Altadena Home
Effective January 1, 2011, the short sale of a dwelling (4 units of less) prohibits a deficiency judgment on a note secured by a first trust deed. C.C.P. 580e , (Senate Bill 931). *
Although this new law will be helpful in facilitating short sales, the law does not go far enough, according to the California of Association of Realtors (CAR).
CAR had urged legislators to go further and prohibit the junior lien holders from seeking a deficiency judgments as well. It is often junior lien holder(s) who interfere with a short sale by refusing to release the right to pursue a deficiency judgment.
This deficiency judgment prohibition on first deeds of trust applies to a broad category of dwellings. The new law, codified at California Code of Civil Procedure section 580e applies to:
- 1 to 4 Residential Units
- Cash-Out Refinanced loans
- Non-Owner Occupied Homes
- Second Homes
- Vacation Homes
*C.C.P. section 580e has been amended to include all lienholders, senior and junior lienholders, pursuant to SB 458 sponsored by the California Association of Realtors and which became effective on 7-15-11.
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Filed under: Legal Resources, Mortgages, Real Estate, Short Sales Tagged: | 2nd home, C.C.P. 580e, new law, no deficiency judgment in short sale on vacation home, non-owner-occupied dwellings, owner occupied homes, prohibit deficiency judgments on first mortgage, short sale
[...] Bill ["SB"] 458 extends the protection against deficiency judgments contained in Senate Bill 931 . Senate Bill 931 merely prohibited the first lien holder from pursuing a deficiency judgment [...]
[...] Bill 458 extends the protection against deficiency judgments contained in the recently passed Senate Bill 931 which became effective on January 1, 2010. Senate Bill 931 merely prohibited the first lien [...]