In a short sale Are you liable for the difference between what you owe and what it sells for?

UPDATED: Sep 30, 2022

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In a short sale Are you liable for the difference between what you owe and what it sells for?

I owe more than the house is worth
Thinking about a short sale
I’m afraid it may appraise about 50,000 less
than what I owe
Will I have to pay the difference?

Asked on March 27, 2017 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, you are liable for the difference or amount by which you do not pay off the loan, unless the bank/lender agrees to take the proceeds of the sale as payment  in full: if they agree to accept the sale as payment in full, then they cannot sue you or seek the money (having agreed that they had been paid in full). That is why it is important to negotiate with the bank first, before selling, to get them to agree (if possible) to accept the sale as satisfaction of your loan. If they do agree, get the agreement in writing.

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 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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