Can the lender come after you for the rest? Deficiency judgments in California

Deficiency rules in California, point by point

• Trustee sale: no deficiency on that note

  After a nonjudicial trustee sale

  No deficiency may be owed or collected on a note secured by a deed of trust or mortgage when the home was sold by the trustee or mortgagee under the power of sale. This does not change what a separate guarantor may owe.

  Cal. Code Civ. Proc. § 580d

• Purchase money loans

  Any foreclosure or sale

  No deficiency is allowed on a loan used to buy a dwelling for not more than four families that you live in at least in part. A refinance made on or after January 1, 2013 keeps this protection, except for any new cash or principal not used to pay the purchase money loan or its costs.

  Cal. Code Civ. Proc. § 580b(a)(3), (b)

• Court foreclosure: 3 months and a fair value hearing

  Within 3 months of the sale

  If a deficiency is not waived or barred, the lender must apply within 3 months of the sale. At a hearing, with at least 15 days notice, either side can offer evidence of the home's fair value, and either side can ask for a probate referee appraisal. The judgment is the debt minus fair value, and never more than the debt minus the sale price.

  Cal. Code Civ. Proc. § 726(b)

• Other suits after a power of sale

  Within 3 months of the sale

  Where a money judgment for the balance can still be sought after a power of sale, the complaint must state the debt, sale price and fair market value, and the case must be filed within 3 months of the sale. The judgment is limited to the debt minus fair market value.

  Cal. Code Civ. Proc. § 580a

• Short sales of 1 to 4 unit homes

  When title passes and the lender gets the proceeds

  If the lender gives written consent to a short sale of a dwelling of not more than four units, title is recorded to the buyer, and the proceeds are paid as agreed, no deficiency may be collected on that note. The lender cannot charge you extra for consent, and any waiver of this rule is void. Fraud or waste, and borrowers that are companies, are not covered.

  Cal. Code Civ. Proc. § 580e

• Deed in lieu

  Before you sign

  We found no California statute that cancels the balance after a deed in lieu the way § 580e does for short sales. The written agreement controls, so ask for a clear release of any remaining debt.

• How a judgment is collected

  10 years, with limited renewals

  A money judgment can be enforced for 10 years and can be renewed, but not within 5 years of a prior renewal. A personal debt judgment under $50,000 can be renewed only once. Wage garnishment is limited to the lesser of 20 percent of disposable earnings or 40 percent of the amount above 48 times the minimum wage.

  Cal. Code Civ. Proc. §§ 683.020, 683.110, 706.050

The short answer in California

Common questions in California