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News & Press: Court Cases

Deficiency Judgments

Tuesday, May 21, 2019  
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Black Sky Capital v. Cobb
Cal. Supreme Court (S243294) 5/6/19

The court held that where a lender who holds both a senior and junior deed of trust nonjudicially forecloses on the senior lien and wipes out its junior lien, the lender may enforce the junior note. Civil Code Section 580d does not apply to preclude a sold-out junior lienholder from enforcing the junior debt, even where the lienholder foreclosed under its own senior deed of trust. The court pointed out that the junior deed of trust was executed two years after the first, and there was no allegation of gamesmanship by evasively splitting a single loan into two loans or recovery in excess of what any junior lienholder would be able to recover.


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