The one action rule is a rule of law that forces a lender to bring only one court action or proceeding against a borrower in a foreclosure. For example, in California, Code of Civil Procedure § 726 has been construed to mean that in the event of default, a secured creditor must, in a single action, first exhaust all its security as a condition of obtaining a monetary deficiency judgment against the debtor personally. If the secured creditor does not resort to all its security before obtaining a money judgment on the underlying debt, the secured creditor may be deemed to have made an "election of remedies" and to have waived the balance of its security. If you need a good attorney in California that handles these types of cases I recommend a law firm called Northern California Jusice Center (their link is below).
Best of luck
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Under the one-action rule, the holder of a mortgage cannot sue the borrower but first must foreclose on the property. The mortgage holder may sue the borrower if the security interest is lost due to no fault of the holder.
For example, if you have a first and a second on the property and default on both, the holder of the first must foreclose. Doing so will extinguish the second's interest in the property. The second may then sue you.
The one-action rule applies only to security interests in real property. Someone who has a security in personal property may sue without foreclosing first.
While your question sounds simple a book could be written and certainly has been concerning the same topic. The issue generally comes up in terms of a lender making an election to do a non-judicial versus a judicial foreclosure on a debt secured by real property. The bottom line is they have to go one way or the other, they cannot go both ways.
If in fact someone has guaranteed the loan, the lender does not have to first foreclose or perfect their security interest as against the property. They can go directly against the guarantor of the loan. If you get involved in this situation please retain very experienced real estate counsel.
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Under the one-action rule, a mortgage lender may elect to file a lawsuit for judicial foreclosure, and in that case, may obtain a deficiency judgment if the sale proceeds are less than what is owed. If the lender proceeds with a non-judicial foreclosure by trustee's sale, the one-action rule bars the lender from also suing for a deficiency.
Richard A. Rodgers, Esq.
200 N. Westlake Blvd. Ste 201
Westlake Village, CA 91362
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