Legal Question in Real Estate Law in California

California Anti-Deficiency Law

I had borrowed money from a family member to put down as down payment for a primary residential purchase. After closing on the property, I took out a HELOC using the purchased property as collateral. I then used the HELOC to pay off the borrowed money to the family member. By doing this, does it barred me from protection under the Anti-Deficiency law to the HELOC lender?

Regards,

J. V from San Jose


Asked on 12/26/08, 12:46 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: California Anti-Deficiency Law

The HELOC is not a purchase-money loan. Therefore, from that standpoint, you are vulnerable to a deficiency judgment. However, you may still be protected, i.e., if the HELOC lender decides to use the power of sale in a deed of trust to foreclose, as most do, rather than going for a judicial foreclosure. You might separately be liable for loan-application fraud if you failed to disclose the liability to the family member.

Read more
Answered on 12/27/08, 12:38 am


Related Questions & Answers

More Real Estate and Real Property questions and answers in California