(a) There can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein, which action shall be in accordance with the provisions of this chapter. In the action the court may, by its judgment, direct the sale of the encumbered real property or estate for years therein (or so much of the real property or estate for years as may be necessary), and the application of the proceeds of the sale to the payment of the costs of court, the expenses of levy and sale, and the amount due plaintiff, including, where the mortgage provides for the payment of attorney's fees, the sum for attorney's fees as the court shall find reasonable, not exceeding the amount named in the mortgage.
§ 726.One Form of Action; Judgment of Court; Decree For Foreclosure
Title 10. Actions In Particular Cases · Chapter 1. Actions for the Foreclosure of Mortgages · Last amended 1993 · Last verified July 28, 2026
In one sentenceSection 726 codifies California's one-action rule, requiring a secured creditor to foreclose the mortgage or deed of trust judicially before pursuing the debtor personally, while spelling out how the decree handles any deficiency, unrecorded interests, multi-county property, and a narrow carve-out for fraud claims against borrowers.
Full Text of § 726
(b) The decree for the foreclosure of a mortgage or deed of trust secured by real property or estate for years therein shall declare the amount of the indebtedness or right so secured and, unless judgment for any deficiency there may be between the sale price and the amount due with costs is waived by the judgment creditor or a deficiency judgment is prohibited by Section 580b, shall determine the personal liability of any defendant for the payment of the debt secured by the mortgage or deed of trust and shall name the defendants against whom a deficiency judgment may be ordered following the proceedings prescribed in this section. In the event of waiver, or if the prohibition of Section 580b is applicable, the decree shall so declare and there shall be no judgment for a deficiency. In the event that a deficiency is not waived or prohibited and it is decreed that any defendant is personally liable for the debt, then upon application of the plaintiff filed at any time within three months of the date of the foreclosure sale and after a hearing thereon at which the court shall take evidence and at which hearing either party may present evidence as to the fair value of the real property or estate for years therein sold as of the date of sale, the court shall render a money judgment against the defendant or defendants for the amount by which the amount of the indebtedness with interest and costs of levy and sale and of action exceeds the fair value of the real property or estate for years therein sold as of the date of sale. In no event shall the amount of the judgment, exclusive of interest from the date of sale and of costs exceed the difference between the amount for which the real property or estate for years therein was sold and the entire amount of the indebtedness secured by the mortgage or deed of trust. Notice of the hearing shall be served upon all defendants who have appeared in the action and against whom a deficiency judgment is sought, or upon their attorneys of record, at least 15 days before the date set for the hearing. Upon application of any party made at least 10 days before the date set for the hearing the court shall, and upon its own motion the court at any time may, appoint one of the probate referees provided for by law to appraise the real property or estate for years therein sold as of the time of sale. The probate referee shall file the appraisal with the clerk and the appraisal is admissible in evidence. The probate referee shall take and subscribe an oath to be attached to the appraisal that the referee has truly, honestly and impartially appraised the real property or estate for years therein to the best of the referee's knowledge and ability. Any probate referee so appointed may be called and examined as a witness by any party or by the court itself. The court shall fix the compensation, in an amount as determined by the court to be reasonable, but the fees shall not exceed similar fees for similar services in the community where the services are rendered, which may be taxed and allowed in like manner as other costs.
(c) No person holding a conveyance from or under the mortgagor of real property or estate for years therein, or having a lien thereon, which conveyance or lien does not appear of record in the proper office at the time of the commencement of the action need be made a party to the action, and the judgment therein rendered, and the proceedings therein had, are as conclusive against the person holding the unrecorded conveyance or lien as if the person had been a party to the action. Notwithstanding Section 701.630, the sale of the encumbered real property or estate for years therein does not affect the interest of a person who holds a conveyance from or under the mortgagor of the real property or estate for years therein mortgaged, or has a lien thereon, if the conveyance or lien appears of record in the proper office at the time of the commencement of the action and the person holding the recorded conveyance or lien is not made a party to the action.
(d) If the real property or estate for years therein mortgaged consists of a single parcel, or two or more parcels, situated in two or more counties, the court may, in its judgment, direct the whole thereof to be sold in one of the counties, and upon these proceedings, and with like effect, as if the whole of the property were situated in that county.
