California Deficiency Judgement Lawyer
Going through any foreclosure can be a traumatic experience. Families may lose their homes or the physical location of their business. Sadly, this may not be the end of their legal and financial troubles. If the loss of real estate has been the product of a judicial foreclosure, the lender may move to collect the remainder of the debt that you owed on the land. This could occur if the sale of foreclosed property did not bring enough money to cover the remaining amount on your mortgage. These deficiency judgements can cause headaches for former property owners.
An Oakland deficiency judgement lawyer may be able to help you. They can explain how these judgements function and why a lender may be pushing for their creation in civil court. Our dedicated foreclosure attorneys are prepared to fight back against the creation of these orders and strategize ways to limit their impact on your future.
What is a Deficiency Judgement?
Deficiency judgements are legal orders that may go into effect after a foreclosure makes its way through the court. When banks and other lenders foreclose on a property and take possession, they will immediately move to resell the property on the open market. The idea here is to gain funds to cover the deficiency left on the borrower’s mortgage.
However, situations can arise where the foreclosure sale does not bring sufficient funds to cover the amount left on the old mortgage. When this occurs, the lender can ask a court to create a deficiency judgement. This judgement obligates the original borrower on the mortgage to pay the difference.
There are limits as to when a lender can ask a court to create these judgements. For example, California Code of Civil Procedure § 580d states that a deficiency judgement can only result from a judicial foreclosure. This is a foreclosure that has moved through the courts. An Oakland deficiency judgement attorney could provide more information about the purpose of these judgements and when they may come into being.
Providing Defenses Against the Creation of Deficiency Judgements
The best way to avoid the creation of a deficiency judgement is to erase the need for a lender to seek this remedy. One option that still involves the surrender of property is to enter into a deed in lieu of foreclosure agreement. In simple terms, the bank agrees to take back possession of the property for less than the value remaining on the mortgage note. This eliminates the need for a deficiency judgement as there is no longer any difference between a sale price and debt. A similar option is to create a short sale when the property moves directly to a new buyer.
If a lender has already foreclosed on a home, it may be possible to argue that a deficiency judgement is impossible under state law. One option is to argue under California’s one-action rule that the lender has already taken their opportunity to collect on the debt. According to CA Code Civ. Proc. § 726(a), lenders cannot seek a deficiency judgement after a foreclosure if they have already pursued a non-judicial foreclosure or attempted to collect on a promissory note.
Frequently Asked Questions
A deficiency judgment is a court order that holds a borrower responsible for the remaining balance of a loan after a foreclosure sale has not fully covered the outstanding debt.
A lender can pursue a deficiency judgment if the foreclosure sale proceeds are less than the remaining mortgage balance, subject to state laws and limits.
In California, deficiency judgments are generally prohibited on purchase-money loans for primary residences but may be allowed for other types of loans, including second homes, investment properties, or refinanced loans.
A purchase-money loan is a mortgage taken out specifically to buy a property. California law protects borrowers from deficiency judgments on these loans for their primary residence.
No. The lender must file a separate lawsuit to obtain a deficiency judgment after foreclosure, and the court will determine whether the borrower is liable.
Yes. Borrowers may negotiate with the lender to settle the remaining balance, request loan forgiveness, or pursue alternatives like short sales or deed-in-lieu arrangements.
Generally, lenders have up to one year from the date of the foreclosure sale to file for a deficiency judgment, but this can vary based on loan type and legal specifics.
If granted, the court allows the lender to pursue collection of the remaining balance, which may include wage garnishment, bank levies, or liens on other property.
Filing for bankruptcy can potentially halt collection efforts and discharge certain debts, depending on the type of bankruptcy and timing relative to the foreclosure and judgment.
Yes. A deficiency judgment can significantly impact credit scores and remain on a credit report for up to seven years, affecting future borrowing ability.
Yes. California law allows lenders to seek deficiency judgments on non-owner-occupied properties, refinances, or second homes, subject to court approval.
Yes. California law calculates the maximum recovery based on the difference between the unpaid loan balance and the foreclosure sale price, plus allowable costs and interest.
Yes. Borrowers can challenge the judgment in court on grounds such as improper foreclosure procedures, incorrect calculation of the debt, or violations of legal protections.
We provide legal analysis, negotiate with lenders, represent borrowers in court, challenge invalid claims, and help protect clients’ assets from aggressive collection actions.
Contact a qualified foreclosure and deficiency judgment attorney immediately. Avoid ignoring the notice, as timely action is critical to protect your rights and explore all legal options.
Let an Oakland Deficiency Judgement Attorney Protect Your Financial Future
The foreclosure on your real estate may seem to be the end of your financial problems. However, if a subsequent sale of the property fails to bring funds sufficient to cover your debts, the lender may ask a court to create a deficiency judgement. This could leave you responsible for the remaining payments.
An Oakland deficiency judgement lawyer could help contest the creation or legality of these orders. They could argue that the law does not allow their creation due to the type of loan or that the kind of property itself is exempt from these collection efforts. Contact us today so we can get started on your case.
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Reach Out to a California Real Estate Attorney Today
Disputes concerning real estate can have a significant financial impact on individuals and businesses alike. If there is a dispute and it appears that a compromise is not possible, it may be necessary to initiate litigation. This could mean participating in settlement or mediation talks or even bringing a formal lawsuit to civil court.
A California real estate lawyer may be able to help. They are prepared to take the lead in settlement talks that could help to avoid costly court cases. However, if the case does go to court, they will take every step necessary to protect your rights. Contact us now to learn more.