PRIOR PRINTER'S NO. 2087 PRINTER'S NO. 2231
No. 1469 Session of 2002
INTRODUCED BY GREENLEAF, LEMMOND, COSTA, ORIE, O'PAKE, M. WHITE,
KUKOVICH AND KITCHEN, JUNE 12, 2002
SENATOR GREENLEAF, JUDICIARY, AS AMENDED, SEPTEMBER 24, 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 IN WHICH IT WAS ENTERED TO THE COUNTY where the execution <--
22 sale was held, the judgment shall be deemed entered in that <--
23 county THE COUNTY IN WHICH THE SALE TOOK PLACE. <--
24 (b) Effect of failure to give notice.--Any debtor[, obligor,
25 guarantor, mortgagor, and any other person directly or
26 indirectly liable to the judgment creditor for the payment of
27 the debt,] and any owner of the property affected thereby, who
28 is neither named in the petition nor served with a copy thereof
29 or notice of the filing thereof as prescribed by general rule,
30 shall be deemed to be discharged from all personal liability to
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1 the judgment creditor on the debt, interest and costs, but any
2 such failure to name such person in the petition or to serve the
3 petition or notice of the filing thereof shall not prevent
4 proceedings 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[, obligors and guarantors,
13 and any other persons liable directly or indirectly for the
14 debt,] and the owners of the property affected thereby, from
15 personal liability to the judgment creditor to the extent of
16 the fair market value as averred in the answer, less the
17 amount of any prior liens, costs, taxes and municipal claims
18 not discharged by the sale, and also less the amount of any
19 such items paid at distribution on the sale.
20 * * *
21 (5) After the hearing, if any, and the determination by
22 the court under paragraph (1), (2) or (4) of the fair market
23 value of the property sold, then, except as otherwise
24 provided in subsection (f), the debtor[, obligor, guarantor
25 and any other person liable directly or indirectly to the
26 judgment creditor for the payment of the debt] shall be
27 released and discharged of such liability to the judgment
28 creditor to the extent of the fair market value of said
29 property determined by the court, less the amount of all
30 prior liens, costs, taxes and municipal claims not discharged
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1 by the sale, and also less the amount of any such items paid
2 at the distribution on the sale, and shall also be released
3 and discharged of such liability to the extent of any amount
4 by which the sale price, less such prior liens, costs, taxes
5 and municipal claims, exceeds the fair market value as agreed
6 to by the judgment creditor or fixed and determined by the
7 court as provided in this subsection, and thereupon the
8 judgment creditor may proceed by appropriate proceedings to
9 collect the balance of the debt.
10 * * *
11 (e) Waiver of benefit of section prohibited.--Any agreement
12 made by any debtor[, obligor, surety or guarantor] at any time,
13 either before or after or at the time of incurring any
14 obligation, to waive the benefits of this section or to release
15 any obligee from compliance with the provisions hereof shall be
16 void.
17 * * *
18 (f.1) Collateral located in more than one county.--
19 (1) A IF THE REAL PROPERTY COLLATERAL IS LOCATED IN MORE <--
20 THAN ONE COUNTY IN THIS COMMONWEALTH, A judgment creditor may
21 elect not to file a valuation petition in the court in each
22 of the SUCH counties as provided under subsection (a) and <--
23 shall not be subject to the penalties for failure to file the
24 petition under subsection (d), if the real property <--
25 collateral is located in more than one county in this
26 Commonwealth, (D), IF the judgment creditor is a nonconsumer <--
27 judgment creditor and the provisions of paragraphs (2), (3) <--
28 and (4) AND (3) are satisfied. <--
29 (2) The judgment creditor shall petition the deficiency
30 court to determine and fix the fair market value of all of
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1 the real property collateral as provided under subsection
2 (c)(1), (2), (3) and (4). The value shall be determined on a
3 parcel-by-parcel basis, and the amount so fixed for each
4 parcel comprising the real property collateral shall be the
5 fair market value for the parcel for all purposes under this
6 subsection unless redetermined as provided in paragraph (4).
7 (3) The determination of the fair market value of the
8 real property collateral by the deficiency court, as provided
9 in paragraph (2), shall be made before an execution sale is
10 held with respect to any of the real property collateral.
