I am often asked by homeowners facing foreclosure whether their other properties and assets are also at risk once the foreclosure is completed. This statute cannot be waived by the borrower, so the borrower and lien holder cannot contract around it. Notably, had the same lender kept both loans, then the borrower could have asserted the Single Action Rule, but the way this loan was structured allowed the lender to sell the second mortgage, and that came back to bite the borrower -- Surprise! Let's further assume that the amount remaining on the mortgage exceeds the fair market value of the property -- what is commonly known as a property "under water". Or maybe the value of the property has sunk so low that you doubt that it will come back to the value of the mortgage within your lifetime. If the lender forecloses non-judicially, Code of Civil Procedure section d provides that the foreclosure is the lender's sole remedy, and it cannot seek a deficiency judgment. Able might have been protected had the Sarasota home been in California, he is not protected against the Florida deficiency judgment.
Cadlerock Joint Venture v. Lobel.
Law › California Case Law › California Court of Appeal Decisions › › Cadlerock Joint Venture v. Lobel. Case opinion for CA Court of Appeal CADLEROCK JOINT VENTURE v. WILLIAM LOBEL.
Read the Court's full decision on FindLaw. I recently had an interesting email exchange with a couple of fellow bankruptcy attorneys on the subject of foreclosure. The specific question we.
In either case, you are either evicted from the property or you voluntarily abandoned it, what is known as "walking away". The trial court agreed with the borrower, but the California Court of Appeals did not, basically holding that because the junior lien had been extinguished, there was no foreclosure that the buyer of the second mortgage could make, and thus it was not prohibited from its "first action" of suing the borrower for the deficiency.
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Real Estate 2d ed. Lobel and the current holder of the junior loan can sue the borrower. For instance, California is a "single action state" whose laws provide that the lender must foreclose on the collateral, and cannot sue the borrower for the deficiency. After any foreclosure of a purchase money loan including a judicial foreclosure, the foreclosing lender is again precluded from pursuing other assets.
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|Able has wages that can now be garnished to satisfy the deficiency judgment. Download PDF version. It cannot sue the borrow to collect the post-resale deficiency. The answer depends on the nature of the debt. Able in California, which has an Anti-Deficiency Statute?
Able might have been protected had the Sarasota home been in California, he is not protected against the Florida deficiency judgment.
Foreclosure, Deficiency Judgments and the Perils of AntiDeficiency Statutes
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The Treatment Of A Second Mortgage After A Foreclosure Sale
That decision, Cadlerock Joint Venture, LP v. Lobel () 4thwill change the landscape to the detriment of many.
On the other hand, if the mortgage is a purchase money debt, then there is a statute directly on point: III.
They are also at risk from a non-foreclosing junior lienholder if the senior lienholder forecloses and the junior loan was not used for the purchase of the property or if the property is not occupied by the owner. This method is favored since it is much faster and more cost effective, generally completed in less than six months. This statute cannot be waived by the borrower, so the borrower and lien holder cannot contract around it.
Cadlerock Joint Venture LP v. Lobel Southern California Bankruptcy Law Blog
In some states, the bank can also tack on interest and penalties.
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|This article summarizes the California law on point, and in particular the significant restrictions on a lender's ability to seek such recovery.
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On its face, section d contemplates a single loan. This junior lienholder did not itself foreclose so it is not subject to the CCP section d restriction described above. No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter 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.
If the lender forecloses non-judicially, Code of Civil Procedure section d provides that the foreclosure is the lender's sole remedy, and it cannot seek a deficiency judgment.
If additional funds are advanced as part of the refinance, the original amount remains purchase money and the advance is not.