Nature of the Case
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Facts
P purchased a condominium in San Diego County with a $452,000 loan from Valley Vista Mortgage Corporation. The loan was secured by a deed of trust recorded against the condominium. P fell behind on her payments. On March 10, 2010, she received a “notice of default and election to sell” from D, Valley Vista's successor in interest on the loan. D began the foreclosure process. P asked if D would release its security interest so that she could sell her property to a third party for $400,000. D provisionally approved the sale and agreed to release its security interest, subject to several conditions. P must net zero [from the sale]. All proceeds are to be remitted to the lender. … Neither the borrower nor any other party may receive any sales proceeds or any other funds as a result of this transaction.” The letter identified the “Total Proceeds to be received by D” as “$ 375,061.86” (the sale price minus closing costs) and said that “D shall not accept less than the stated net amount.” D reserved the right to rescind its approval of the sale “should any variances occur in the approved transaction,” including any additional costs that reduce D's net proceeds, postponement of the closing, or untimely delivery of the final settlement statement to D. “The amount paid to D is for the release of D's security interest(s) only, and the Borrower is still responsible for all deficiency balances remaining on the Loan, per the terms of the original loan documents.” P accepted D's terms and sold her condominium to a third party for $400,000 on July 22, 2010. P then received a collection letter from D, demanding the $116,686.89 balance remaining on her loan. D brought this declaratory judgment action, claiming that Code of Civil Procedure section 580b prohibited D from collecting the deficiency. The trial court sustained D's demurrer without leave to amend. The Court of Appeal reversed, holding that any effort by D to recover the deficiency would be barred by section 580b and P's agreement to pay the deficiency balance was an unenforceable waiver of the statute's protections. The court held that section 580b's “protections apply after any sale, not just a foreclosure.” D appealed.
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