Deficiency Judgment Bill
Senator Ducheny proposed the Senate Bill 931 which prohibits a deficiency judgment under a note secured by a first deed of trust where the trustor sells the dwelling for less than the remaining amount of indebtedness with the written consent of the first deed of trust holder. The written consent is considered to be an approval by the beneficiary of the sale proceeds as full payment. The remaining amount of the indebtedness on the first deed of trust is considered fully discharged.
The deficiency is like any other unsecured debt and as such is legally the same to credit card debit, medical debt, or a payday loan. The 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. The law also forbids 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.
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