How do I get rid of judgement that is on a short sale property?

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How do I get rid of judgement that is on a short sale property?

I am buying a house on a short sale, the existing bank 1st and2nd lenders have agreed to reduce the payoff and accept my offer. I am fully approved and ready to close but now there is a 3rd lien on the property from a judgement (on the seller) for $29,000 that has to be paid. There is also $8000 in back HOA dues to be paid. We are taking care of the dues through all the parties chipping in. My problem is the judgement. There is no money for them to get paid. The seller owns 2 other properties and we have found out that she has 2 other judgements – one for $15,600 and the other for $3,600 – neither of which have shown up on the title report for the subject property yet. What are my options to make this judgement go away? I am ready willing and able to close now. The 1stTD and 2nd TD banks gave us until 02/07 to close and now we have an extension until 03/07. Can you suggest how I take care of this and close my escrow? Optional Information:  Trying to negotiate with seller to have judgement moved to another property. Also escrow is trying to contact the attorney on the judgement to see if they will move it to another property.

Asked on February 16, 2011 under Real Estate Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Listen, I am not sure that you can.  If the house were being foreclosed then subordinate judgement s would not survive the foreclosure but it is a short sale and the judgement creditor does not have to transfer the judgement or sign a satisfaction unless it is satisfied.  What you could do is negotiate the judgement on behalf of the seller.  Really a creditor who has a judgement against a seller who has multiple judgements may be happy to get any amount on the dollar and write off the rest of the judgement as bad debt.  Try it.  If you really want the property it may be the way to go.  Good luck to you.


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