What happens if a buyer defaults on a purchase money second trust deed?

When a buyer defaults on a purchase money second trust deed, the seller retains the right to take legal action, which is reflected in the correct choice. However, it's important to understand the context behind this option. The seller may choose to bring a court action to recover what is owed under the trust deed; however, because this is a purchase money mortgage, the seller cannot secure a deficiency judgment. This means that even if the property is lost in foreclosure or sold at auction, the seller cannot pursue the buyer for any remaining balance owed after the sale, which aligns with specific legal protections in place for primary residence financing.

In real estate transactions, a purchase money mortgage is used to finance the purchase of a property, and special rules apply to protect buyers in these situations. Thus, while the seller has some recourse through legal channels, the inability to pursue a deficiency judgment provides a safeguard for buyers against being held liable beyond the property itself.

This understanding of the ramifications and legal limitations surrounding purchase money mortgages is crucial for both buyers and sellers in navigating their rights and responsibilities during the transaction process.