The great depression in 1930's made the California legislature to pass a series of estate laws that restricted all the remedies which were earlier provided to the lender in case of the property foreclosure. One of the many laws passed during that time for estate planners in California levies bar on any kind of deficiency judgments in the cases where non-judicial property foreclosure is involved. While all these might seem a little gibberish to you, so this article will clearly explain you the relationship between anti deficiency law and estate planners living trust California, that actually regularize the estate planning laws in the city.
According to civil code section the cases that involve foreclosure sale of any non-judicial real estate property done using mortgage money, will not be liable to pass any deficiency judgment. Now this is a rather complicated definition explained by estate planner living trust in California, let's take a deeper look at it in a rather very layman language.
Non-Judicial Foreclosure
Let's start with the basic of understanding what exactly the non-judicial foreclosure is, any real estate transaction done without the supervision of court is termed as non-judicial foreclosure. It usually takes place outside the courts only that too under the supervision of real estate attorney.
Purchase Money Mortgage
Mortgages where the loan proceeds are included in the purchase of the property itself are known as purchase money mortgages. In this kind of mortgage a borrower asks the lender to loan him some money to buy his/her residential property. Such kind of loan is considered as the purchase money mortgage.
Deficiency Judgment
Deficiency judgment for real estate planners in California is the foreclosure sale of the property asset, wherein the loan is secured by selling the property at a lower cost than the value of the total loan amount. For example: if a borrower has taken a loan of $400K for the property that costs around $500K in 2011, then the loan amount that he has paid till 2015 will be around $375K , whereas the value of the property has gone down to $200K and is sold at that price. In such a scenario, the borrower who fails to pay the loan amount due to any reasons loses his rights over the property in 2015 under the non-judicial foreclosure sale of the property.
This allows banks to obtain deficiency judgment against the borrower for the remaining $175K, but the civil code bars any such transaction against the borrower.
Source : articlesbase.com
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