How can I be sure my lender will not sue me for the deficiency of a short sale after they have accepted a lesser amount? 8 Answers as of July 16, 2013

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Durham Jones & Pinegar | Erven Nelson
In the short sale documents, you must insert a clause for the lender to waive (give up) any rights it may have to pursue a deficiency judgment.
Answer Applies to: Nevada
Replied: 7/16/2013
Mark Weinstein
Mark Weinstein | Mark Weinstein
Usually when a short sale lender approves a short sale they will send the seller/borrower a Short Sale Approval Letter specifically stating that the short sale lender agrees to not sue the seller/borrower for the deficiency. (The deficiency is the difference between what is owed on the property and the amount that the short sale lender will net from the short sale). You as the seller/borrower should attempt to obtain a Short Sale Approval Letter from your short sale lender(s) that specifically waivers the bank's right to pursue the deficiency as part of the negotiation with your lender(s) in connection with your agreement to sell the property. You can use your agreement to sell the property, and the fact that you have found a buyer to purchase the property, as leverage in connection with obtaining a waiver of the deficiency. This is because the short sale saves the bank time and money. The short sale means that the bank will obtain funds for the property and will not have to go thorough the process of foreclosing on the property and then marketing and selling the property. You may need legal assistance to effectively negotiate with the bank to obtain a specific waiver of the deficiency in the Short Sale Approval Letter. Sometimes if the deficiency is very large the bank may only agree to a partial waiver of the deficiency and demand a Promissory Note for the portion of the deficiency they will not agree to waive. Again, you may need legal assistance in connection with your efforts to work the best deal with the bank and to stop the bank from foreclosing on your home before you can get the short sale completed.
Answer Applies to: Georgia
Replied: 7/14/2013
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
We have to negotiate those into the terms and you will normally read in your payoff letter that they are waiving the deficiency, or they say they will pursue a deficiency but release the lien or they are silent on it which means they reserve the right to sue you for that deficiency.
Answer Applies to: New York
Replied: 7/14/2013
Law Office of D.L. Drain, P.A.
Law Office of D.L. Drain, P.A. | Diane L. Drain
That protection must be included in the short sale agreement.
Answer Applies to: Arizona
Replied: 7/14/2013
Janke Legal Consulting | Bruce C. Janke
A full release of liability should be part of the short sale agreement. Ask your broker about this, or carefully read the sale documents to ensure this release is included.
Answer Applies to: California
Replied: 7/14/2013
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