What are the consequences of walking away from an investment property?

UPDATED: Dec 13, 2011

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What are the consequences of walking away from an investment property?

I own 2 homes – 1 is my primary home and 1 is an investment property. I cannot make anymore payments on the investment property and I want to let it go. I have some savings in the bank and wanted to know if I let it go, will the bank come after my money and primary home? In TX.

Asked on December 13, 2011 under Real Estate Law, Texas


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Good question. Under most states in this country, the anti-deficiency laws for a purchase money loan does not apply to investment property (non-residential property). Meaning, if the investment property you are writing about is foreclosed upon for less than what it is owing on the loans, you could be personally responsible for the deficiency.

Some states such as California preclude a deficiency judgment on investment property where a non-judicial foreclosure happens. Perhaps Texas may have a similar statute. I suggest that you have an appraiser appraise the property for future need if you intend on walking away from it. A short sale is an option.

I suggest that you consult with a real estate attorney about your situation for further questions.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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