Hunter

Budget Realty, Inc. (Seller) appeals from the summary judgment in favor of Martin D. Hunter and Linda Rubin (together referred to as Buyer). The sole issue on appeal is whether a purchase money trust deed is taken outside the antideficiency protection of Code of Civil Procedure section 580b when the trust deed contains an unexercised agreement to subordinate the security to a construction loan. We find that until the subordination provision is exercised, jeopardy to the seller’s security has not been aggravated. Thus, we hold that presence of an unexercised subordination provision does not take a purchase money loan outside section 580b protection.

Facts

The Buyer purchased commercial property, paying $15,000 cash and taking the property subject to an existing first trust deed of $46,000. The Seller took back a $29,000 promissory note secured by a junior second deed of trust for the balance of the purchase price. The junior trust deed contained a provision in which the Seller agreed to subordinate his lien to up to $400,000 of construction financing. The Buyer never proceeded to obtain construction financing and thus the subordination provision was not…