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Deficiency judgments - 42 Pa. Cons. Stat. § 8103Legal Research Home > Pennsylvania Statutes
§ 8103. Deficiency judgments.
(a) General rule.--Whenever any real property is sold,
directly or indirectly, to the judgment creditor in execution
proceedings and the price for which such property has been sold
is not sufficient to satisfy the amount of the judgment,
interest and costs and the judgment creditor seeks to collect
the balance due on said judgment, interest and costs, the
judgment creditor shall petition the court to fix the fair
market value of the real property sold. The petition shall be
filed as a supplementary proceeding in the matter in which the
judgment was entered. If the judgment was transferred from the
county in which it was entered to the county where the execution
sale was held, the judgment shall be deemed entered in the
county in which the sale took place.
(b) Effect of failure to give notice.--Any debtor and any
owner of the property affected thereby, who is neither named in
the petition nor served with a copy thereof or notice of the
filing thereof as prescribed by general rule, shall be deemed to
be discharged from all personal liability to the judgment
creditor on the debt, interest and costs, but any such failure
to name such person in the petition or to serve the petition or
notice of the filing thereof shall not prevent proceedings
against any respondent named and served.
(c) Action on petition.--
(1) If no answer is filed within the time prescribed by
general rule, or if an answer is filed which does not
controvert the allegation of the fair market value of the
property as averred in the petition, the court shall
determine and fix as the fair market value of the property
sold the amount thereof alleged in the petition to be the
fair market value.
(2) If an answer is filed controverting the averment in
the petition as to the fair market value of the property, but
no testimony is produced at the hearing supporting such
denial of the fair market value, the court shall determine
and fix as the fair market value of the property sold the
amount thereof alleged in the petition to be the fair market
value.
(3) If an answer is filed alleging as the fair market
value an amount in excess of the fair market value of the
property as averred in the petition, the judgment creditor
may agree to accept as the fair market value of the property
the value set up in the answer and in such case may file a
stipulation releasing the debtors and the owners of the
property affected thereby, from personal liability to the
judgment creditor to the extent of the fair market value as
averred in the answer, less the amount of any prior liens,
costs, taxes and municipal claims not discharged by the sale,
and also less the amount of any such items paid at
distribution on the sale.
(4) If an answer is filed and testimony produced setting
forth that the fair market value of the property is more than
the value stated in the petition, the court shall hear
evidence of and determine and fix the fair market value of
the property sold.
(5) After the hearing, if any, and the determination by
the court under paragraph (1), (2) or (4) of the fair market
value of the property sold, then, except as otherwise
provided in subsection (f), the debtor shall be released and
discharged of such liability to the judgment creditor to the
extent of the fair market value of said property determined
by the court, less the amount of all prior liens, costs,
taxes and municipal claims not discharged by the sale, and
also less the amount of any such items paid at the
distribution on the sale, and shall also be released and
discharged of such liability to the extent of any amount by
which the sale price, less such prior liens, costs, taxes and
municipal claims, exceeds the fair market value as agreed to
by the judgment creditor or fixed and determined by the court
as provided in this subsection, and thereupon the judgment
creditor may proceed by appropriate proceedings to collect
the balance of the debt.
(d) Action in absence of petition.--If the judgment creditor
shall fail to present a petition to fix the fair market value of
the real property sold within the time after the sale of such
real property provided by section 5522 (relating to six months
limitation), the debtor, obligor, guarantor or any other person
liable directly or indirectly to the judgment creditor for the
payment of the debt, or any person interested in any real estate
which would, except for the provisions of this section, be bound
by the judgment, may file a petition, as a supplementary
proceeding in the matter in which the judgment was entered, in
the court having jurisdiction, setting forth the fact of the
sale, and that no petition has been filed within the time
limited by section 5522 to fix the fair market value of the
property sold, whereupon the court, after notice as prescribed
by general rule, and being satisfied of such facts, shall direct
the clerk to mark the judgment satisfied, released and
discharged.
(e) Waiver of benefit of section prohibited.--Any agreement
made by any debtor at any time, either before or after or at the
time of incurring any obligation, to waive the benefits of this
section or to release any obligee from compliance with the
provisions hereof shall be void.
(f) Certain special allocations.--Notwithstanding the
provisions of subsection (c)(5), if the judgment creditor is a
nonconsumer judgment creditor and:
(1) if the judgment has been entered with respect to a
partial recourse obligation, the fair market value of the
property determined as provided in subsection (c) will be
applied first to discharge, as provided in subsection (c)(5),
all liability for the nonrecourse portion of the obligation
before any portion of such value is applied to discharge any
liability for the recourse portion of the obligation; and
(2) if the judgment has been entered with respect to an
obligation of which only a portion is guaranteed, the fair
market value of the property determined as provided in
subsection (c) will be applied first to discharge, as
provided in subsection (c), all liability for the portion of
the obligation which is not guaranteed before any portion of
such value is applied to discharge any liability for the
portion of such obligation which is guaranteed.
