Effective January 1, 2011, SB 931 adds Section 580(e) to the California Code of Civil Procedure. This new law is great news for most borrowers and sellers of real property involved in a short sale. The new California law provides that when the seller of a one to four unit residential property sells the property at a short sale, the first trust deed holder who consents in writing to the short sale cannot seek a deficiency judgment.
A deficiency judgment is a judgment against the borrower for the difference between the unpaid balance of the secured debt and the amount...