Can a bank in Alabama sue a borrower in California for a deficiency after a short sale of a failed investment property?

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Can a bank in Alabama sue a borrower in California for a deficiency after a short sale of a failed investment property?

We invested in a duplex in Alabama. We live in California. The investment and
development went bad and the bank agreed to a short sale. We now have an
unsecured deficiency debt with the bank. About 130,000. Can the Alabama bank
sue us for this amount? Does California law protect us? Is it likely the bank
will come after us?

Thank you

Asked on March 20, 2016 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Since the property and the bank were in Alabama, Alabama law should apply, unless the mortgage agreement specifically provided that a different state's law applies. If AL law applies, then it allows deficiency judgments"--i.e. the bank can sue you for the remaining balance. A California court wil enforce the judgment of an AL court, so you can be sued in AL, then a CA court will help the bank collect from you.


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