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:
Section 580b of the Code of Civil Procedure is
9amended to read:
begin deleteNo end delete
11deficiency shall be owed or collected, and no deficiency judgment
12shall lie, for any of the following:
13(1) After a sale of real property or an estate for years therein
14for failure of the purchaser to complete his or her contract of sale.
15(2) Under a deed of trust or mortgage given to the vendor to
16secure payment of the balance of the purchase price of that real
17property or estate for years therein.
18(3) Under a deed of trust or mortgage on a dwelling for not more
19than four families given to a lender to secure repayment of a loan
20that was used to pay all or part of the purchase price of that
21dwelling, occupied entirely or in part by the purchaser. For
22purposes of subdivision (b), a loan described in this paragraph is
23a “purchase money loan.”
24(b) No deficiency shall be owed or collected, and no deficiency
25judgment shall lie, on a loan, refinance, or other credit transaction
26(collectively, a “credit transaction”) that is used to refinance a
27purchase money loan, or subsequent refinances of a purchase
28money loan, except to the extent that in a credit transaction the
29lender or creditor advances new principal (hereafter “new
30advance”) that is not applied to an obligation owed or to be owed
31under the purchase money loan, or to fees, costs, or related
32expenses of the credit transaction. A new credit transaction shall
33be deemed to be a purchase money loan except as to the principal
34amount of a new advance. For purposes of this section, any
35payment of principal shall be deemed to be applied first to the
P3 1principal balance of the purchase money loan, and then to the
2principal balance of a new advance, and interest payments shall
3be applied to any interest due and owing. This subdivision applies
4only to credit transactions that are executed on or after January 1,
13 When both a chattel mortgage and a deed of trust or
14mortgage have been given to secure payment of the balance of the
15combined purchase price of both real and personal property, no
16deficiency judgment shall lie under any one thereof if no deficiency
17judgment would lie under the deed of trust or mortgage on the real
18property or estate for years therein.
Section 580d of the Code of Civil Procedure is
21amended to read:
begin deleteNo end delete
23deficiency shall be owed or collected, and no deficiency judgment
24shall be rendered for a deficiency on a note secured by a deed of
25trust or mortgage on real property or an estate for years therein
26executed in any case in which the real property or estate for years
27therein has been sold by the mortgagee or trustee under power of
28sale contained in the mortgage or deed of trust.
36 This section does not apply to a deed of trust, mortgage, or
37other lien given to secure the payment of bonds or other evidences
38of indebtedness authorized or permitted to be issued by the
39Commissioner of Corporations, or which is made by a public utility
P4 1subject to the Public Utilities Act (Part 1 (commencing with Section
2201) of Division 1 of the Public Utilities Code).