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Deficiency Judgments and Approval Letter Language
Remember, Brokers and Agents are not Attorneys and cannot give legal advice. Seller should consult with legal and tax counsel regarding the decision to seek a short sale and the legal language used in a short sale approval.
In addition to containing language about "releasing the lien," the approval letter should contain language regarding "not pursuing a deficiency judgment" and "releasing the borrowers from all obligations under the promissory note."
"Releasing the lien" and "releasing the borrowers from obligations under the promissory note" are two separate issues.
The following represents a sample deficiency judgment request with a bank negotiator, and proposed language to be used. The language is based on C.A.R. legal and independent Attorney recommendations.
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Hello Tracy,
The borrowers have a concern with the language of the approval letter.
Our California Association of Realtors forms tell the sellers to check with an attorney so they fully understand the implications of a short sale. The borrower had an attorney review the approval letter and he requested one item be added. Please add the following:
“Countrywide or its investors will not pursue a deficiency judgment if the short sale closes on the referenced loan, and will release the borrower from any and all obligations from the promissory note.”
Thank you for your assistance with this.
Best regards,
Arnold Agent, Realtor
Watkins Realty Group
Cell: 619-555--1234
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To view a sample fax request, click below:
