Legal Question in Real Estate Law in California

Re: Short sale purchase money loan

I think so, because a short sale is not a foreclosure. This is an undesirable provision and may affect the desirability of doing the short sale vis-a-vis going through a foreclosure, where a deficiency cannot be pursued.

Re: Short sale purchase money loan

They absolutely can, and will very likely seek to pursue collection of the amount due. You signed a promissory note agreeing to repay them a certain amount of money. The short sale will not repay all of that money. What they are agreeing to in the short sale is to release their collateral (the home) without being paid in full. They generally do not release the remaining liability, unless whomever is negotiating your short sale is skilled and knows how to get them to agree to waive any further collection. In a foreclosure, they might be barred from collecting that difference (between what you owe them and what they recover on the home at foreclosure) by laws that only apply to foreclosures. You may want to have an attorney or someone who really knows how to negotiate short sales take another stab at it - most Realtors do not know how to properly negotiate a short sale.

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Re: Short sale purchase money loan

Of course, that's the law. Try to negotiate it away if you can.