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California Anti-Deficiency Legislation
California has passed amendments to its anti-deficiency statute. The closing of a short sale and acceptance of terms of short sale will not give rise to deficiency claims for liability that lenders may pursue. Does this mean that California borrowers are out of the woods? Hardly! A bankruptcy analysis by a Certified Bankruptcy Specialist should still be part of the agent’s due diligence in counseling the seller. Other liabilities may exist for which a Chapter 7 may be necessary. But, if property is short sold Chapter 7 relief may be out of seller’s reach as they will fail the Means Test. Avoid professional liability and make sure your sellers consult with a Certified Bankruptcy Specialist.