Governor Brown signed Senate Bill 458 yesterday which prohibits a short sale deficiency judgment whether a lender is a senior or a junior lienholder in a short sale. The previously signed bill enacted earlier this year protected the seller from first lienholders seeking short sale deficiences in short sale transactions. Any short sale consisting of one-to-four residential units closing after the signing of Senate Bill 458 will now prohibit the deficiency.
Any short sale that closed before the signing of the bill on July 15th is subject to a possible deficiency judgment by junior lienholders.
Short sale closings that occured prior to January 2011 could be subject to possible short sale deficiency by both the senior or junior lienholder.