Legal Definitions - one-form-of-action rule

The one-form-of-action rule is a legal principle, primarily found in certain states, that requires a creditor to pursue all available remedies for a single debt in a singlelawsuit. This rule is most commonly applied to debts secured by real estate, such as mortgages. Its purpose is to protect debtors from being subjected to multiple lawsuits by the same creditor for the same defaulted loan. Instead of first suing to recover the collateral and then filing a separate lawsuit to collect any remaining unpaid balance (known as a deficiency), the creditor must combine these actions into one comprehensive legal proceeding.

Examples:

Example 1: Residential Mortgage Foreclosure

• Imagine a homeowner, Sarah, takes out a mortgage loan from "First National Bank" to buy her house. The house itself serves as collateral for the loan. If Sarah experiences financial hardship and stops making her mortgage payments, she defaults on the loan.
• Under the one-form-of-action rule, First National Bank cannot first sue Sarah to simply take possession of her house (foreclose) and then, if the house sells for less than the outstanding debt, file a *separate* lawsuit to recover the remaining balance (a deficiency judgment). Instead, the bank must initiate a single lawsuit that combines both the foreclosure action to sell the property and any claim for a deficiency judgment against Sarah.

Example 2: Commercial Real Estate Loan Default

• "Tech Innovations Inc." secures a business loan from "Capital Lending Group" using its office building as collateral. Due to unforeseen market changes, Tech Innovations Inc. defaults on its loan obligations.
• The one-form-of-action rule dictates that Capital Lending Group must bring a single legal action against Tech Innovations Inc. This action would seek to foreclose on the office building to sell it and, simultaneously, request a judgment for any outstanding debt that remains after the sale of the property. The lender is prevented from pursuing the collateral in one case and then later suing for the monetary shortfall in another.

Example 3: Secured Personal Loan for a Yacht

• David purchases a luxury yacht using a loan from "Marine Finance Co.," with the yacht itself serving as collateral for the loan. If David defaults on his payments, Marine Finance Co. has the right to repossess the yacht.
• In jurisdictions adhering to the one-form-of-action rule, Marine Finance Co. must combine its efforts to seize and sell the yacht with any claim for a deficiency (the amount still owed if the yacht's sale doesn't cover the full loan balance) into one unified lawsuit. They cannot first repossess the yacht and then, months later, file a new lawsuit against David for the remaining debt.