California Code of Civil Procedure
Section 580d
(a) Except as provided in subdivision (b), no deficiency shall be owed or collected, and no deficiency judgment shall 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 executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.
(b) The fact that no deficiency shall be owed or collected under the circumstances set forth in subdivision (a) does not affect the liability that a guarantor, pledgor, or other surety might otherwise have with respect to the deficiency, or that might otherwise be satisfied in whole or in part from other collateral pledged to secure the obligation that is the subject of the deficiency.
(c) This section does not apply to a deed of trust, mortgage, or other lien given to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Financial Protection and Innovation or which is made by a public utility subject to the Public Utilities Act.
Attorney Notes:
- Under CCP 580d, if a lender chooses a non-judicial trustee sale to foreclose, they are typically barred from pursuing the homeowner for any remaining balance.
- You may not wish to destroy your property on the way out… (c) 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 deed of trust or mortgage, this section shall not limit the ability of the holder of the deed of trust or mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any third party for fraud or waste.
- If you have two loans in California and the second is a recourse loan, you generally want to avoid letting the first lender foreclose. When the senior lender forecloses, the junior lien is wiped out as security, turning the second lender into a sold-out junior, which means Code of Civil Procedure §580d does not bar them from suing you personally for the balance.
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