Avoid Deficiency Judgement, From Short Sales With Full Recourse Loan, In California

October 28, 2010

REAL ESTATE INVESTING

This legal chart is intended to provide a quick and easy guide to determine when a borrower may be liable for a deficiency judgment in California.  There are other factors and conditions which may change the result (such as fraud by the borrower and bad faith waste).  For more details see the legal article, Deficiency Judgments and California Law.  Find out the rules on deficiency judgments of non-recourse loans in California short sales, and read about the newest Short Sale law that may stop lender  recourse for deficiency. Readers who require specific advice should consult an attorney.

* If a senior lienholder forecloses on the property, the “wiped out” junior lienholder who no longer has a secured note may not sue on this promissory note for those categories indicated in the chart.

Residential 1 – 4 units, Owner Intends to Occupy a Unit in the Secured Real Property

Non-owner Occupied or Other Real Property

Lender Purchase Money Loan
(non-recourse loan)

Seller Financed Purchase Money Loan
(non-recourse loan)

Refinance (Non-Purchase Money Loan)
(recourse loan)

Lender Purchase Money Loan
(recourse loan)

Seller Financed Purchase Money Loan
(non-recourse loan)

Refinance (Non-Purchase Money Loan)
(recourse loan)

NO
deficiency judgment if senior or junior lienholder*

Cal. Code Civ. Proc. § 580b

NO
deficiency judgment if senior or junior lienholder*

Cal. Code Civ. Proc. § 580b

YES
deficiency judgment if judicial foreclosure

NO
deficiency judgment if trustee’s sale foreclosure

Cal. Code Civ. Proc. § 580d

YES
deficiency judgment if judicial foreclosure

NO
deficiency judgment if trustee’s sale foreclosure

Cal. Code Civ. Proc. § 580d

NO
deficiency judgment if senior or junior lienholder*

Cal. Code Civ. Proc.
§ 580b

YES
deficiency judgment if judicial foreclosure

NO
deficiency judgment if trustee’s sale foreclosure

Cal. Code Civ. Proc. § 580d

Short-sale deficiency judgment California

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