LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED

By
Real Estate Broker/Owner with Independent Real Estate Broker DRE#00972295

LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED

 

 

On Friday July 15, 2011, Governor Brown signed into law a California Associations of Realtor’s sponsored bill, Senate Bill 458.

 

Senate Bill 458 prevents lenders, who have agreed to a short sale, from pursuing a property owner for any deficiency created after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lien holder.

 

 

Effective immediately for transactions closing escrow from this day forward, both senior and junior lien holders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.

 

 

Although, a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.  A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

 

Exceptions to the new law include a lender seeking damages for a borrower's fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

 

This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.

 

Disclaimer: This is not legal advise and is solely for informational purposes.  I am a California Real Estate Broker specializing in real estate Short Sales, Probate Sales and Regular/Standard sales in the Los Angeles County area.

 

 

Aida Pinto

Real Estate Broker

Realtor since 1987

(562) 916-3237

 

Websites:

www.PintoRealtyInc.com/

www.ShortSaleDiva.org/

www.ReoLicensedSpecialist.com/

 

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Posted by

Aida Pinto (562) 884-6196
Los Angeles County
Real Estate Broker



The Real Estate Maven : https://www.facebook.com/aRealEstateMaven?ref=hl

 

Short Sale, Probate and standard real estate expert.

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Tags:
no deficiency judgment
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Rainer
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Daniel H. Fisher
www.FisherHermanRealty.com (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC

as a former Californian, I heard it said that "As California goes, so goes the nation".  This legislation would be a welcome national trend!

Jul 16, 2011 03:51 AM #1
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Bryan Robertson
Los Altos, CA

This was a huge bill to get passed and it will make the burden on former homeowners significantly less.  The ability of banks to go back after sellers was a looming cloud over the future of the real estate market.

Jul 16, 2011 05:07 AM #2
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Aida Pinto

Real Estate Broker (562) 884-6196
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