Pennsylvania Act 1998-144 — JUDICIAL CODE (42 PA.C.S.) - AMEND COMMENCEMENT OF ACTIONS

Act text

JUDICIAL CODE (42 PA.C.S.) - AMEND COMMENCEMENT OF ACTIONS
                 Act of Dec. 21, 1998, P.L. 1082, No. 144             Cl. 42
                             Session of 1998
                               No. 1998-144

     SB 1262

                                  AN ACT

     Amending Title 42 (Judiciary and Judicial Procedure) of the
        Pennsylvania Consolidated Statutes, further providing for
        actions that must be commenced within six months and for
        deficiency judgments.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Sections 5522(b)(2) and 8103 of Title 42 of the
     Pennsylvania Consolidated Statutes are amended to read:
      § 5522.  Six months limitation.
        * * *
        (b)  Commencement of action required.--The following actions
     and proceedings must be commenced within six months:
            * * *
            (2)  A petition for the establishment of a deficiency
        judgment following [sale of the collateral of the debtor
        under] execution and delivery of the sheriff's deed for the
        property sold in connection with the execution proceedings
        referenced in the provisions of section 8103 (relating to
        deficiency judgments).
            * * *
      § 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 [having jurisdiction]
     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.
        (b)  Effect of failure to give notice.--Any debtor, obligor,
     guarantor, mortgagor, and any other person directly or
     indirectly liable to the judgment creditor for the payment of
     the debt, 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[, and thereupon enter a decree directing the judgment
        creditor to file release of the debtors, obligors, guarantors
        or any other persons directly or indirectly liable for the
        debts, to the extent of the fair value so fixed, whereupon
        execution may be issued for the balance of the debt].
            (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, obligors and guarantors,
        and any other persons liable directly or indirectly for the
        debt, 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 [shall be] 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[, which shall in no event exceed
        the amount of the debt, interest, costs, taxes and municipal
        claims] 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, obligor, guarantor
        and any other person liable directly or indirectly to the
        judgment creditor for the payment of the debt shall be
        released and discharged of such liability to the judgment
        creditor to the extent of the fair market value of said
        property [as previously agreed to by the judgment creditor
        or] 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 [statute after the sale] 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, obligor, surety or guarantor 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.
        (g)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "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.
        "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.
        "Recourse portion of the obligation."  All of the obligation
     except the nonrecourse portion thereof.
        Section 2.  This act shall apply to all actions and
     proceedings pending on the effective date of this act.
        Section 3.  This act shall take effect immediately.

     APPROVED--The 21st day of December, A. D. 1998.

     THOMAS J. RIDGE