No Deficiency Judgments after Short Sale due to Senate Bill 458?
There is good news for home owners who are considering short sales in California. Governor Brown signed Senate Bill 458 into law today. This new law prohibits servicers, lenders and investors from pursuing deficiency judgments against home owners of 1 to 4 unit residential property.
Deficiency judgments on similar properties were prevented by CCP 580e last year, but only on first mortgage. Senate Bill 458 extends this protection to second mortgages and other mortgages as well.
The protection of Senate Bill 458 shall not apply to home owners who commit fraud or waste or to LLC, corporations, limited partnerships, political subdivision of the state, lien secured by a bond as specified, or public utility lien. There are additional rules for notes that are cross collateralized with more than one property.
Disclaimer: This article is not intended as tax or legal advice. Those considering a short sale are advised to consult an attorney and/or tax professional regarding any potential liability. This article is not intended to solicit listings currently listed with another broker.