(e) If a deficiency judgment is waived or prohibited, the real property or estate for years therein shall be sold as provided in Section 716.020. If a deficiency judgment is not waived or prohibited, the real property or estate for years therein shall be sold subject to the right of redemption as provided in Sections 729.010 to 729.090, inclusive.
(f) Notwithstanding this section or any other provision of law to the contrary, any person authorized by this state to make or arrange loans secured by real property or any successor in interest thereto, that originates, acquires, or purchases, in whole or in part, any loan secured directly or collaterally, in whole or in part, by a mortgage or deed of trust on real property or an estate for years therein, may bring an action for recovery of damages, including exemplary damages not to exceed 50 percent of the actual damages, against a borrower where the action is based on fraud under Section 1572 of the Civil Code and the fraudulent conduct by the borrower induced the original lender to make that loan.
(g) Subdivision (f) does not apply to loans secured by single-family, owner-occupied residential real property, when the property is actually occupied by the borrower as represented to the lender in order to obtain the loan and the loan is for an amount of one hundred fifty thousand dollars ($150,000) or less, as adjusted annually, commencing on January 1, 1987, to the Consumer Price Index as published by the United States Department of Labor.
Plain-English Summary
Section 726 is the anchor of California mortgage law. Subdivision (a) says there can be only one form of action to recover a debt secured by a mortgage or deed of trust on real property, and that action must proceed through judicial foreclosure — a sale of the security, with proceeds applied to costs, the levy and sale expenses, and the debt itself, including reasonable attorney's fees if the mortgage provides for them. A creditor who skips foreclosure and sues on the note directly, or who takes some other action treated as an election to proceed against the debtor personally, forfeits the security.
Subdivision (b) governs what happens when the sale doesn't cover the debt. Unless the judgment creditor waives a deficiency or § 580b bars one outright, the foreclosure decree has to identify which defendants may face personal liability, and a deficiency judgment can follow only after a separate post-sale hearing on the property's fair value — capped so the judgment never exceeds the gap between the indebtedness and the sale price. Subdivision (c) protects the foreclosing plaintiff from unrecorded interests: someone holding an unrecorded conveyance or lien doesn't need to be joined and is bound by the judgment anyway, while a recorded interest holder left out of the suit keeps that interest untouched by the sale. Subdivision (d) lets a single decree cover property spanning multiple counties, and subdivision (e) routes the sale toward § 716.020 when no deficiency is possible, or toward the redemption-sale procedure of §§ 729.010-729.090 when it is.
Subdivisions (f) through (h) carve out a narrow, separate lane: a lender defrauded into making the loan by the borrower's own fraud under Civil Code § 1572 can sue for damages, including limited exemplary damages, without that suit counting as the one action or as a deficiency judgment under §§ 580a, 580b, or 580d — except this carve-out doesn't reach loans on owner-occupied, single-family homes at or under the statute's inflation-adjusted loan-amount threshold.
Frequently Asked Questions
What is California's "one-action rule" under § 726?
It means a creditor secured by a mortgage or deed of trust on real property has only one avenue to collect the debt: judicial foreclosure of the security. Suing the borrower directly, or taking other action that amounts to an election against the debtor personally, can forfeit the right to foreclose.
Can a lender get a deficiency judgment after a foreclosure sale under § 726?
Only if the judgment creditor hasn't waived it and § 580b doesn't prohibit it. Even then, the deficiency has to be set through a post-sale hearing on the property's fair value, and it can't exceed the difference between the sale price and the total debt.
Does someone with an unrecorded lien on the property have to be sued in the foreclosure action?
No. Under § 726(c), a person holding an unrecorded conveyance or lien at the time the action begins doesn't need to be made a party, and the resulting judgment binds that person just as if they had been.
Can a lender ever sue a borrower for fraud without triggering the one-action rule?
Yes, in a narrow circumstance. Subdivisions (f) through (h) let a lender sue for fraud under Civil Code § 1572 that induced the loan, without that suit counting as the one action or as a deficiency judgment under §§ 580a, 580b, or 580d — but this doesn't apply to smaller loans on owner-occupied single-family homes.
Amendment History
Amended by Stats. 1992, Ch. 1095, Sec. 4. Effective January 1, 1993.
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
Also known as: california one action ruleone form of action mortgage foreclosuredeficiency judgment california foreclosure