Antideficiency Protections Under 580b, 580d, and 580e Amended and Clarified

  Antideficiency protections have been clarified by July 2013 legislation amending Code of Civil Procedure sections 580b and 580d. SB 426 amends those sections and clearly provides that the prohibitions contained in sections 580b and 580d include collecting or even owing a deficiency. The amendment further clarifies that the prohibition extends only to the borrower and the borrower’s non-encumbered assets — not to 1) guarantors, pledgors, or other sureties; or, 2) that might be satisfied from other collateral pledged to secure the obligation.

  The clarification also applies to Code of Civil Procedure section 580(e)(2), i.e., which prohibits a deficiency in the event of a short sale to which the lender consents. Section 580(e)(2) specifically provides that the “rights, remedies, and obligations of any holder, beneficiary, trustor, mortgagor, obligor, obligee or guarantor of the note … shall be treated and determined as if the dwelling had been sold through foreclosure under a power of sale contained in deed of trust … in the manner contemplated by Section 580d.”

  For a summary of California’s antideficiency legislation, see my post: Anti-deficiency Statutes Summarized. You may also wish to view all of my posts under category Antideficiency. 

  I consult with clients and accept cases involving foreclosure sales, including those protected by California’s antideficiency legislation. For other types of cases I accept, please scroll my Home and My Practice pages. If you are seeking a legal consultation or representation, please give me a call at 818.971.9409. – Michael Daymude

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