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(1) As used in this section:
(a) "Deficiency" means the balance owed to a secured lender under a secured loan after completion of a short sale of the secured property.
(b) "Obligor" means the person or persons obligated to pay a secured loan.
(c) "Secured lender" means the person or persons to whom the obligation under a secured loan is owed.
(d) "Secured loan" means a loan or other credit for personal, family, or household purposes secured by a mortgage or trust deed on secured property.
(e) "Secured property" means single-family, residential real property located in the state that is the subject of a mortgage or trust deed to secure a secured loan.
(f) "Short sale" means a sale:
(i) of secured property;
(ii) by the owner of the secured property;
(iii) that results in the secured lender being paid less than the balance owing under the secured loan; and
(iv) made with the secured lender's consent and resulting in the secured lender releasing the mortgage or reconveying the trust deed on the secured property.
(2) An action to recover a deficiency is barred unless it is commenced no more than three months after the date of recording of a release of mortgage or reconveyance of trust deed with respect to secured property and resulting from a short sale of that property.
(3) Subsection (2) does not apply if the obligor or owner engaged in fraud in connection with the short sale.
(4) Subsection (2) does not apply to an agreement that:
(a) is executed:
(i) between one or more obligors under a secured loan and the secured lender; and
(ii) in connection with a short sale; and
(b) obligates an obligor to pay some or all of a deficiency.