What is my liability regarding a deficiency judgment after foreclosure?
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What is my liability regarding a deficiency judgment after foreclosure?
I own an investment condo hit by Harvey. If I let the lender foreclose can they get a deficiency judgment? We owe 136k It may be worth 110k with the damage that hasn’t been repaired. If they foreclose on the 136k and turn around and sell it to the HOA for 10, what would I be at risk for?
Asked on March 15, 2019 under Real Estate Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Your state (like most states) allows deficiency judgments. You are liable for the difference (after paying costs of sale) between the remaining principal balance and the proceeds of sale, with the following caveat: they cannot deliberately sell it for an artificially low price and charge you for the balance, but instead must make reasonable efforts to get a fair price for it. If they try to charge you more than you are willing to pay and they end up suing you, as a defense, you could raise that they did not make reasonable efforts to "mitigate damages," or reduce/minimize what they are owed; if you could show that they should have been able to sell it for more, you could reduce what you owe.
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