Facts: A buyer and seller entered into negotiations to purchase a home. The buyer obtained a first and second loan from a lender secured by two trust deeds on the property. The seller agreed to carryback the remaining purchase price secured by a third trust deed. As the lender refused to fund the loan if there was a trust deed, the buyer and seller recorded a trust deed securing the debt after escrow closed. The buyer later entered into a short sale agreement with a third-party. The lender and seller consented to the short sale, both accepting less than the outstanding balances.
Claim: The seller sought to obtain a deficiency judgment against the buyer for the remaining balance of the carryback debt secured by the trust deed, claiming they were not subject to anti-deficiency rules barring collection of a deficiency from the buyer since the trust deed did not secure the purchase price as it was recorded after the close of escrow.
Counterclaim: The buyer sought to bar the seller from obtaining a deficiency judgment, claiming the buyer was protected by anti-deficiency rules since the carryback debt was incurred to fund a portion of the purchase price.
Holding: A California Court of Appeals held the seller may not seek a deficiency judgment against the buyer since the purchase-assist carryback debt secured payment of a portion of the purchase price and is thus subject to anti-deficiency protections, regardless of when the trust deed securing the debt was recorded. [Enloe v. Kelso (2013) __ CA 4th__]
