Amended in Assembly June 11, 2013

Amended in Senate April 1, 2013

Senate BillNo. 426


Introduced by Senator Corbett

February 21, 2013


An act to amend Sections 580b and 580d 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.begin insert The bill also would express the intent of the Legislature that these provisions would not impact existing law regarding the liability of a guarantor, pledgor, or other surety with respect to a deficiency, nor existing law regarding other collateral pledged to secure the obligation that is the subject of a deficiency.end insert

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

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertThe Legislature finds and declares that this
2measure is not intended to and does not impact existing law
3regarding the liability a guarantor, pledgor or other surety may
4have with respect to a deficiency, nor does it impact existing law
5regarding other collateral pledged to secure an obligation that is
6the subject of a deficiency.end insert

7

begin deleteSECTION 1.end delete
8begin insertSEC. 2.end insert  

Section 580b of the Code of Civil Procedure is
9amended to read:

10

580b.  

(a) begin deleteNo end deletebegin insertExcept as provided in subdivision (c), no end insert
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,
52013.

begin insert

6(c) The fact that no deficiency shall be owed or collected under
7the circumstances set forth in subdivisions (a) and (b) does not
8affect the liability that a guarantor, pledgor or other surety might
9otherwise have with respect to the deficiency, or that might
10otherwise be satisfied in whole or in part from other collateral
11pledged to secure the obligation that is the subject of the deficiency.

end insert
begin delete

12(c)

end delete

13begin insert(d)end insert 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.

19

begin deleteSEC. 2.end delete
20begin insertSEC. 3.end insert  

Section 580d of the Code of Civil Procedure is
21amended to read:

22

580d.  

(a) begin deleteNo end deletebegin insertExcept as provided in subdivision (b), no end insert
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.

begin insert

29(b) The fact that no deficiency shall be owed or collected under
30the circumstances set forth in subdivision (a) does not affect the
31liability that a guarantor, pledgor or other surety might otherwise
32have with respect to the deficiency, or that might otherwise be
33satisfied in whole or in part from other collateral pledged to secure
34the obligation that is the subject of the deficiency.

end insert
begin delete

35(b)

end delete

36begin insert(c)end insert 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).



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