San Diego Real Estate and Bankruptcy Lawyer Discusses the Risk of a Deficiency Judgment After A Short Sale
Our San Diego Real Estate and Bankruptcy Attorneys are getting asked a similar question over and over – “I am about to close on a short sale and I want to know if the bank can go after me for a deficiency judgment?”
The answer is always that it depends. While there are a lot of factors that are at play, the most important document that relates to whether the bank can go after you for a deficiency is the document the bank provides to release you from your loan so you can complete the short sale.
The most recent client that came in for a review of their short sale documents had been told by her broker that there could be no deficiency judgment. In fact, this particular San Diego broker had gone so far as to claim that the broker had worked with the lender to assure that there would be no deficiency judgment. As you will see this was an out and out lie!
When the client brought her short sale paperwork into the office, one of our San Diego Bankruptcy and Real Estate Attorneys, Harold Thompson, reviewed the paperwork. Guess what! The very first thing in the paper work said this agreement in no way precludes the lender from pursuing a deficiency judgment!
Clearly the broker had lied. Why? Well we cannot get in this particular broker’s head. But our guess is that he wanted to close the sale so he could get his commission. Remember, the broker is only going to get paid if the sale goes through.
So, should the person back out? That is a tough call. If she goes through with the short sale, the bank can come after for the deficiency. If she cancels the sale, much worse things may happen though. First, she is still on the hook to the bank(s) for the entire loan and the monthly payments. Second, the buyer may sue her for backing out of the deal. Third, the unscrupulous broker may actually sue her for the commission. She really found herself in a predicament. We advised her of the ramifications of each decision.
This client illustrates exactly why people have to be careful of a San Diego Short Sale. This woman was pretty much at the point of no return and found out that the short sale was going to not really help her. In fact, had she simply let a foreclosure happen, she may have been in a better position. Now she may still be facing a bankruptcy in her future if the bank goes after her for the deficiency.
When you are talking 10s of thousand and 100s of thousands of dollars of debt, we recommend you always seek the assistance of San Diego Attorney that is familiar with both real estate law and bankruptcy law so that you fully understand the ramifications of all your decisions. As seen from the client above, it is best to do this as early in the process as possible.
The Attorneys at the Law Office of Harold D. Thompson are San Diego Real Estate and Bankruptcy Lawyers dedicated to helping with all of your real estate issues – including helping you save your home through bankruptcy. Call us TODAY at 619.615.0767 or visit one of our websites at www.ThompsonLawSD.comorhttp://www.sandiegobankruptcylawyerblog.com/ for more information.
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