If I sell a rental property in a short sale does the new California law (SB931) exempt me from a deficiency judgment as it will for primary residence?

Asked by Teufelhunden, Coronado, CA Thu Dec 2, 2010

Does SB 931 apply to rental properties as it does to primary residences after Jan 1, 2011? We have an offer for our rental property (short sale) that Chase wants to close by Dec 29, 2010 and the letter says that we will still be responsible for deficiency balances. Sounds like they want to have the option to collect from us and are trying to beat the deadline before SB 931 goes into effect.

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7
Dp2, , Virginia
Sat Dec 4, 2010
Interesting, nick TH. Deutsche?

I wonder if less banks will opt for short-sales when that law goes into effect.
0 votes
Cameron Novak, Agent, Corona, CA
Sat Dec 4, 2010
Follow up. didn't notice your date. After Jan 1st, the new SB 931 will provide, the bill "is not limited to consumer transactions, nor is it limited to situations in which the dwelling is the residence of the obligor." I've posted a cite... more info there.
0 votes
Cameron Novak, Agent, Corona, CA
Sat Dec 4, 2010
Funny to see all these agents avoiding the question. Everyone may want to dance around an answer on this, but you don't need to worry about the answer to this if you have an expert negotiator handling the settlement agreement with the lien holder. A successful negotiation will result in a letter from the lien holder releasing you from further action.

To answer your question... the fact that this is a rental places you in a bad position if there remains a deficit after the SS and your broker hasn't negotiated a full release of responsibility.

Good Luck.
0 votes
Jane Grant, Agent, Aguanga, CA
Thu Dec 2, 2010
Teufelhunden; Investment properties differ from Owner Occupant residences, but It really depends on what your loan documents say, if you refinanced or not and what you negotiate in your short sale...You need Attorney representation in this situation. Real Estate agents are not attorneys and cannot give legal advice!
~~~~~
0 votes
Joan Wilson, Agent, San Diego, CA
Thu Dec 2, 2010
You really do need to talk with an attorney and an accountant. My understanding is that...if this is not your primary residence, you will pay the judgement. Good luck,
Joan Wilson
Web Reference:  http://hafahamp.net
0 votes
Kari Shea, Agent, San Diego, CA
Thu Dec 2, 2010
Hi there,

Despite the multiple scenarios you may receive from agents here, Terri has it right.

You may also want to consult a CPA with real estate experience to look at any tax consequences.

Best of luck to you,

Mark & Kari Shea
Shea Real Estate
Serving Greater San Diego
0 votes
Terri Vellios, Agent, Campbell, CA
Thu Dec 2, 2010
I would check with a real estate attorney. If you sign the deficiency letter you now have something in writing. The law will determine if it is legal.
Web Reference:  http://terrivellios.com
0 votes
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