## Facts

- A seller conveyed real property to a corporate buyer but did not receive the full purchase price at closing.
- The buyer paid part of the price using loan proceeds from a third-party lender, secured by a purchase-money deed of trust recorded against the property.
- For the remaining portion of the price, the seller accepted the buyer’s unsecured promissory notes.
- The buyer defaulted on both the lender’s loan and the seller’s unsecured notes.
- The lender foreclosed under its deed of trust.
- The seller sought declaratory relief that the seller’s vendor’s lien for the unpaid purchase price was senior to the lender’s purchase-money deed of trust; the trial court ruled for the seller.
- The lender appealed.

## Issues

1. When a seller’s equitable vendor’s lien and a third-party purchase-money deed of trust arise from the same sale transaction, which lien has priority under California law?
2. How should Civil Code § 2898(a) (priority for purchase-money security) be reconciled with Civil Code §§ 3046 and 3048 (vendor’s lien and its enforceability against those claiming under the debtor)?

## Decision

- The Court of Appeal reversed the judgment for the seller.
- The court held the purchase-money deed of trust had priority over the seller’s vendor’s lien.
- The court directed entry of judgment recognizing the lender’s purchase-money deed of trust as senior.

## Legal Principles

- Under Cal. Civ. Code § 2898(a), a mortgage or deed of trust given for the price of real property at the time of conveyance has priority over other liens created against the purchaser, subject to recording laws.
- A vendor’s lien under Cal. Civ. Code § 3046 is an equitable lien securing the unpaid purchase price left unsecured other than by the buyer’s personal obligation.
- Although Cal. Civ. Code § 3048 makes a vendor’s lien enforceable against those claiming under the debtor (absent good-faith purchase or encumbrance for value), it yields where a specific statutory priority grants seniority to a purchase-money deed of trust in the same transaction.
- Statutory conflict is resolved by applying the more specific priority rule for purchase-money security interests and by avoiding results that would defeat reliance on recorded acquisition financing.

## Conclusion

The court held that, in a simultaneous purchase transaction, a third-party lender’s purchase-money deed of trust is senior to the seller’s equitable vendor’s lien for the unpaid, unsecured portion of the purchase price, and it reversed the trial court’s contrary priority determination.


Brock v. First S. Sav. Ass'n (In Receivership), 8 Cal. App. 4th 661 (Cal. Ct. App. 1992)