If the beneficiary of the note endorses it, the beneficiary can be personally liable on the endorsement to the buyer of the note. Tort actions on the note are not barred. A deficiency judgment is possible after a sale under a court action if a deficiency judgment is not waived or prohibited. There are several disadvantages to a court sale in addition to the added expense and time and the difficulty of collecting. The Trustor has three months to redeem the property by paying the full amount including costs if there was no deficiency liability.
Trustor has one year, or sometimes longer for equitable reasons, if there is deficiency liability.
The Trustor can remain in possession during the redemption period but the lender can put in a receiver with rents collected applying on the amount needed to redeem. The first way a purchase money loan may be created is when the seller takes back a note and deed of trust as part of the purchase price. The purchase money prohibition against deficiency judgment may apply to other lending that was essential to the sale such as a Realtor taking back a note and deed of trust on the property sold as Realtor's commission. If the Trustor-debtor rewrites a purchase money loan later it can lose its purchase money character is if the changes create a new, different loan. If buyer subordinates the note from seller, for the purpose of more intensive development, the buyer is not protested against a deficiency judgment.