What can happen to a borrower’s other property as a result of a short sale?

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

What can happen to a borrower’s other property as a result of a short sale?

I am trying to do a “short sale” on my house in VA. If the bank accepts a contract for less than amount owed by me now, do they have any rights to my home in FL?

Asked on August 17, 2011 Florida

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

This is not a yes or no question that needs to be answered here.   Let me explain the best that I can.  In a short sale what you have to worry about is the deficiency judgment, which is the difference between the amount on the mortgage and the amount of the sale price on the house.  There is usually a negative amount which is why the bank must approve the sale (they would not care if they were getting the mortgage paid off).  What you need to make sure in a short sale is that the bank waives the deficiency, otherwise they come after you for it.  Then the question becomes, can they put a lien against your home in Florida by filing the judgment from Virginia?  The answer may in fact be yes, depending on the amount of the deficiency.  Florida has a homestead exemption against unsecured creditors. Please seek legal help with the sale and the rest.  Good luck. 

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

With respect to the short sale of your home in Virginia, assuming the loan is purchase money (meaning the orignal loan when you bought the home), most likely your state has anti-deficiency laws precluding the lender in a first secured position from suing you for any deficiency on a short sale.

If your loan on your home is a refinance, you need to make sure in a written agreement with the lending institution holding the loan that if it accepts the terms of the short sale where it will not receive 100% owed it if the short sale closes, it will not be looking at you for any deficiency.

California recently passed a laws stating that the acceptance of any lending institution of money from a short sale transaction precludes it from going after the property owner for any short fall.

If there is deficiency claim by the lender on your Virginia property's sale and a deficiency judgment is obtained against you, the lender on the Virginia home could possibly record an abstract of judgment on your Florida property.

You should consult with a Virginia attorney regarding the short sale issues of your Virginia property.

Good luck.


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.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption