Tuesday, April 12, 2011

foreclosure - deficiency judgment

The Home Savings and Loan v. Irongate Ventures - Superior Court - April 8, 2011

Deficiency judgment action must be brought "in the matter in which the judgment was entered." 42 Pa. C.S. 8103(a). In this case, there were two judgments -- a) money judgment by confession against corporate landowner; b) foreclosure against against same corporate landowner.

Property sold by sheriff's sale in the deficiency case. However, Plaintiff brought deficiency action in money judgment case, not foreclosure case.

Held, deficiency action dismissed because not brought "in matter in which the judgment was entered." Attempt to set deficiency in the money judgment case took place beyond six months from the date of the sheriff's sale. If the judgment creditor fails to file a § 8103(a) petition to fix the fair market value of the property within six months of the sheriff’s sale, then the debtor may file a petition to have the judgment marked satisfied, released and discharged as a matter of law. 42 Pa.C.S.A. § 8103(d); First Nat. Consumer Discount Co. v. Fetherman, 527 A.2d 100, 105 (Pa. 1987).


burden of proof and construction in deficiency cases

The judgment creditor must carry the burden to demonstrate its compliance with the Deficiency Judgment Act.” First Federal Sav. & Loan Ass'n of Carnegie v. Keisling, 746 A.2d 1150, 1153-1154 (Pa. Super. 2000) (citations omitted). Moreover, the Deficiency Judgment Act is to be liberally interpreted in favor of judgment debtors. Id.

“The objective of the Deficiency Judgment Act is to relieve a debtor from further personal liability to the judgment creditor when the real property taken by the judgment creditor on an execution has a fair market value on the date of sale sufficient so that the judgment creditor can dispose of the property to others without a further loss.” Horbal v. Moxham Nat. Bank, 697 A.2d 577, 582 (Pa. 1997).

constitutionality of Deficiency Judgment Act

N.B. We note that in Commonwealth v. Nieman, 5 A.3d 353, (Pa. Super. 2010 this Court, en banc, held that the Deficiency Judgment Act, 42 Pa.C.S.A. § 8103, was unconstitutional. However, by order dated October 19, 2010, upon the Petition to Intervene of the General Assembly of the Commonwealth of Pennsylvania, this Court granted a stay of the decision in Nieman, retroactive to September 8, 2010, and pending review by the Pennsylvania Supreme Court.