11 (4) (i) If the execution sale of a parcel of real
12 property is concluded and the judgment creditor is the
13 purchaser of the parcel at the sale, then either the
14 judgment creditor or the debtor shall MAY file a petition <--
15 with the deficiency court seeking a redetermination of
16 the fair market value of the parcel provided the petition
17 is filed within the six month period established under
18 section 5522(b)(6).
19 (ii) If the petition is filed in a timely manner,
20 the deficiency court shall redetermine the fair market
21 value of the parcel in the manner provided in subsection
22 (c)(1), (2), (3) and (4). The redetermined value shall be
23 the fair market value of the parcel for all purposes
24 under this subsection.
25 (iii) The filing of the petition for the
26 redetermination shall not limit or affect the judgment
27 creditor's ability to execute on the real property
28 collateral unless and until the value is redetermined by
29 the court. However, where the debtor alleges in its
30 petition that an appropriate redetermination of value by
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1 the court with respect to property that has already been
2 sold to the judgment creditor at an execution sale would
3 be sufficient to satisfy the judgment in full, the
4 deficiency court may issue a stay of further execution
5 proceedings, pending the court's ruling on the petition
6 for redetermination of value.
7 (5) In cases subject to this subsection, the debtor
8 shall be released and discharged from liability for the
9 payment of the debt in the manner provided in subsection
10 (c)(5) to the extent of:
11 (i) the fair market value determined by the
12 deficiency court of all real property collateral
13 purchased by the judgment creditor in execution
14 proceedings on the judgment less the deductible items
15 described in subsection (c)(5); and
16 (ii) the amount distributed to the judgment creditor
17 as a result of the sale of the real property collateral
18 purchased in the proceedings by third parties.
19 (f.2) Foreign collateral.--
20 (1) No deficiency court shall have the power to fix the
21 fair market value of real property located outside this
22 Commonwealth and may not take into account the value of that
23 property in considering whether or not a deficiency exists
24 under this section.
25 (2) This section shall not apply to the sale of any real
26 property located outside this Commonwealth.
27 (g) Definitions.--As used in this section, the following
28 words and phrases shall have the meanings given to them in this
29 subsection:
30 "Adjusted value." The assessed value of a parcel of real
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1 property collateral determined for real estate tax purposes
2 times the applicable common level ratio factor published by the
3 Department of Revenue.
4 "Consumer credit transaction." A credit transaction in which
5 the party to whom credit is offered or extended is a natural
6 person and the money, property or services which are the subject
7 of the transaction are primarily for personal, family or
8 household purposes.
9 "Debtor." A debtor, obligor, guarantor, surety and any other
10 person liable directly or indirectly to a judgment creditor for
11 the payment of a debt.
12 "Deficiency court." With respect to cases covered by
13 subsection (f.1), the court of common pleas located in the
14 county where the highest adjusted value land is located.
15 "Highest adjusted value land." The real property collateral
16 located in a county that has a higher aggregate adjusted value
17 than real property collateral located in any other county.
18 "Judgment." The judgment which was enforced by the execution
19 proceedings referred to in subsection (a), whether that judgment
20 is a judgment in personam such as a judgment requiring the
21 payment of money or a judgment de terris or in rem such as a
22 judgment entered in an action of mortgage foreclosure or a
23 judgment entered in an action or proceeding upon a mechanic's
24 lien, a municipal claim, a tax lien or a charge on land.
25 "Judgment creditor." The holder of the judgment which was
26 enforced by the execution proceedings.
27 "Nonconsumer judgment creditor." Any judgment creditor
28 except a judgment creditor whose judgment was entered with
29 respect to a consumer credit transaction.
30 "Nonrecourse portion of the obligation." The portion as to
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1 which the judgment creditor's recourse is limited to the
2 mortgaged property or other specified assets of the debtor which
3 are less than all of such assets.
4 "Partial recourse obligation." An obligation which includes
5 both a nonrecourse portion and a recourse portion.
6 "Real property collateral." All of the real property subject
7 to a lien securing the obligation evidenced by the judgment and
8 located within this Commonwealth.
9 "Recourse portion of the obligation." All of the obligation
10 except the nonrecourse portion thereof.
11 "Valuation petition." A petition to fix the fair market
12 value of real property sold as required by subsection (a).
13 Section 3. This act shall take effect in 60 days.
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