We bought another primary residence, and would like to short sale our previous primary residence?

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We bought another primary residence, and would like to short sale our previous primary residence?

So we bought a new primary residence closer to our jobs, and were planning on keeping our previous primary residence as a rental until the market turns around. But now my wife is in fear of losing her job, and we can’t afford to keep our previous primary residence, so we want to short sale on our previous house. (which is further away from our jobs). IF I try to do this and the bank is not willing and the house goes into foreclosure, am i risking any type of Lein’s being placed on my Primary Residence?? I’m okay with the credit hit, i just want to make sure my Primary residence is protected!

Asked on July 5, 2009 under Real Estate Law, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Possibly the bank will accept a deed in lieu of foreclosure?  I've provided you with a link that explains this further and compares a deed in lieu to a short sale - including the tax consequences.  

 http://www.nolopress.com/article.cfm/ObjectID/A80A6DCE-1F1E-49E3-8AB35679DB63ADF9/catID/7e846209-6969-42d1-8b1617c517d8e62e/213/317/ART/ 

Hope this helps.

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

The problem is, if you have to let the first property go into foreclosure, if it sells for less than the balance plus the foreclosure costs, the lender can get a deficiency judgment, which would become a lien on your primary residence.


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