Short sale (real estate) - Wikipedia, the free encyclopedia

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** Short sale (real estate) **

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For short selling in the financial markets, see Short (finance).


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A *short sale* is a sale of real estate in which the proceeds from selling
the property will fall short of the balance of debts secured by liens
against the property, and the property owner cannot afford to repay the
liens' full amounts, and whereby the lien holders agree to release their
lien on the real estate and accept less than the amount owed on the
debt.^[1] Any unpaid balance owed to the creditors is known as a
deficiency.^[2]^[3] Short sale agreements do not necessarily release
borrowers from their obligations to repay any shortfalls on the loans,
unless specifically agreed to between the parties. However, in California,
legislation was passed to preclude deficiencies after a short sale is
approved. The same is true of lenders on first loans and lenders on second
loans — once the short sale is approved, no deficiencies are permitted
after the short sale. (SB 931, SB 458 - Calif. Code of Civil Procedure
§580e).

A short sale is often used as an alternative to foreclosure because it
mitigates additional fees and costs to both the creditor and borrower. Both
often result in a negative credit report against the property owner.

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Source: en.wikipedia.org/wiki/Short_sale_(real_estate)

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