[quote=Kingside]
The one action rule (CCP 726) is not really an anti-deficency statute, it is a statute that requires a lender to proceed with foreclosure before seeking other remedies such a personal liability. The anti-deficency protection you are talking about, no deficiency claim against the borrower after a non-judicial forecloure, is CCP 580d.
But CCP 580d only applies to the borrower, not “true” third party guarantors. This issue has been litigated often in California, but if you want to see a recent application and interesting explanation in a recent California published decision, Talbott v. Hustwit (2008)164 Cal.App.4th 148 is a good one:
And to be clear, a “true guarantor” is a third party, not the borrower itself. I stand by my statement that most commercial real estate loans I see that involve LLCs/corps also involve personal guarantees.[/quote]
Thanks for the link. Interestingly, neither the subject case and nor any of the cases cited by the appelate court which supported the conclusion of the court, were LLP’s or corporations, but rather trusts, or other entities, with a true 3rd party guarantor, who was neither an owner of the secured property or an equity holder, in any manner. The case cited in which the ruling was for the borrower, the borrower was the beneficial owner of the property.
These kinds of guarantees are not typical. Part of the reason, as I pointed out in another thread, that banks are reluctant to lend to trusts.
