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Exploring the One Action Rule: A Key Legal Principle in Foreclosure
Definition & Meaning
The one action rule is a legal principle that requires a lender to pursue only one legal action against a borrower in a foreclosure case. This means that if a borrower defaults on a loan, the lender must first try to collect the debt by using all available security or collateral in a single lawsuit. For instance, in California, this rule is outlined in the Code of Civil Procedure § 726. If a lender fails to exhaust all security before seeking a monetary judgment against the borrower, they may lose the right to claim any remaining balance owed. This rule is designed to protect borrowers by preventing lenders from pursuing multiple legal actions for the same debt.
Table of content
Legal Use & context
The one action rule is primarily used in civil law, particularly in foreclosure proceedings. It is relevant in situations where a secured creditor, such as a bank or financial institution, seeks to recover funds after a borrower defaults on a loan. This rule helps ensure that lenders cannot take advantage of borrowers by pursuing multiple claims simultaneously. Users may find legal forms related to foreclosure and debt recovery that align with this rule, which can be managed using resources like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner in California defaults on their mortgage. The lender files for foreclosure and attempts to recover the owed amount by selling the property. If the sale does not cover the full debt, the lender cannot pursue the homeowner for the remaining balance unless they first utilized all available security.
(Hypothetical example) Example 2: A borrower has multiple properties as collateral. The lender must choose one property to foreclose on and cannot file separate lawsuits for each property to recover the total debt owed.
Relevant laws & statutes
In California, the one action rule is codified in the Code of Civil Procedure § 726. This statute outlines the requirements for lenders regarding foreclosure actions and deficiency judgments.
Comparison with related terms
Term
Definition
Key Difference
Election of Remedies
A legal doctrine that prevents a party from pursuing multiple legal remedies for the same issue.
One action rule focuses on foreclosure actions specifically, while election of remedies applies more broadly.
Deficiency Judgment
A court order to pay the remaining balance owed after a foreclosure sale.
Deficiency judgments can occur after the one action rule is satisfied, depending on the lender's actions.
Common misunderstandings
What to do if this term applies to you
If you are facing foreclosure, it's important to understand your rights under the one action rule. Consider the following steps:
Review your loan documents to understand the terms and conditions.
Consult with a legal professional to discuss your options and rights.
Explore US Legal Forms for templates and resources that can help you navigate the foreclosure process.
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