Legal Question in Real Estate Law in California

Re: ShortSale Denial

Whether a lender is able to pursue a deficiency judgment depends on how the loan originated and whether the lender forecloses judicially or by a trustee�s sale.

The Purchase Money Rule prohibits a deficiency judgment after foreclosure of real property where a loan is given to the seller as part of purchase price. This also applies to a seller carry back loan.

If the 2nd lender forecloses via a trustee's sale (non-judicial foreclosure) no deficiency judgment is available. However, if the senior lender forecloses and wipes out the junior loan, the junior lender can pursue a judgment as a sold out junior lienholder.

There are many issues regarding negotiating a short sale with the lender. You should retain an attorney to assist you.

NOTICE: No attorney-client or confidential relationship is created through this communication. The information provided is of a general nature only and does not constitute legal advice or a legal opinion and requires that the poster obtain legal advice from an attorney to protect his or her rights.