Happy New Year Short Sellers…

There is good news for some potential short sellers out there! As of January 1, 2011 SB 931 took effect which prevents lenders from pursuing an action to recover more from you following an approved short sale on your first lien on property of one to four units. Prior to January, lenders could in certain cases, agree to a short sale but still pursue a deficiency judgment for the loss. That opportunity has now been cut off by this piece of legislation. This could be sweet relief for short sellers who have only a first trust deed against their property to exit outside of a foreclosure or bankruptcy. (Review by competent counsel is still advised nonetheless.)

It is important to note however that SB 931 does not extend to junior liens which leaves many potential short sellers still exposed. Specifically those with a second or line of credit against their home or property could be subject to a deficiency judgment for the unsatisfied second following a short sale that otherwise complied with SB 931. Further this new law does not protect you in foreclosure.

As with all things in the mortgage arena presently, beware of proceeding outside of advice from competent counsel. It always is important to seek legal and tax advice to determine your best option both legally and from a tax perspective as there are limits on this new law as well as many other factors which impact a decision to proceed with the disposal of your property. King Law Offices focuses its practice on real estate and bankruptcy matters and offers complimentary consultations concerning your short sale strategy. Give us a call before you move forward.

530 221 2640
King Law Offices