What are the consequences of walking away from an investment property?
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What are the consequences of walking away from an investment property?
I own 2 homes – 1 is my primary home and 1 is an investment property. I cannot make anymore payments on the investment property and I want to let it go. I have some savings in the bank and wanted to know if I let it go, will the bank come after my money and primary home? In TX.
Asked on December 13, 2011 under Real Estate Law, Texas
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Good question. Under most states in this country, the anti-deficiency laws for a purchase money loan does not apply to investment property (non-residential property). Meaning, if the investment property you are writing about is foreclosed upon for less than what it is owing on the loans, you could be personally responsible for the deficiency.
Some states such as California preclude a deficiency judgment on investment property where a non-judicial foreclosure happens. Perhaps Texas may have a similar statute. I suggest that you have an appraiser appraise the property for future need if you intend on walking away from it. A short sale is an option.
I suggest that you consult with a real estate attorney about your situation for further questions.
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