PRINTER'S NO.  1886

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

1373

Session of

2012

  

  

INTRODUCED BY GREENLEAF, BOSCOLA, EARLL, PILEGGI, BROWNE AND FERLO, JANUARY 9, 2012

  

  

REFERRED TO JUDICIARY, JANUARY 9, 2012  

  

  

  

AN ACT

  

1

Amending Title 42 (Judiciary and Judicial Procedure) of the

2

Pennsylvania Consolidated Statutes, further providing for six

3

months limitation and for deficiency judgments.

4

The General Assembly of the Commonwealth of Pennsylvania

5

hereby enacts as follows:

6

Section 1.  Sections 5522(b)(2) and (6) and 8103(a), (b), (c)

7

(3) and (5), (e), (f.1), (f.2) and (g) of Title 42 of the

8

Pennsylvania Consolidated Statutes, amended or added by the act

9

of November 24, 2004 (P.L.1243, No.152), amendment declared

10

unconstitutional, 5 A.3d 353 (Pa. Superior 2010), stay granted

11

retroactively to September 8, 2010 (Pa. Superior 2010), limited

12

petition for allowance of appeal granted, 937 MAL 2010 (Pa.

13

2011), are reenacted to read:

14

§ 5522.  Six months limitation.

15

* * *

16

(b)  Commencement of action required.--The following actions

17

and proceedings must be commenced within six months:

18

* * *

 


1

(2)  A petition for the establishment of a deficiency

2

judgment following execution and delivery of the sheriff's

3

deed for the property sold in connection with the execution

4

proceedings referenced in the provisions of section 8103(a)

5

(relating to deficiency judgments).

6

* * *

7

(6)  A petition for redetermination of fair market value

8

pursuant to section 8103(f.1)(4) following execution and

9

delivery of the sheriff's deed for the property sold in

10

connection with the execution proceedings referenced under

11

section 8103.

12

§ 8103.  Deficiency judgments.

13

(a)  General rule.--Whenever any real property is sold,

14

directly or indirectly, to the judgment creditor in execution

15

proceedings and the price for which such property has been sold

16

is not sufficient to satisfy the amount of the judgment,

17

interest and costs and the judgment creditor seeks to collect

18

the balance due on said judgment, interest and costs, the

19

judgment creditor shall petition the court to fix the fair

20

market value of the real property sold. The petition shall be

21

filed as a supplementary proceeding in the matter in which the

22

judgment was entered. If the judgment was transferred from the

23

county in which it was entered to the county where the execution

24

sale was held, the judgment shall be deemed entered in the

25

county in which the sale took place.

26

(b)  Effect of failure to give notice.--Any debtor  and any

27

owner of the property affected thereby, who is neither named in

28

the petition nor served with a copy thereof or notice of the

29

filing thereof as prescribed by general rule, shall be deemed to

30

be discharged from all personal liability to the judgment

- 2 -

 


1

creditor on the debt, interest and costs, but any such failure

2

to name such person in the petition or to serve the petition or

3

notice of the filing thereof shall not prevent proceedings

4

against any respondent named and served.

5

(c)  Action on petition.--

6

* * *

7

(3)  If an answer is filed alleging as the fair market

8

value an amount in excess of the fair market value of the

9

property as averred in the petition, the judgment creditor

10

may agree to accept as the fair market value of the property

11

the value set up in the answer and in such case may file a

12

stipulation releasing the debtors and the owners of the

13

property affected thereby, from personal liability to the

14

judgment creditor to the extent of the fair market value as

15

averred in the answer, less the amount of any prior liens,

16

costs, taxes and municipal claims not discharged by the sale,

17

and also less the amount of any such items paid at

18

distribution on the sale.

19

* * *

20

(5)  After the hearing, if any, and the determination by

21

the court under paragraph (1), (2) or (4) of the fair market

22

value of the property sold, then, except as otherwise

23

provided in subsection (f), the debtor shall be released and

24

discharged of such liability to the judgment creditor to the

25

extent of the fair market value of said property determined

26

by the court, less the amount of all prior liens, costs,

27

taxes and municipal claims not discharged by the sale, and

28

also less the amount of any such items paid at the

29

distribution on the sale, and shall also be released and

30

discharged of such liability to the extent of any amount by

- 3 -

 


1

which the sale price, less such prior liens, costs, taxes and

2

municipal claims, exceeds the fair market value as agreed to

3

by the judgment creditor or fixed and determined by the court

4

as provided in this subsection, and thereupon the judgment

5

creditor may proceed by appropriate proceedings to collect

6

the balance of the debt.

7

* * *

8

(e)  Waiver of benefit of section prohibited.--Any agreement

9

made by any debtor at any time, either before or after or at the

10

time of incurring any obligation, to waive the benefits of this

11

section or to release any obligee from compliance with the

12

provisions hereof shall be void.

13

* * *

14

(f.1)  Collateral located in more than one county.--

15

(1)  If the real property collateral is located in more

16

than one county in this Commonwealth, a judgment creditor may

17

elect not to file a valuation petition in the court in each

18

of such counties as provided under subsection (a) and shall

19

not be subject to the penalties for failure to file the

20

petition under subsection (d) if the judgment creditor is a

21

nonconsumer judgment creditor and the provisions of

22

paragraphs (2) and (3) are satisfied.

