§ 580b.No Deficiency Judgment Owed Or Collected Exception
Title 8. Of the Trial and Judgment In Civil Actions · Chapter 1. Judgment in General · Last amended 2015 · Last verified July 28, 2026
In one sentenceSection 580b bars deficiency judgments in three purchase-money scenarios -- failed installment land sales, seller-carryback financing, and lender loans used to buy an owner-occupied dwelling of four units or fewer -- and extends that bar to most refinances of those loans while preserving liability for guarantors and other pledged collateral.
(a)Except as provided in subdivision (c), no deficiency shall be owed or collected, and no deficiency judgment shall lie, for any of the following:
(1)After a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale.
(2)Under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein.
(3)Under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan that was used to pay all or part of the purchase price of that dwelling, occupied entirely or in part by the purchaser. For purposes of subdivision (b), a loan described in this paragraph is a "purchase money loan."
(b)No deficiency shall be owed or collected, and no deficiency judgment shall lie, on a loan, refinance, or other credit transaction (collectively, a "credit transaction") that is used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, except to the extent that in a credit transaction the lender or creditor advances new principal (hereafter "new advance") that is not applied to an obligation owed or to be owed under the purchase money loan, or to fees, costs, or related expenses of the credit transaction. A new credit transaction shall be deemed to be a purchase money loan except as to the principal amount of a new advance. For purposes of this section, any payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of a new advance, and interest payments shall be applied to any interest due and owing. This subdivision applies only to credit transactions that are executed on or after January 1, 2013.
(c)The fact that no deficiency shall be owed or collected under the circumstances set forth in subdivisions (a) and (b) does not affect the liability that a guarantor, pledgor, or other surety might otherwise have with respect to the deficiency, or that might otherwise be satisfied in whole or in part from other collateral pledged to secure the obligation that is the subject of the deficiency.
(d)When both a chattel mortgage and a deed of trust or mortgage have been given to secure payment of the balance of the combined purchase price of both real and personal property, no deficiency judgment shall lie under any one thereof if no deficiency judgment would lie under the deed of trust or mortgage on the real property or estate for years therein.
Plain-English Summary
This is California's signature anti-deficiency rule, and it protects three distinct situations. First, a seller who resells real property after a buyer defaults on an installment purchase contract can't come back for the shortfall. Second, a seller who takes back a deed of trust or mortgage to secure the unpaid purchase price — seller financing — faces the same bar. Third, a lender who finances the purchase of a dwelling of four units or fewer, occupied by the borrower, can't collect a deficiency on that "purchase money loan" either. Notably, only this third category is limited to small residential dwellings; the first two apply to real property generally.
Subdivision (b) extends the protection to refinances. A credit transaction that refinances a purchase money loan, or refinances an earlier refinance of one, stays protected — except to the extent the lender advances new principal (a "new advance") that isn't applied to the existing purchase-money debt or to the costs of the refinance itself. Payments get credited first to the original purchase-money balance, then to any new advance, so a borrower's payment history matters in sorting out how much protection survives a refinance. This extension applies only to credit transactions from January 1, 2013 forward.
None of this touches other forms of security for the same debt. A guarantor, pledgor, or other surety can still be held liable for a deficiency the primary borrower can't be charged with, and other collateral pledged for the debt can still be reached. And where a chattel mortgage and a real property deed of trust or mortgage were both given to secure a combined purchase price, no deficiency judgment lies under either one if none would lie under the real property instrument.
Frequently Asked Questions
What is a "purchase money loan" under § 580b?
A loan secured by a deed of trust or mortgage on a dwelling of not more than four units, given to a lender to secure repayment of money used to pay all or part of the purchase price of that dwelling, occupied at least in part by the purchaser.
Does § 580b protect a seller who finances the sale directly?
Yes. Subdivision (a)(2) bars a deficiency under a deed of trust or mortgage given to the vendor to secure the unpaid purchase price, without limiting that protection to small residential properties.
Am I still protected if I refinance my purchase money loan?
Generally yes, except to the extent the refinance advances new principal beyond what's applied to the existing purchase-money debt or to the refinance's own costs, and only for credit transactions from January 1, 2013 onward.
Does § 580b protect my loan guarantor from a deficiency claim?
No. Subdivision (c) makes clear that a guarantor, pledgor, or other surety can still be held liable, and other pledged collateral can still be reached, even where the borrower is protected.
What if both a chattel mortgage and a real property mortgage secured the same combined purchase price?
Subdivision (d) bars a deficiency judgment under either instrument if none would lie under the real property deed of trust or mortgage.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
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