Legal Question in Real Estate Law in California
My bank has approved a short sale offer for my home to be sold for $180,000. I currently owe $290,000 on this 2 bedroom condo. The form they sent me states that they may pursue a deficiency judgement for the difference in the payment received. Is there any way I can get released from any further obligation under California real estate laws? Since the current loan is a refinanced loan, I was told that it was a recourse loan and I was liable for the taxes. Does that mean there is no way out of the potential requirement for me to have to pay the remaining $110,000 at a future date if the bank pursues it?
1 Answer from Attorneys
Since it is a refinance, you will either have to pay the bank the remaining balance, or they will write it off and then you will pay state income tax on it. It is currently exempt from federal tax.
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