Can the bank take part ofmy mom’sprofit sharing is she does a short sale on her home?
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Can the bank take part ofmy mom’sprofit sharing is she does a short sale on her home?
She is 70 years old and wants to retire but is upside down by $50,000 on her mortgage. She has $150,000 in profit sharing.
Asked on December 27, 2011 under Real Estate Law, Florida
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If your mother does a short sale on her home and closes escrow on it, there is a possibility in some states in this country that the lender may seek the deficiency on the loan as a result of the short sale. California is an exception. In California if there is a short sale and the lender takes any money from the sale, the lender is precluded for suing the seller for any deficiency.
I suggest that the short sale agreement spell out that the lender cannot sue your mother for any deficiency in the event of a successful sale. I recommend that your mother consult with a real estate attorney before the short sale closes to protect her interests.
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