In a short sale Are you liable for the difference between what you owe and what it sells for?

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In a short sale Are you liable for the difference between what you owe and what it sells for?

I owe more than the house is worth
Thinking about a short sale
I’m afraid it may appraise about 50,000 less
than what I owe
Will I have to pay the difference?

Asked on March 27, 2017 under Real Estate Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Yes, you are liable for the difference or amount by which you do not pay off the loan, unless the bank/lender agrees to take the proceeds of the sale as payment  in full: if they agree to accept the sale as payment in full, then they cannot sue you or seek the money (having agreed that they had been paid in full). That is why it is important to negotiate with the bank first, before selling, to get them to agree (if possible) to accept the sale as satisfaction of your loan. If they do agree, get the agreement in writing.


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