Amended in Senate April 1, 2013

Senate BillNo. 426


Introduced by Senator Corbett

February 21, 2013


An act to amend Sections 580b andbegin delete 580eend deletebegin insert 580dend insert of the Code of Civil Procedure, relating to deficiency judgments.

LEGISLATIVE COUNSEL’S DIGEST

SB 426, as amended, 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 deficiency shall be owed or collected, and no
2deficiency judgment shall liebegin insert,end insert for any of 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
10that was used to pay all or part of the purchase price of that
11dwelling, occupied entirely or in part by the purchaser. For
12purposes of subdivision (b), a loan described in this paragraph is
13a “purchase money loan.”

14(b) No deficiencybegin insert shall be owed or collected, and no deficiencyend insert
15 judgment shall liebegin insert,end insert on a loan, refinance, or other credit transaction
16(collectively, a “credit transaction”) that is used to refinance a
17purchase money loan, or subsequent refinances of a purchase
18money loan, except to the extent that in a credit transaction the
19lender or creditor advances new principal (hereafter “new
20advance”) that is not applied to an obligation owed or to be owed
21under the purchase money loan, or to fees, costs, or related
22expenses of the credit transaction. A new credit transaction shall
23be deemed to be a purchase money loan except as to the principal
24amount of a new advance. For purposes of this section, any
25payment of principal shall be deemed to be applied first to the
26principal balance of the purchase money loan, and then to the
27principal balance of a new advance, and interest payments shall
28be applied to any interest due and owing. This subdivision applies
29only to credit transactions that are executed on or after January 1,
302013.

31(c) When both a chattel mortgage and a deed of trust or mortgage
32have been given to secure payment of the balance of the combined
33purchase price of both real and personal property, no deficiency
34judgment shall lie under any one thereof if no deficiency judgment
35would lie under the deed of trust or mortgage on the real property
36or estate for years therein.

37

SEC. 2.  

Section 580d of the Code of Civil Procedure is
38amended to read:

39

580d.  

(a) No deficiency shall be owed or collected, and no
40deficiency judgment shall be rendered for a deficiency on a note
P3    1secured by a deed of trust or mortgage on real property or an estate
2for years therein executed in any case in which the real property
3or estate for years therein has been sold by the mortgagee or trustee
4under power of sale contained in the mortgage or deed of trust.

5(b) This section does not apply to a deed of trust, mortgage, or
6other lien given to secure the payment of bonds or other evidences
7of indebtedness authorized or permitted to be issued by the
8Commissioner of Corporations, or which is made by a public utility
9subject to the Public Utilities Act (Part 1 (commencing with Section
10201) of Division 1 of the Public Utilities Code).



O

    98