin insertThis end insertsection does not apply tobegin delete anyend deletebegin insert aend insert deed of trust,begin delete mortgageend delete
10begin insert mortgage,end insert or other lien given to secure the payment of bonds or
11other evidences of indebtedness authorized or permitted to be
12issued by the Commissioner of Corporations, or which is made by
13a public utility subject to the Public Utilities Act (Part 1
14(commencing with Section 201) of Division 1 of the Public Utilities
15Code).



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