(f.1) Collateral located in more than one county.--
(1) If the real property collateral is located in more
than one county in this Commonwealth, a judgment creditor may
elect not to file a valuation petition in the court in each
of such counties as provided under subsection (a) and shall
not be subject to the penalties for failure to file the
petition under subsection (d) if the judgment creditor is a
nonconsumer judgment creditor and the provisions of
paragraphs (2) and (3) are satisfied.
(2) The judgment creditor shall petition the deficiency
court to determine and fix the fair market value of all of
the real property collateral as provided under subsection
(c)(1), (2), (3) and (4). The value shall be determined on a
parcel-by-parcel basis, and the amount so fixed for each
parcel comprising the real property collateral shall be the
fair market value for the parcel for all purposes under this
subsection unless redetermined as provided in paragraph (4).
(3) The determination of the fair market value of the
real property collateral by the deficiency court as provided
in paragraph (2) shall be made before an execution sale is
held with respect to any of the real property collateral.
(4) (i) If the execution sale of a parcel of real
property is concluded and the judgment creditor is the
purchaser of the parcel at the sale, then either the
judgment creditor or the debtor may file a petition with
the deficiency court seeking a redetermination of the
fair market value of the parcel provided the petition is
filed within the six-month period established under
section 5522(b)(6).
(ii) If the petition is filed in a timely manner,
the deficiency court shall redetermine the fair market
value of the parcel in the manner provided in subsection
(c)(1), (2), (3) and (4). The redetermined value shall be
the fair market value of the parcel for all purposes
under this subsection.
(iii) The filing of the petition for the
redetermination shall not limit or affect the judgment
creditor's ability to execute on the real property
collateral unless and until the value is redetermined by
the court. However, where the debtor alleges in its
petition that an appropriate redetermination of value by
the court with respect to property that has already been
sold to the judgment creditor at an execution sale would
be sufficient to satisfy the judgment in full, the
deficiency court may issue a stay of further execution
proceedings pending the court's ruling on the petition
for redetermination of value.
(5) In cases subject to this subsection, the debtor
shall be released and discharged from liability for the
payment of the debt in the manner provided in subsection
(c)(5) to the extent of:
(i) the fair market value determined by the
deficiency court of all real property collateral
purchased by the judgment creditor in execution
proceedings on the judgment less the deductible items
described in subsection (c)(5); and
(ii) the amount distributed to the judgment creditor
as a result of the sale of the real property collateral
purchased in the proceedings by third parties.
(f.2) Foreign collateral.--
(1) No deficiency court shall have the power to fix the
fair market value of real property located outside this
Commonwealth and may not take into account the value of that
property in considering whether or not a deficiency exists
under this section.
(2) This section shall not apply to the sale of any real
property located outside this Commonwealth.
(g) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Adjusted value." The assessed value of a parcel of real
property collateral determined for real estate tax purposes
times the applicable common level ratio factor published by the
State Tax Equalization Board.
"Consumer credit transaction." A credit transaction in which
the party to whom credit is offered or extended is a natural
person and the money, property or services which are the subject
of the transaction are primarily for personal, family or
household purposes.
"Debtor." A debtor, obligor, guarantor, surety and any other
person liable directly or indirectly to a judgment creditor for
the payment of a debt.
"Deficiency court." With respect to cases covered by
subsection (f.1), the court of common pleas located in the
county where the highest adjusted value land is located.
"Highest adjusted value land." The real property collateral
located in a county that has a higher aggregate adjusted value
than real property collateral located in any other county.
"Judgment." The judgment which was enforced by the execution
proceedings referred to in subsection (a), whether that judgment
is a judgment in personam such as a judgment requiring the
payment of money or a judgment de terris or in rem such as a
judgment entered in an action of mortgage foreclosure or a
judgment entered in an action or proceeding upon a mechanic's
lien, a municipal claim, a tax lien or a charge on land.
"Judgment creditor." The holder of the judgment which was
enforced by the execution proceedings.
"Nonconsumer judgment creditor." Any judgment creditor
except a judgment creditor whose judgment was entered with
respect to a consumer credit transaction.
"Nonrecourse portion of the obligation." The portion as to
which the judgment creditor's recourse is limited to the
mortgaged property or other specified assets of the debtor which
are less than all of such assets.
"Partial recourse obligation." An obligation which includes
both a nonrecourse portion and a recourse portion.
"Real property collateral." All of the real property subject
to a lien securing the obligation evidenced by the judgment and
located within this Commonwealth.
"Recourse portion of the obligation." All of the obligation
except the nonrecourse portion thereof.
"Valuation petition." A petition to fix the fair market
value of real property sold as required by subsection (a).
(Dec. 21, 1998, P.L.1082, No.144, eff. imd.; Nov. 24, 2004,
P.L.1243, No.152, eff. 60 days)
2004 Amendment. Act 152 amended subsecs. (a), (b), (c)(3)
and (5), (e) and (g) and added subsecs. (f.1) and (f.2).
Cross References. Section 8103 is referred to in section
5522 of this title.
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Last modified: November 27, 2007 |
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