Legal Question in Real Estate Law in California

Re: Short Sale; Lender demanding promissory note

Whether the promissory note is secured or unsecured depemds upon whether you agree in the underlying deal to give the lender a security interest in any collateral. There is also a secondary issue as to whether the note is an additional obligation, kind of like a guarantee, or whether it extinguishes and replaces your existing obligation to the 2nd lender. Probably the former.

Whatever happens, the guy wo is owed $55K on the 2nd is going to be around and making trouble. He will no doubt become a so-called "sold out junior" when (or if?) a foreclosure wipes out his collateral, and as a then-unsecured creditor, will no longer be bound to go after the collateral first; he will be allowed to sue you and get a judgment against whatever else you have, can garnish wages, and all that unhappy stuff.

I would say perhaps shift some of the burden of making your decisions to your divorce lawyer, where at least there is a professional responsibility to you to use care and not mis-advise, and to try to get a property settlement in the divorce court that shifts as much of the burden and the future uncertainty to your husband as the law allows.