I researched the deficiency issue on short sales specifically this morning. I’m sure the reason everyone thinks it’s 7 years is because of UCA 78B-2-207 which states that all actions or defenses founded upon title to real estate have a 7 year statute of limitations from the date on which the act is based. However, with a short-sale, the title is no longer at issue. The lender has officially released their claim on the title at the time of the short-sale. That puts you back to a regular collection action. In Utah the debt collection statute of limitations is 6 years for a written contract or promissory note. The kicker for this however is UCA 78B-2-113 (Effect of payment, acknowledgment, or promise to pay). This says that the statute of limitations date begins at any of the following:
The date the debt arose;
The date a written acknowledgment of the debt or a promise to pay is made by the debtor; or
The date a payment is made by the debtor.
Any one of those events will re-start the clock for 6 years. It could easily be argued that the letter they have you sign at closing would initiate (b) above and start the 6 year clock.
Please consult your own legal counsel regarding matters involving litigation issues. We are not Attorneys.
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