Bill Text: CA SB1069 | 2011-2012 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Deficiency judgments.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2012-07-09 - Chaptered by Secretary of State. Chapter 64, Statutes of 2012. [SB1069 Detail]

Download: California-2011-SB1069-Introduced.html

---

BILL NUMBER: SB 1069	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Corbett

                        FEBRUARY 13, 2012

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


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1069, as introduced, Corbett. Deficiency judgments.
   Existing law provides that no deficiency judgment shall lie
following a judicial foreclosure with respect to, among other things,
a deed of trust or mortgage given to the vendor to secure payment of
the balance of the purchase price of real property, or under a deed
of trust or mortgage on a dwelling to secure repayment of a purchase
money loan which was in fact used to pay all or part of the purchase
price of that dwelling.
   This bill would additionally provide, as defined, that a purchase
money loan does not lose that status and the protection from
deficiency liability, if, among other things, it is renewed,
refinanced, consolidated, restructured, modified, assigned, or
assumed on or after January 1, 2013. The bill would also provide,
however, that the protection from deficiency liability for a purchase
money obligation extends only to the outstanding amount of the
purchase money obligation, and that the obligor has the burden of
establishing that amount, as specified. The bill would provide that a
deficiency judgment may lie in certain circumstances where a vendor
has subordinated its loan to a construction loan for a commercial
project, the construction loan has funded a substantial portion of
the project, and the construction lender has foreclosed on the
property, extinguishing all or part of the vendor's subordinated
lien.
   The bill would state the intent of the Legislature in amending
these provisions to codify the holding in Spangler v. Memler (1972) 7
Cal.3d 603, as construed by DeBerard Properties, Inc. v. Lim (1999)
20 Cal.4th 659.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 580b of the Code of Civil Procedure is amended
to read:
   580b.   (a)    No deficiency judgment shall lie
in any event after  (1)  a sale of real property or an
estate for years therein for failure of the purchaser to complete his
or her contract of sale, or  (2) except as provided in
subdivision (e),  under a deed of trust or mortgage given to the
vendor to secure payment of the balance of the purchase price of
that real property or estate for years therein, or  (3) 
under a  deed of trust or mortgage on a dwelling for not more
than four families given to a lender to secure repayment of a loan
which was in fact used to pay all or part of the purchase price of
that dwelling occupied, entirely or in part, by the purchaser
  purchase money obligation  . 
   (b) A purchase money obligation does not lose its status as such
in any of the following circumstances:  
   (1) The collateral securing the purchase money obligation also
secures an obligation that is not a purchase money obligation. 

   (2) The purchase money obligation has been renewed, refinanced,
consolidated, restructured, modified, assigned, or assumed on or
after January 1, 2013.  
   (c) The protection against deficiency liability provided by this
section with respect to a purchase money obligation extends only to
the amount of the purchase money obligation remaining outstanding
against a qualified dwelling. An obligor seeking that protection has
the burden of establishing the amount of the purchase money
obligation remaining outstanding against a qualified dwelling. Any
payments that have been applied to the principal balance due on any
loan for which that protection is sought shall be deemed to first
have reduced the outstanding principal balance of the obligor's
purchase money obligation, and then to have reduced the remaining
outstanding principal balance of the loan.  
   (d) For purposes of this section, a "purchase money obligation"
means an obligation secured by a deed of trust or mortgage on a
qualified dwelling. For purposes of this section, a "qualified
dwelling" means a dwelling for not more than four families as to
which a deed of trust or mortgage has been given to a lender to
secure repayment of a loan which was in fact used to pay all or part
of the purchase price of that dwelling occupied, entirely or in part,
by the purchaser. A loan that is used to refinance a purchase money
obligation is a purchase money obligation for all amounts used to
reduce or discharge the then-outstanding principal of the original
purchase money loan or a subsequent purchase money loan, so long as
the loan is secured by the qualified dwelling.  
   (e) A deficiency judgment may lie if all of the following occur:
 
   (1) The vendor has contractually subordinated his or her lien to
the lien of a construction lender.  
   (2) The construction loan involves a commercial project that
contemplates a material change in the use of the real property, or a
material increase in intensity of the existing use of the real
property.  
   (3) The construction lender has funded a substantial portion of
the project.  
   (4) The construction lender has foreclosed on the property,
extinguishing all or part of the lien held by the vendor. 

    Where 
    (f)    Where  both a chattel mortgage
and a deed of trust or mortgage have been given to secure payment of
the balance of the combined purchase price of both real and personal
property, no deficiency judgment shall lie at any time under any one
thereof if no deficiency judgment would lie under the deed of trust
or mortgage on the real property or estate for years therein.
  SEC. 2.  It is the intent of the Legislature in amending Section
580b of the Code of Civil Procedure in this act to codify the holding
in Spangler v. Memler (1972) 7 Cal.3d 603, as construed by DeBerard
Properties, Inc. v. Lim (1999) 20 Cal.4th 659.