PRIOR PRINTER'S NOS. 1603, 1834 PRINTER'S NO. 1916
No. 1262 Session of 1998
INTRODUCED BY GREENLEAF, HOLL, HART, LEMMOND, WILLIAMS AND
HELFRICK, JANUARY 26, 1998
AS AMENDED ON THIRD CONSIDERATION, APRIL 21, 1998
AN ACT
1 Amending Title 42 (Judiciary and Judicial Procedure) of the
2 Pennsylvania Consolidated Statutes, further providing for
3 actions that must be commenced within six months and for
4 deficiency judgments.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Sections 5522(b)(2) and 8103 of Title 42 of the
8 Pennsylvania Consolidated Statutes are amended to read:
9 § 5522. Six months limitation.
10 * * *
11 (b) Commencement of action required.--The following actions
12 and proceedings must be commenced within six months:
13 * * *
14 (2) A petition for the establishment of a deficiency
15 judgment following [sale of the collateral of the debtor
16 under] conclusion of the auction on the day upon which the <--
17 EXECUTION AND DELIVERY OF THE SHERIFF'S DEED FOR THE property <--
18 is sold in connection with the execution proceedings <--
1 referenced in the provisions of section 8103 (relating to
2 deficiency judgments).
3 * * *
4 § 8103. Deficiency judgments.
5 (a) General rule.--Whenever any real property is sold,
6 directly or indirectly, to the judgment creditor in execution
7 proceedings and the price for which such property has been sold
8 is not sufficient to satisfy the amount of the judgment,
9 interest and costs and the judgment creditor seeks to collect
10 the balance due on said judgment, interest and costs, the
11 judgment creditor shall petition the court [having jurisdiction]
12 to fix the fair market value of the real property sold. The
13 petition shall be filed as a supplementary proceeding in the
14 matter in which the judgment was entered.
15 (b) Effect of failure to give notice.--Any debtor, obligor,
16 guarantor, mortgagor, and any other person directly or
17 indirectly liable to the judgment creditor for the payment of
18 the debt, and any owner of the property affected thereby, who is
19 neither named in the petition nor served with a copy thereof or
20 notice of the filing thereof as prescribed by general rule,
21 shall be deemed to be discharged from all personal liability to
22 the judgment creditor on the debt, interest and costs, but any
23 such failure to name such person in the petition or to serve the
24 petition or notice of the filing thereof shall not prevent
25 proceedings against any respondent named and served.
26 (c) Action on petition.--
27 (1) If no answer is filed within the time prescribed by
28 general rule, or if an answer is filed which does not
29 controvert the allegation of the fair market value of the
30 property as averred in the petition, the court shall
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1 determine and fix as the fair market value of the property
2 sold the amount thereof alleged in the petition to be the
3 fair market value.
4 (2) If an answer is filed controverting the averment in
5 the petition as to the fair market value of the property, but
6 no testimony is produced at the hearing supporting such
7 denial of the fair market value, the court shall determine
8 and fix as the fair market value of the property sold the
9 amount thereof alleged in the petition to be the fair market
10 value[, and thereupon enter a decree directing the judgment
11 creditor to file release of the debtors, obligors, guarantors
12 or any other persons directly or indirectly liable for the
13 debts, to the extent of the fair value so fixed, whereupon
14 execution may be issued for the balance of the debt].
15 (3) If an answer is filed alleging as the fair market
16 value an amount in excess of the fair market value of the
17 property as averred in the petition, the judgment creditor
18 may agree to accept as the fair market value of the property
19 the value set up in the answer and in such case may file a
20 stipulation releasing the debtors, obligors and guarantors,
21 and any other persons liable directly or indirectly for the
22 debt, and the owners of the property affected thereby, from
23 personal liability to the judgment creditor to the extent of
24 the fair market value as averred in the answer, less the
25 amount of any prior liens, costs, taxes and municipal claims
26 not discharged by the sale, and also less the amount of any
27 such items paid at distribution on the sale.
28 (4) If an answer [shall be] is filed and testimony
29 produced setting forth that the fair market value of the
30 property is more than the value stated in the petition, the
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1 court shall hear evidence of, and determine and fix the fair
2 market value of the property[, which shall in no event exceed
3 the amount of the debt, interest, costs, taxes and municipal
4 claims] sold.
