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The Court reasoned:
The key to the resolution of the issue before us lies in the
recognition that, in this case, there is a clear separation
between the foreclosure sale and the unpaid recourse
liability for mortgage principal which survives as part of a
deficiency judgment. * * * [Id. at 200.]
The Court held in the Aizawa case that, where there is a
foreclosure sale and an unpaid recourse liability survives as a
deficiency judgment and continues as an enforceable liability
against the debtor, the amount realized is the foreclosure
proceeds and not the amount of the recourse liability. The Court
also noted that there was no dispute that the foreclosure
proceeds in that case represented the fair market value of the
property.
Respondent argues that there are two main differences
between this case and the Aizawa case that require a different
result here. Respondent first points out that, unlike the Aizawa
case, the fair market value of the property in this case exceeded
the foreclosure price. Secondly, respondent argues that, unlike
the Aizawa case, no portion of petitioner's unpaid recourse
liability for the mortgage survived under Utah law as part of a
deficiency judgment at the close of 1989.6
6
Based on the discussion that follows, it is not necessary
for the Court to address whether it is relevant that the fair
market value of the property exceeded the amount realized in the
foreclosure sale.
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