PNL Pomona v. Meruelo
A husband and wife created a revocable intervivos family trust with themselves as trustors, trustees and beneficiaries. They then caused the trust to take out a loan from a lender and personally guaranteed the loan. When the borrower defaulted on the loan, the lender nonjudicially foreclosed on real property securing the loan and then sought a deficiency judgment against the guarantors, which the trial court granted. We reverse. California’s nondeficiency statutes prevent a lender from obtaining a deficiency judgment against a primary obligor after nonjudicial foreclosure. A guarantor of a loan to an inter vivos trust who is also the trustor, trustee and beneficiary of the trust is considered to be a primary obligor, and is not liable for any deficiency following nonjudicial foreclosure.
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