Effective January 1, 2011, the 1st trust deed lender for a seller who completes a short sale in California will not be able to obtain a deficiency judgment against the seller.
In other words, if you have two loans on your property and complete a short sale, the written consent to a short sale from the 1st trust deed lender will obligate it to accept the proceeds from the sale as full payment. Any remaining amount on the loan will be discharged.
Note that this does not apply to 2nd trust deed lenders.
This is according to Senate Bill 931. Governor Schwarzenegger vetoed Senate Bill 1178, which would have extended California's anti-deficiency protection to refinance loans.
The actual text for Senate Bill 931 can be found HERE.
While this has already been happening on short sales that I've completed for my past clients, this bill now makes it a law to do so.
Will this apply to 2nd trust deed lenders in the future? Chime in and let me know what you think.
For more info, feel free to contact me or to leave a comment. Thank you!
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