PRINTER'S NO. 2087
No. 1469 Session of 2002
INTRODUCED BY GREENLEAF, LEMMOND, COSTA, ORIE, O'PAKE, M. WHITE,
KUKOVICH AND KITCHEN, JUNE 12, 2002
REFERRED TO JUDICIARY, JUNE 12, 2002
AN ACT
1 Amending Title 42 (Judiciary and Judicial Procedure) of the
2 Pennsylvania Consolidated Statutes, further providing for six
3 month limitations and for deficiency judgments.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Section 5522(b)(2) of Title 42 of the
7 Pennsylvania Consolidated Statutes is amended and the subsection
8 is amended by adding a paragraph 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 execution and delivery of the sheriff's
16 deed for the property sold in connection with the execution
17 proceedings referenced in the provisions of section 8103(a)
18 (relating to deficiency judgments).
1 * * *
2 (6) A petition for redetermination of fair market value
3 pursuant to section 8103(f.1)(4) following execution and
4 delivery of the sheriff's deed for the property sold in
5 connection with the execution proceedings referenced under
6 section 8103.
7 Section 2. Section 8103(a), (b), (c)(3) and (5), (e) and (g)
8 of Title 42 are amended and the section is amended by adding
9 subsections to read:
10 § 8103. Deficiency judgments.
11 (a) General rule.--Whenever any real property is sold,
12 directly or indirectly, to the judgment creditor in execution
13 proceedings and the price for which such property has been sold
14 is not sufficient to satisfy the amount of the judgment,
15 interest and costs and the judgment creditor seeks to collect
16 the balance due on said judgment, interest and costs, the
17 judgment creditor shall petition the court to fix the fair
18 market value of the real property sold. The petition shall be
19 filed as a supplementary proceeding in the matter in which the
20 judgment was entered. If the judgment was transferred from the
21 county where the execution sale was held, the judgment shall be
22 deemed entered in that county.
23 (b) Effect of failure to give notice.--Any debtor[, obligor,
24 guarantor, mortgagor, and any other person directly or
25 indirectly liable to the judgment creditor for the payment of
26 the debt,] and any owner of the property affected thereby, who
27 is neither named in the petition nor served with a copy thereof
28 or notice of the filing thereof as prescribed by general rule,
29 shall be deemed to be discharged from all personal liability to
30 the judgment creditor on the debt, interest and costs, but any
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1 such failure to name such person in the petition or to serve the
2 petition or notice of the filing thereof shall not prevent
3 proceedings against any respondent named and served.
4 (c) Action on petition.--
5 * * *
6 (3) If an answer is filed alleging as the fair market
7 value an amount in excess of the fair market value of the
8 property as averred in the petition, the judgment creditor
9 may agree to accept as the fair market value of the property
10 the value set up in the answer and in such case may file a
11 stipulation releasing the debtors[, obligors and guarantors,
12 and any other persons liable directly or indirectly for the
13 debt,] and the owners of the property affected thereby, from
14 personal liability to the judgment creditor to the extent of
15 the fair market value as averred in the answer, less the
16 amount of any prior liens, costs, taxes and municipal claims
17 not discharged by the sale, and also less the amount of any
18 such items paid at 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[, obligor, guarantor
24 and any other person liable directly or indirectly to the
25 judgment creditor for the payment of the debt] shall be
26 released and discharged of such liability to the judgment
27 creditor to the extent of the fair market value of said
28 property determined by the court, less the amount of all
29 prior liens, costs, taxes and municipal claims not discharged
30 by the sale, and also less the amount of any such items paid
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1 at the distribution on the sale, and shall also be released
2 and discharged of such liability to the extent of any amount
3 by which the sale price, less such prior liens, costs, taxes
4 and municipal claims, exceeds the fair market value as agreed
5 to by the judgment creditor or fixed and determined by the
6 court as provided in this subsection, and thereupon the
7 judgment creditor may proceed by appropriate proceedings to
8 collect the balance of the debt.
9 * * *
10 (e) Waiver of benefit of section prohibited.--Any agreement
11 made by any debtor[, obligor, surety or guarantor] at any time,
12 either before or after or at the time of incurring any
13 obligation, to waive the benefits of this section or to release
14 any obligee from compliance with the provisions hereof shall be
15 void.
16 * * *
17 (f.1) Collateral located in more than one county.--
18 (1) A judgment creditor may elect not to file a
19 valuation petition in the court in each of the counties as
20 provided under subsection (a) and shall not be subject to the
21 penalties for failure to file the petition under subsection
22 (d), if the real property collateral is located in more than
23 one county in this Commonwealth, the judgment creditor is a
24 nonconsumer judgment creditor and the provisions of
25 paragraphs (2), (3) and (4) are satisfied.