23

(2)  The judgment creditor shall petition the deficiency

24

court to determine and fix the fair market value of all of

25

the real property collateral as provided under subsection (c)

26

(1), (2), (3) and (4). The value shall be determined on a

27

parcel-by-parcel basis, and the amount so fixed for each

28

parcel comprising the real property collateral shall be the

29

fair market value for the parcel for all purposes under this

30

subsection unless redetermined as provided in paragraph (4).

- 4 -

 


1

(3)  The determination of the fair market value of the

2

real property collateral by the deficiency court as provided

3

in paragraph (2) shall be made before an execution sale is

4

held with respect to any of the real property collateral.

5

(4)  (i)  If the execution sale of a parcel of real

6

property is concluded and the judgment creditor is the

7

purchaser of the parcel at the sale, then either the judgment

8

creditor or the debtor may file a petition with the

9

deficiency court seeking a redetermination of the fair market

10

value of the parcel provided the petition is filed within the

11

six-month period established under section 5522(b)(6).

12

(ii)  If the petition is filed in a timely manner,

13

the deficiency court shall redetermine the fair market

14

value of the parcel in the manner provided in subsection

15

(c)(1), (2), (3) and (4). The redetermined value shall be

16

the fair market value of the parcel for all purposes

17

under this subsection.

18

(iii)  The filing of the petition for the

19

redetermination shall not limit or affect the judgment

20

creditor's ability to execute on the real property

21

collateral unless and until the value is redetermined by

22

the court. However, where the debtor alleges in its

23

petition that an appropriate redetermination of value by

24

the court with respect to property that has already been

25

sold to the judgment creditor at an execution sale would

26

be sufficient to satisfy the judgment in full, the

27

deficiency court may issue a stay of further execution

28

proceedings pending the court's ruling on the petition

29

for redetermination of value.

30

(5)  In cases subject to this subsection, the debtor

- 5 -

 


1

shall be released and discharged from liability for the

2

payment of the debt in the manner provided in subsection (c)

3

(5) to the extent of:

4

(i)  the fair market value determined by the

5

deficiency court of all real property collateral

6

purchased by the judgment creditor in execution

7

proceedings on the judgment less the deductible items

8

described in subsection (c)(5); and

9

(ii)  the amount distributed to the judgment creditor

10

as a result of the sale of the real property collateral

11

purchased in the proceedings by third parties.

12

(f.2)  Foreign collateral.--

13

(1)  No deficiency court shall have the power to fix the

14

fair market value of real property located outside this

15

Commonwealth and may not take into account the value of that

16

property in considering whether or not a deficiency exists

17

under this section.

18

(2)  This section shall not apply to the sale of any real

19

property located outside this Commonwealth.

20

(g)  Definitions.--As used in this section, the following

21

words and phrases shall have the meanings given to them in this

22

subsection:

23

"Adjusted value."  The assessed value of a parcel of real

24

property collateral determined for real estate tax purposes

25

times the applicable common level ratio factor published by the

26

State Tax Equalization Board.

27

"Consumer credit transaction."  A credit transaction in which

28

the party to whom credit is offered or extended is a natural

29

person and the money, property or services which are the subject

30

of the transaction are primarily for personal, family or

- 6 -

 


1

household purposes.

2

"Debtor."  A debtor, obligor, guarantor, surety and any other

3

person liable directly or indirectly to a judgment creditor for

4

the payment of a debt.

5

"Deficiency court."  With respect to cases covered by

6

subsection (f.1), the court of common pleas located in the

7

county where the highest adjusted value land is located.

8

"Highest adjusted value land."  The real property collateral

9

located in a county that has a higher aggregate adjusted value

10

than real property collateral located in any other county.

11

"Judgment."  The judgment which was enforced by the execution

12

proceedings referred to in subsection (a), whether that judgment

13

is a judgment in personam such as a judgment requiring the

14

payment of money or a judgment de terris or in rem such as a

15

judgment entered in an action of mortgage foreclosure or a

16

judgment entered in an action or proceeding upon a mechanic's

17

lien, a municipal claim, a tax lien or a charge on land.

18

"Judgment creditor."  The holder of the judgment which was

19

enforced by the execution proceedings.

20

"Nonconsumer judgment creditor."  Any judgment creditor

21

except a judgment creditor whose judgment was entered with

22

respect to a consumer credit transaction.

23

"Nonrecourse portion of the obligation."  The portion as to

24

which the judgment creditor's recourse is limited to the

25

mortgaged property or other specified assets of the debtor which

26

are less than all of such assets.

27

"Partial recourse obligation."  An obligation which includes

28

both a nonrecourse portion and a recourse portion.

29

"Real property collateral."  All of the real property subject

30

to a lien securing the obligation evidenced by the judgment and

- 7 -

 


1

located within this Commonwealth.

2

"Recourse portion of the obligation."  All of the obligation

3

except the nonrecourse portion thereof.

4

"Valuation petition."  A petition to fix the fair market

5

value of real property sold as required by subsection (a).

6

Section 2.  The reenactment of sections 5522(b)(2) and (6)

7

and 8103(a), (b), (c)(3) and (5), (e), (f.1), (f.2) and (g) of

8

Title 42 of the Pennsylvania Consolidated Statutes shall apply

9

retroactively to January 2, 2005.

10

Section 3.  This act shall take effect immediately.

- 8 -