Short Sales And Deficiency Judgement
A deficiency judgement is typical of Las Vegas Short Sales of Foreclosures, where the lender files in court to require the borrower pay them the difference between what they owed and what the property sold for.
The deficit (deficiency) amount for many underwater properties in Las Vegas can be significant, especially in neighborhoods where home values have dropped more than 60% from 5 years ago.
In addition to the difference in loan amount, the deficiency judgement may also include all of the legal fees and other associated costs that were incurred while the property was being liquidated.
For Example:
| Original Loan Amount: | $200,000 |
| Price Home Sold For: | – $125,000 |
| Deficiency Amount: | = $75,000 |
If the state the property is located in the state of Nevada, the loan is likely a recourse loan, which means the bank experiencing the deficiency has the right to pursue that borrower after the property is sold.
Banks in Nevada have 6 months to file suit for a deficiency judgment after foreclosure, or in the case of a short sale where the deficiency rights have been retained.
For loans generated after Oct 1 2009, banks will not have the ability to pursue a deficiency if the home was purchased and occupied as a personal residence.
However, in many cases, a good REALTOR® can frequently get that deficiency waived for you, even if state law does not automatically protect you.
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