Legal Question in Real Estate Law in California

Re: home forclosure laws in ca

In reply to your inquiry, let me offer the following:

California has anti-deficiency legislation that generally precludes a lender from suing a borrower for a deficiency after foreclosure. Although exceptions to the rule do exist, it's a safe bet that if the lender conducts a private foreclosure, i.e., has the trustee sell the property at private sale, then the borrower is not liable for any deficiency.

If a borrower does want to hold the borrower liable for the deficiency, the lender must seek a judicial foreclosure, i.e., sue the borrower in court for a judgment foreclosing the trust deed, and for a deficiency judgment. Judicial foreclosure can be costly and time consuming, so most institutional lenders conduct private foreclosures and waive the deficiency.

Be careful, though, about your use of the term "paid in full." If the lender forecloses, the borrower will still show a default and foreclosure on their credit report. The fact that the lender takes the property back does not mean that the obligations on the note and trust deed have been satisfied.

Feel free to let me know if you have questions or

comments. Now, let me give the "de rigeur" caveat:

The foregoing information is provided as an

accommodation only, and does not constitute legal

advice or a legal opinion based on a comprehensive

review of all relevant facts and documents, nor can

provision of such information be construed as

creating an attorney-client relationship.