(a) General rule.--Whenever any real property is sold, directly or indirectly, to the judgment creditor in execution proceedings and the price for which such property has been sold is not sufficient to satisfy the amount of the judgment, interest and costs and the judgment creditor seeks to collect the balance due on said judgment, interest and costs, the judgment creditor shall petition the court to fix the fair market value of the real property sold. The petition shall be filed as a supplementary proceeding in the matter in which the judgment was entered. If the judgment was transferred from the county in which it was entered to the county where the execution sale was held, the judgment shall be deemed entered in the county in which the sale took place.

(b) Effect of failure to give notice.--Any debtor and any owner of the property affected thereby, who is neither named in the petition nor served with a copy thereof or notice of the filing thereof as prescribed by general rule, shall be deemed to be discharged from all personal liability to the judgment creditor on the debt, interest and costs, but any such failure to name such person in the petition or to serve the petition or notice of the filing thereof shall not prevent proceedings against any respondent named and served.

(c) Action on petition.--

(1) If no answer is filed within the time prescribed by general rule, or if an answer is filed which does not controvert the allegation of the fair market value of the property as averred in the petition, the court shall determine and fix as the fair market value of the property sold the amount thereof alleged in the petition to be the fair market value.

(2) If an answer is filed controverting the averment in the petition as to the fair market value of the property, but no testimony is produced at the hearing supporting such denial of the fair market value, the court shall determine and fix as the fair market value of the property sold the amount thereof alleged in the petition to be the fair market value.

(3) If an answer is filed alleging as the fair market value an amount in excess of the fair market value of the property as averred in the petition, the judgment creditor may agree to accept as the fair market value of the property the value set up in the answer and in such case may file a stipulation releasing the debtors and the owners of the property affected thereby, from personal liability to the judgment creditor to the extent of the fair market value as averred in the answer, less the amount of any prior liens, costs, taxes and municipal claims not discharged by the sale, and also less the amount of any such items paid at distribution on the sale.

(4) If an answer is filed and testimony produced setting forth that the fair market value of the property is more than the value stated in the petition, the court shall hear evidence of and determine and fix the fair market value of the property sold.

(5) After the hearing, if any, and the determination by the court under paragraph (1), (2) or (4) of the fair market value of the property sold, then, except as otherwise provided in subsection (f), the debtor shall be released and discharged of such liability to the judgment creditor to the extent of the fair market value of said property determined by the court, less the amount of all prior liens, costs, taxes and municipal claims not discharged by the sale, and also less the amount of any such items paid at the distribution on the sale, and shall also be released and discharged of such liability to the extent of any amount by which the sale price, less such prior liens, costs, taxes and municipal claims, exceeds the fair market value as agreed to by the judgment creditor or fixed and determined by the court as provided in this subsection, and thereupon the judgment creditor may proceed by appropriate proceedings to collect the balance of the debt.

(d) Action in absence of petition.--If the judgment creditor shall fail to present a petition to fix the fair market value of the real property sold within the time after the sale of such real property provided by section 5522 (relating to six months limitation), the debtor, obligor, guarantor or any other person liable directly or indirectly to the judgment creditor for the payment of the debt, or any person interested in any real estate which would, except for the provisions of this section, be bound by the judgment, may file a petition, as a supplementary proceeding in the matter in which the judgment was entered, in the court having jurisdiction, setting forth the fact of the sale, and that no petition has been filed within the time limited by section 5522 to fix the fair market value of the property sold, whereupon the court, after notice as prescribed by general rule, and being satisfied of such facts, shall direct the clerk to mark the judgment satisfied, released and discharged.

(e) Waiver of benefit of section prohibited.--Any agreement made by any debtor at any time, either before or after or at the time of incurring any obligation, to waive the benefits of this section or to release any obligee from compliance with the provisions hereof shall be void.

(f) Certain special allocations.--Notwithstanding the provisions of subsection (c)(5), if the judgment creditor is a nonconsumer judgment creditor and:

(1) if the judgment has been entered with respect to a partial recourse obligation, the fair market value of the property determined as provided in subsection (c) will be applied first to discharge, as provided in subsection (c)(5), all liability for the nonrecourse portion of the obligation before any portion of such value is applied to discharge any liability for the recourse portion of the obligation; and

(2) if the judgment has been entered with respect to an obligation of which only a portion is guaranteed, the fair market value of the property determined as provided in subsection (c) will be applied first to discharge, as provided in subsection (c), all liability for the portion of the obligation which is not guaranteed before any portion of such value is applied to discharge any liability for the portion of such obligation which is guaranteed.

(f.1) Collateral located in more than one county.--

(1) If the real property collateral is located in more than one county in this Commonwealth, a judgment creditor may elect not to file a valuation petition in the court in each of such counties as provided under subsection (a) and shall not be subject to the penalties for failure to file the petition under subsection (d) if the judgment creditor is a nonconsumer judgment creditor and the provisions of paragraphs (2) and (3) are satisfied.

