Section 580b of the California Code of Civil Procedure makes purchase-money deeds of trust in California "nonrecourse" by prohibiting any deficiency judgment following foreclosure. In Spangler v. Memel, the California Supreme Court created an exception to the antideficiency rule of section 580b where the seller subordinated the buyer's purchase-money deed of trust to a construction loan deed of trust that was subsequently foreclosed, leaving the seller without security. This Article suggests that upon analysis of Spangler, the judgment is a misconceived attempt to protect sellers as a "class" from certain risks of real estate development, even though sellers of developable property often reap a benefit in higher prices by sharing in such a risk. The author criticizes Spangler and cases that have followed and extended Spangler.
Jamie O. Harris,
California Code of Civil Procedure Section 580b Revisited: Freedom of Contract in Real Estate Purchase Agreements,
San Diego L. Rev.
Available at: https://digital.sandiego.edu/sdlr/vol30/iss3/3