The “one-action rule” is law that is unique to the state of California. The state passed the law to protect homeowners from multiple legal actions on a single debt. Essentially, this law forces lenders to choose one action to pursue in their attempts to collect debts on a home. They may pursue:
- A judicial foreclosure – Lenders may apply for a court order that allows them to foreclose on a property and seek the monetary difference between what the home is sold for and what the mortgage is worth from the homeowner. This course of action is rare, however, as the process is both expensive and time-consuming.
- A non-judicial foreclosure – Lenders generally choose not to pursue foreclosure through the courts, preferring instead to collect what they can on their investment by selling the house through a trustee. Because they are limited to one action in California, lenders cannot sue the homeowner for the difference between what they recover and what was owed on the loan. (Separate actions can, however, be taken against second or third mortgages.)
It is important that you know and understand your rights as a homeowner. The California one-action rule is meant to protect you from harassment.