August 21, 2012
The seller (Rocha) carried back a note secured by a second deed of trust on property he sold to defendant (Weinstein). The note was later modified pursuant to a settlement agreement in an action in which Weinstein sued Rocha for failing to disclose housing code violations. Weinstein defaulted on both deeds of trust and the holder of the first deed of trust foreclosed, wiping out Rocha's deed of trust. Rocha sued to recover the amount due on the note. The court held that the settlement agreement was inextricably tied to the promissory note, and was a modification of the terms of the note. Therefore, a deficiency judgment is precluded by C.C.P. Section 580b, which prohibits a seller who carries back a purchase money deed of trust from recovering a deficiency judgment.
Cal.App. 2nd Dist. (B235931) 8/1/12