Anti-deficiency statute
A state law that limits or bans lenders from suing borrowers for the shortfall after a foreclosure sale. Rules vary and often depend on the loan type and property type.
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Part 1 of 4
Why a seller cares
In some states a lender cannot chase you for the shortfall after a foreclosure or a short sale on your home. Whether yours is one of them changes what a short sale or a deed in lieu actually costs.
Part 2 of 4
A simple example
You owe $260,000 on a home that sells at foreclosure for $220,000. In a state with an anti-deficiency rule for purchase loans, the $40,000 shortfall ends there.
| The state and the loan | What happens to the $40,000 |
|---|---|
| Anti-deficiency state, original purchase loan | The lender cannot sue for it |
| Anti-deficiency state, a refinance with cash out | Often not protected; the lender can pursue it |
| No such statute | A deficiency judgment is possible |
The rule is state by state and loan by loan, and it decides whether the loss ends with the house.
Part 3 of 4
What people get wrong
That losing the house always clears the debt. Only in some states, and often only for the loan that bought it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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