26 (2) The judgment creditor shall petition the deficiency
27 court to determine and fix the fair market value of all of
28 the real property collateral as provided under subsection
29 (c)(1), (2), (3) and (4). The value shall be determined on a
30 parcel-by-parcel basis, and the amount so fixed for each
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1 parcel comprising the real property collateral shall be the
2 fair market value for the parcel for all purposes under this
3 subsection unless redetermined as provided in paragraph (4).
4 (3) The determination of the fair market value of the
5 real property collateral by the deficiency court, as provided
6 in paragraph (2), shall be made before an execution sale is
7 held with respect to any of the real property collateral.
8 (4) (i) If the execution sale of a parcel of real
9 property is concluded and the judgment creditor is the
10 purchaser of the parcel at the sale, then either the
11 judgment creditor or the debtor shall file a petition
12 with the deficiency court seeking a redetermination of
13 the fair market value of the parcel provided the petition
14 is filed within the six month period established under
15 section 5522(b)(6).
16 (ii) If the petition is filed in a timely manner,
17 the deficiency court shall redetermine the fair market
18 value of the parcel in the manner provided in subsection
19 (c)(1), (2), (3) and (4). The redetermined value shall be
20 the fair market value of the parcel for all purposes
21 under this subsection.
22 (iii) The filing of the petition for the
23 redetermination shall not limit or affect the judgment
24 creditor's ability to execute on the real property
25 collateral unless and until the value is redetermined by
26 the court. However, where the debtor alleges in its
27 petition that an appropriate redetermination of value by
28 the court with respect to property that has already been
29 sold to the judgment creditor at an execution sale would
30 be sufficient to satisfy the judgment in full, the
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1 deficiency court may issue a stay of further execution
2 proceedings, pending the court's ruling on the petition
3 for redetermination of value.
4 (5) In cases subject to this subsection, the debtor
5 shall be released and discharged from liability for the
6 payment of the debt in the manner provided in subsection
7 (c)(5) to the extent of:
8 (i) the fair market value determined by the
9 deficiency court of all real property collateral
10 purchased by the judgment creditor in execution
11 proceedings on the judgment less the deductible items
12 described in subsection (c)(5); and
13 (ii) the amount distributed to the judgment creditor
14 as a result of the sale of the real property collateral
15 purchased in the proceedings by third parties.
16 (f.2) Foreign collateral.--
17 (1) No deficiency court shall have the power to fix the
18 fair market value of real property located outside this
19 Commonwealth and may not take into account the value of that
20 property in considering whether or not a deficiency exists
21 under this section.
22 (2) This section shall not apply to the sale of any real
23 property located outside this Commonwealth.
24 (g) Definitions.--As used in this section, the following
25 words and phrases shall have the meanings given to them in this
26 subsection:
27 "Adjusted value." The assessed value of a parcel of real
28 property collateral determined for real estate tax purposes
29 times the applicable common level ratio factor published by the
30 Department of Revenue.
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1 "Consumer credit transaction." A credit transaction in which
2 the party to whom credit is offered or extended is a natural
3 person and the money, property or services which are the subject
4 of the transaction are primarily for personal, family or
5 household purposes.
6 "Debtor." A debtor, obligor, guarantor, surety and any other
7 person liable directly or indirectly to a judgment creditor for
8 the payment of a debt.
9 "Deficiency court." With respect to cases covered by
10 subsection (f.1), the court of common pleas located in the
11 county where the highest adjusted value land is located.
12 "Highest adjusted value land." The real property collateral
13 located in a county that has a higher aggregate adjusted value
14 than real property collateral located in any other county.
15 "Judgment." The judgment which was enforced by the execution
16 proceedings referred to in subsection (a), whether that judgment
17 is a judgment in personam such as a judgment requiring the
18 payment of money or a judgment de terris or in rem such as a
19 judgment entered in an action of mortgage foreclosure or a
20 judgment entered in an action or proceeding upon a mechanic's
21 lien, a municipal claim, a tax lien or a charge on land.
22 "Judgment creditor." The holder of the judgment which was
23 enforced by the execution proceedings.
24 "Nonconsumer judgment creditor." Any judgment creditor
25 except a judgment creditor whose judgment was entered with
26 respect to a consumer credit transaction.
27 "Nonrecourse portion of the obligation." The portion as to
28 which the judgment creditor's recourse is limited to the
29 mortgaged property or other specified assets of the debtor which
30 are less than all of such assets.
20020S1469B2087 - 7 -
1 "Partial recourse obligation." An obligation which includes
2 both a nonrecourse portion and a recourse portion.
3 "Real property collateral." All of the real property subject
4 to a lien securing the obligation evidenced by the judgment and
5 located within this Commonwealth.
6 "Recourse portion of the obligation." All of the obligation
7 except the nonrecourse portion thereof.
8 "Valuation petition." A petition to fix the fair market
9 value of real property sold as required by subsection (a).
10 Section 3. This act shall take effect in 60 days.
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