Legal Question in Real Estate Law in California

Re: San Diego property short sale question

You are confusing two different concepts. Anti-deficiency laws (what you refer to as non-recourse) have nothing to do with short sales. Anti-deficiency protection only exists in the context of a lender foreclosure of your home. In the case of a short sale, the lender is agreeing to release their collateral (your home) from the loan in return for payment of part of what you owe them. Problem is, you signed a promissory note for the whole thing, and just because the house is sold, the enforceability of the original promissory note is in no way impaired. Out of an abundance of caution (and often, to give you new terms), the bank will have you sign a new promissory note. In other words, regardless of whether you sign a new promissory note or not, in a short sale you are liable for the "short," unless they expressly (in writing) accept the short pay as satisfaction in full of your entire loan. Few banks are waiving their right to collect the short in short sales these days, and recently they have started collection efforts more aggressively on the short.

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Re: San Diego property short sale question

I don't disagree with Mr. Gibbs' answer, but let me say it a different way. The anti-deficiency laws apply to notes secured by residential real property. The promissory note you're asking about apparently will NOT be secured by residential real property; in fact, it may not be collateralized at all. In that case, this new note will be full recourse and the anti-deficiency laws will not apply in any way.

Re: San Diego property short sale question

Agressively negotiate a waiver on a deficiency sale with the bank. Contact me directly.