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

Deficiency rules in Pennsylvania, point by point

• When the Deficiency Judgment Act applies

  When the lender or its agent buys at the sheriff's sale

  The rule applies when the property is sold, directly or indirectly, to the judgment creditor at the execution sale for less than the judgment, interest and costs. If the lender wants to collect the rest, it must file a petition to fix fair market value in the same court case.

  42 Pa.C.S. § 8103(a)

• Six month deadline

  Within six months after the sheriff's sale

  The petition must be filed within the six month limit in 42 Pa.C.S. § 5522. If it is not, you or anyone liable on the debt can file a petition, and the court will direct the clerk to mark the judgment satisfied, released and discharged.

  42 Pa.C.S. § 8103(d)

• How the fair market value hearing works

  After the lender's petition is served on you

  If you do not file an answer, or you deny the value but bring no evidence, the court uses the value in the lender's petition. If you file an answer and bring testimony that the home was worth more, the court hears the evidence and sets the value. You are released from the debt to the extent of that value, less prior liens, costs and taxes the sale did not clear.

  42 Pa.C.S. § 8103(c)

• If you were not named or served

  When the petition is filed

  A debtor or owner who is not named in the petition, or not served with it or notice of it, is discharged from all personal liability on the debt to that lender.

  42 Pa.C.S. § 8103(b)

• You cannot sign these rights away

  Any time

  Any agreement, before or after the loan, to waive the Deficiency Judgment Act is void. A clause in your mortgage or a later paper saying otherwise does not take away this protection.

  42 Pa.C.S. § 8103(e)

• No wage garnishment

  While the lender tries to collect

  Wages in an employer's hands are exempt from attachment except for a short list of debts such as support, some residential rent judgments, student loans from PHEAA and criminal restitution. A mortgage deficiency is not on that list, though other assets such as bank accounts may still be reached.

  42 Pa.C.S. § 8127(a)

• Short sale and deed in lieu

  Before you sign

  The Deficiency Judgment Act covers sales at an execution sale, not short sales or deeds in lieu, and we found no Pennsylvania statute that sets a deficiency rule for them. The written agreement controls, so ask the lender to state in writing that it waives any remaining balance.

The short answer in Pennsylvania

Common questions in Pennsylvania