5 (5) After the hearing, if any, and the determination by
6 the court under paragraphs (1), (2) or (4) of the fair market
7 value of the property sold, then, except as otherwise
8 provided in subsection (f), the debtor, obligor, guarantor
9 and any other person liable directly or indirectly to the
10 judgment creditor for the payment of the debt shall be
11 released and discharged of such liability to the judgment
12 creditor to the extent of the fair market value of said
13 property [as previously agreed to by the judgment creditor
14 or] determined by the court, less the amount of all prior
15 liens, costs, taxes and municipal claims not discharged by
16 the sale, and also less the amount of any such items paid at
17 the distribution on the sale, and shall also be released and
18 discharged of such liability to the extent of any amount by
19 which the sale price, less such prior liens, costs, taxes and
20 municipal claims, exceeds the fair market value as agreed to
21 by the judgment creditor or fixed and determined by the court
22 as provided in this subsection, and thereupon the judgment
23 creditor may proceed by appropriate proceedings to collect
24 the balance of the debt.
25 (d) Action in absence of petition.--If the judgment creditor
26 shall fail to present a petition to fix the fair market value of
27 the real property sold within the time after the sale of such
28 real property provided by section 5522 (relating to six months
29 limitation), the debtor, obligor, guarantor or any other person
30 liable directly or indirectly to the judgment creditor for the
19980S1262B1916 - 4 -
1 payment of the debt, or any person interested in any real estate
2 which would, except for the provisions of this section, be bound
3 by the judgment, may file a petition, as a supplementary
4 proceeding in the matter in which the judgment was entered, in
5 the court having jurisdiction, setting forth the fact of the
6 sale, and that no petition has been filed within the time
7 limited by [statute after the sale] section 5522 to fix the fair
8 market value of the property sold, whereupon the court, after
9 notice as prescribed by general rule, and being satisfied of
10 such facts, shall direct the clerk to mark the judgment
11 satisfied, released and discharged.
12 (e) Waiver of benefit of section prohibited.--Any agreement
13 made by any debtor, obligor, surety or guarantor at any time,
14 either before or after or at the time of incurring any
15 obligation, to waive the benefits of this section or to release
16 any obligee from compliance with the provisions hereof shall be
17 void.
18 (f) Certain special allocations.--Notwithstanding the
19 provisions of subsection (c)(5), if the judgment creditor is a
20 nonconsumer judgment creditor and:
21 (1) if the judgment has been entered with respect to a
22 partial recourse obligation, the fair market value of the
23 property, determined as provided in subsection (c), will be
24 applied first to discharge, as provided in subsection (c)(5),
25 all liability for the nonrecourse portion of the obligation
26 before any portion of such value is applied to discharge any
27 liability for the recourse portion of the obligation; and
28 (2) if the judgment has been entered with respect to an
29 obligation of which only a portion is guaranteed, the fair
30 market value of the property, determined as provided in
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1 subsection (c), will be applied first to discharge, as
2 provided in subsection (c), all liability for the portion of
3 the obligation which is not guaranteed, before any portion of
4 such value is applied to discharge any liability for the
5 portion of such obligation which is guaranteed.
6 (g) Definitions.--As used in this section, the following
7 words and phrases shall have the meanings given to them in this
8 subsection:
9 "Consumer credit transaction." A credit transaction in which
10 the party to whom credit is offered or extended is a natural
11 person and the money, property or services which are the subject
12 of the transaction are primarily for personal, family or
13 household purposes.
14 "Judgment." The judgment which was enforced by the execution
15 proceedings referred to in subsection (a), whether that judgment
16 is a judgment in personam such as a judgment requiring the
17 payment of money, or a judgment de terris or in rem such as a
18 judgment entered in an action of mortgage foreclosure or a
19 judgment entered in an action or proceeding upon a mechanic's
20 lien, a municipal claim, a tax lien or a charge on land.
21 "Judgment creditor." The holder of the judgment which was
22 enforced by the execution proceedings.
23 "Nonconsumer judgment creditor." Any judgment creditor
24 except a judgment creditor whose judgment was entered with
25 respect to a consumer credit transaction.
26 "Nonrecourse portion of the obligation." The portion as to
27 which the judgment creditor's recourse is limited to the
28 mortgaged property or other specified assets of the debtor which
29 are less than all of such assets.
30 "Partial recourse obligation." An obligation which includes
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1 both a nonrecourse portion and a recourse portion.
2 "Recourse portion of the obligation." All of the obligation
3 except the nonrecourse portion thereof.
4 Section 2. This act shall take effect in 60 days. <--
5 SECTION 2. THIS ACT SHALL APPLY TO ALL ACTIONS AND <--
6 PROCEEDINGS PENDING ON THE EFFECTIVE DATE OF THIS ACT.
7 SECTION 3. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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