DeBerard Properties, Ltd. v. Lim
Supreme Court of California
976 P.2d 843 (1999)
The Lims (defendants) bought a shopping center from DeBerard (plaintiff) via a purchase-money loan, later renegotiating the debt and signing a forbearance agreement in which they waived the state's anti-deficiency statute protections in exchange for a reduced interest rate and payments, while DeBerard agreed not to foreclose and to subordinate its interest to another lender; the Lims eventually defaulted, the other lender foreclosed and extinguished DeBerard's interest, and DeBerard sued on the promissory note. The trial court held the waiver valid and ruled for the Lims, but the court of appeal reversed, and the Lims appealed.
Whether a debtor can waive the protections afforded by an anti-deficiency statute in exchange for new consideration following an original purchase-money sale.