Opinion ID: 771425
Heading Depth: 3
Heading Rank: 2

Heading: Sale of the Property

Text: 25 Prestige argues that a sale of the property is not required in order for 580b to apply, relying on Brown. We disagree, however, that Brown is controlling and hold that, in this situation, where the security has been lost due to a violation of 726 and, consequently, there has not been and can never be a sale of the property, 580b does not apply. 26 In Brown, the California Supreme Court held that 580b prevented a junior lien holder from recovering a deficiency judgment after the senior lien holder had foreclosed on the property, leaving the junior lien holder with no recovery. See Brown, 259 P.2d at 427-28. The junior lien holder had argued that there cannot be a deficiency if there was no security to sell because it presupposes a partial satisfaction of the debt by a sale which exhausts the security. Id. at 426. The court rejected her argument, however, noting that a deficiency may consist of the entire debt because a deficiency is nothing more than the difference between the security and the debt. Id. at 427. The court went on to state that[t]he purpose of the `after sale' reference in [S 580b] is that the security be exhausted and that result follows after a sale under the first trust deed. Id. 27 Prestige relies on Brown to argue that 580b applies, whether or not there has been a sale of the property, and whether or not there ever will be one. Brown and its progeny are inapposite because they deal with the situation of sold-out junior lienors where there was a foreclosure sale pursuant to the senior debt. See Brown, 259 P.2d 425; see also, e.g., Clay-ton Dev. Co. v. Falvey, 253 Cal. Rptr. 609 (Ct. App. 1988). 5 Unlike in Brown, however, the security in the instant case has not been exhausted by a sale pursuant to a senior debt. We therefore hold that 580b's prohibition of a deficiency judgment does not apply. 28