Senate Bill No. 931
CHAPTER 701
An act to add Section 580e to the Code of Civil Procedure, relating to
mortgages.
[Approved by Governor September 30, 2010. Filed with
Secretary of State September 30, 2010.]
legislative counsel’s digest
SB 931, Ducheny. Mortgages: deficiency judgments.
Existing law authorizes an action for a deficiency judgment for the balance
due upon an obligation for the payment of which a deed of trust or mortgage
with power of sale upon real property or any interest therein was given as
security, as specified. Existing law prohibits a deficiency judgment in any
case in which the real property or an estate for years therein has been sold
by the mortgagee or trustee under power of sale contained in the mortgage
or deed of trust.
This bill would prohibit 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. The
bill would provide that written consent of the holder of the first deed of trust
or first mortgage to that sale shall obligate that 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. The bill would
specify that those provisions would not limit the ability of the holder of the
first deed of trust or first mortgage to seek damages and use existing rights
and remedies against the trustor or mortgagor or any 3rd party for fraud or
waste if the trustor or mortgagor commits either fraud with respect to the
sale of, or waste with respect to, the real property that secures that deed of
trust or mortgage. The bill would make these provisions inapplicable if the
trustor or mortgagor is a corporation or political subdivision of the state.
The people of the State of California do enact as follows:
SECTION 1. Section 580e is added to the Code of Civil Procedure, to
read:
580e. (a) No judgment shall be rendered for any deficiency under a note
secured by a first deed of trust or first mortgage for a dwelling of not more
than four 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
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time of sale with the written consent of the holder of the first deed of trust
or first mortgage. Written consent of the holder of the first deed of trust or
first mortgage to that sale shall obligate that 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.
(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 first deed
of trust or first mortgage, this section shall not limit the ability of the holder
of the first deed of trust or first 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
or political subdivision of the state.
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