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Lender Cannot Pursue Borrower For Deficiency Judgment After Short Sale

By Laurie Murphy 

Laurie Murphy

In a case decided on July 23, 2013, the court of appeal held that a lender cannot pursue a borrower for a deficiency judgment after a short sale.

When a borrower defaulted on her payment obligations under a purchase money note secured by a deed of trust on her residential property, the lender served a notice of default.  The borrower was able to negotiate a short sale with a third party prior to the foreclosure sale but the agreed to price was less than the amount outstanding on the loan.  The lender consented to the short sale with an agreement that they were only releasing the security, not any deficiency.  The borrower then sued the lender after it attempted to collect on the amount of the deficiency it claimed she still owed. 

The trial court sided with the lender.  On appeal by the borrower the court of appeal held that any lender who either forecloses or agrees to a short sale of residential property secured by a deed of trust cannot pursue the borrower for any deficiency after either a foreclosure sale or a short sale.  Coker v. JP Morgan Chase.

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New Requirement in Commercial Leases Effective July 1

By Laurie Murphy

Laurie Murphy

As of July 1,2013, all commercial leases must include a provision indicating whether the leased premises have been inspected by a certified accessibility specialist and if so whether the premises meet all the federal and state accessibility requirements. 

The provision is Civil Code section 1938. This statute compliments a larger statutory scheme enacted in 2012 (Civil Code sections 55.51-.55.57) designed to curb predatory lawsuits by Plaintiffs claiming damages for failing to maintain premises compliant with state and federal accessibility laws.  I had one such case of a client recently where the plaintiff had brought over 50 such lawsuits.
 
Because the landlord is strictly liable for statutory damages so long as a non-compliant conditions exist, landlords nearly always pay the statutory amount which makes them easy targets for lawyers who file these cases most of whom have a stable of professional plaintiffs who are disabled and who troll the area looking for establishments to sue.  The inspection by such a specialist can limit damages sought and/or provide the basis for a stay in litigation.  Commercial landlords are well advised to familiarize themselves with these new laws. 
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