(2) The judgment creditor shall petition the deficiency court to determine and fix the fair market value of all of the real property collateral as provided under subsection (c)(1), (2), (3) and (4). The value shall be determined on a parcel-by-parcel basis, and the amount so fixed for each parcel comprising the real property collateral shall be the fair market value for the parcel for all purposes under this subsection unless redetermined as provided in paragraph (4).

(3) The determination of the fair market value of the real property collateral by the deficiency court as provided in paragraph (2) shall be made before an execution sale is held with respect to any of the real property collateral.

(4) (i) If the execution sale of a parcel of real property is concluded and the judgment creditor is the purchaser of the parcel at the sale, then either the judgment creditor or the debtor may file a petition with the deficiency court seeking a redetermination of the fair market value of the parcel provided the petition is filed within the six-month period established under section 5522(b)(6).

(ii) If the petition is filed in a timely manner, the deficiency court shall redetermine the fair market value of the parcel in the manner provided in subsection (c)(1), (2), (3) and (4). The redetermined value shall be the fair market value of the parcel for all purposes under this subsection.

(iii) The filing of the petition for the redetermination shall not limit or affect the judgment creditor's ability to execute on the real property collateral unless and until the value is redetermined by the court. However, where the debtor alleges in its petition that an appropriate redetermination of value by the court with respect to property that has already been sold to the judgment creditor at an execution sale would be sufficient to satisfy the judgment in full, the deficiency court may issue a stay of further execution proceedings pending the court's ruling on the petition for redetermination of value.

(5) In cases subject to this subsection, the debtor shall be released and discharged from liability for the payment of the debt in the manner provided in subsection (c)(5) to the extent of:

(i) the fair market value determined by the deficiency court of all real property collateral purchased by the judgment creditor in execution proceedings on the judgment less the deductible items described in subsection (c)(5); and

(ii) the amount distributed to the judgment creditor as a result of the sale of the real property collateral purchased in the proceedings by third parties.

(f.2) Foreign collateral.--

(1) No deficiency court shall have the power to fix the fair market value of real property located outside this Commonwealth and may not take into account the value of that property in considering whether or not a deficiency exists under this section.

(2) This section shall not apply to the sale of any real property located outside this Commonwealth.

(g) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

"Adjusted value." The assessed value of a parcel of real property collateral determined for real estate tax purposes times the applicable common level ratio factor published by the State Tax Equalization Board.

"Consumer credit transaction." A credit transaction in which the party to whom credit is offered or extended is a natural person and the money, property or services which are the subject of the transaction are primarily for personal, family or household purposes.

"Debtor." A debtor, obligor, guarantor, surety and any other person liable directly or indirectly to a judgment creditor for the payment of a debt.

"Deficiency court." With respect to cases covered by subsection (f.1), the court of common pleas located in the county where the highest adjusted value land is located.

"Highest adjusted value land." The real property collateral located in a county that has a higher aggregate adjusted value than real property collateral located in any other county.

"Judgment." The judgment which was enforced by the execution proceedings referred to in subsection (a), whether that judgment is a judgment in personam such as a judgment requiring the payment of money or a judgment de terris or in rem such as a judgment entered in an action of mortgage foreclosure or a judgment entered in an action or proceeding upon a mechanic's lien, a municipal claim, a tax lien or a charge on land.

"Judgment creditor." The holder of the judgment which was enforced by the execution proceedings.

"Nonconsumer judgment creditor." Any judgment creditor except a judgment creditor whose judgment was entered with respect to a consumer credit transaction.

"Nonrecourse portion of the obligation." The portion as to which the judgment creditor's recourse is limited to the mortgaged property or other specified assets of the debtor which are less than all of such assets.

"Partial recourse obligation." An obligation which includes both a nonrecourse portion and a recourse portion.

"Real property collateral." All of the real property subject to a lien securing the obligation evidenced by the judgment and located within this Commonwealth.

"Recourse portion of the obligation." All of the obligation except the nonrecourse portion thereof.

"Valuation petition." A petition to fix the fair market value of real property sold as required by subsection (a).

(Dec. 21, 1998, P.L.1082, No.144, eff. imd.; Nov. 24, 2004, P.L.1243, No.152, eff. 60 days; Mar. 14, 2014, P.L.46, No.20, eff. imd.)

2014 Amendment. Act 20 reenacted subsecs. (a), (b), (c)(3) and (5), (e), (f.1), (f.2) and (g), retroactive to January 24, 2005.

2013 Unconstitutionality. Act 152 of 2004 was declared unconstitutional. Commonwealth v. Neiman, 84 A.3d 603 (Pa. 2013). The unconstitutionality took effect March 17, 2014.

Cross References. Section 8103 is referred to in section 5522 of this title.