Western Security Bank v. Beverly Hills Business Bank: The Vanishing Utility of Letters of Credit in Real Estate Transactions

This Casenote discusses the implications of the California appellate court decision of Western Security Bank v. Beverly Hills Business Bank, decided in 1994. In this decision, the court held that the anti-deficiency statute precluding a deficiency judgment after a non-judicial foreclosure barred a creditor\u27s draw on a letter of credit after a non-judicial foreclosure. The author concludes that this decision implies that a draw on a letter of credit before a non-judicial foreclosure would result in a loss of the lender\u27s real property security. The possible repercussions of this decision upon the use of letters of credit in California real estate financing are analyzed and the author proposes that the California Legislature resolve this issue by exempting letters of credit from the anti-deficiency requirements