California’s “One Action Rule” (aka “Single Action Rule”) is codified at Code of Civil Procedure Section 726. It generally requires the holder of a claim secured by real property (i.e., a mortgage lender) to take only one action against the debtor, whether it is to conduct a nonjudicial foreclosure action, judicial foreclosure action, or to sue the debtor personally for the balance of the debt. Section 726 has been interpreted by California Courts to require a mortgage lender to pursue the real property first before being able to sue the debtor personally. (Walker v. Community Bank (1974) 10 Cal.3d 729.) The One Action Rule is therefore also known as the “Security First Rule.”
Exemption for HOAs & Assessment Liens
An association that records an assessment lien against an owner’s property also becomes the holder of a claim secured by real property, similar to a mortgage lender. However, there is an express waiver of the One Action Rule in the Davis Stirling Act, found at Civil Code Section 5700(b). Section 5700(b) allows for an association to pursue the debtor (the delinquent owner) personally even if the association has recorded an assessment lien against the owner’s property as security for the owner’s assessment debt. This allows for an association to, for example, initiate a nonjudicial foreclosure action while also filing a lawsuit against the delinquent owner. However, the association will at some point have to select one remedy. For example, if the association obtains a money judgment, the assessment lien merges into the judgment and can no longer be enforced through nonjudicial foreclosure. (See Diamond Heights Village Assn. v. Financial Freedom (2011) 196 Cal.App.4th 290: See also “Money Judgments (Assessment Collection).” )
