Winter 2012 • Issue 42, page 17
Violation of the One Form of Action Rule
By Davidson, Peter*
Q:Someone warned me that I had to be careful
in getting a receiver appointed to collect rents because the appointment
might violate the “one form of action rule.” What is that and do I need to
worry?
A: The “one form of action rule” is embodied in California Code of
Civil Procedure § 726 which states, in summary, that there can be but one
form of action for the recovery of any debt or the enforcement of any
rights secured by a mortgage on real property. If someone violates the one
form of action rule, they can lose their right to their security interest
in the real property. While the one form of action rule was an issue
during the last foreclosure crises in the late 1990s, it is no longer a
problem, at least with regard to having a receiver appointed. In order to
resolve any lingering issues about the applicability of the one form of
action rule when a receiver is appointed to collect rents under a deed of
trust (among other reasons), the legislature adopted a new California
Civil Code § 2938 in 1997 which, among other things, provides that a
written assignment of an interest in leases, rents, issues or profits of
real property made in connection with an obligation secured by real
property, irrespective of whether the assignment is called an absolute
assignment, absolute conditional upon default, additional security, or
otherwise, is effective to create a present security interest in existing
and future leases, rents, issues or profits of that real property. If
there is a default by the assignor under the obligation secured by the
leases, rents, issues or profits, the assignee (secured party) can do a
number of things to collect, including seeking the appointment of a
receiver. The statute goes on to provide that an enforcement action,
including having a receiver appointed, will not constitute a violation of
§726 (the one form of action rule). Cal. Civ. Code § 2938 (e)(2).
Therefore, you need not be worried. An application to have a receiver
appointed to enforce the terms of a deed of trust or other agreement
related to a real property, or the receiver’s appointment, will not
constitute a violation of the one form of action rule.
*Peter A. Davidson is a Partner of Ervin Cohen & Jessup LLP a
Beverly Hills Law Firm. His practice includes representing Receivers and
acting as a Receiver in State and Federal Court.
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