Legal Question in Real Estate Law in California

Short Sale of Home - Waiver of CA Civil Code 1542

Recently I received an acceptance letter from my lender for my short sale asking me to waive my rights of California Civil Code Section 1542, what does this mean?

Asked on 7/24/08, 12:20 pm

1 Answer from Attorneys

David Gibbs The Gibbs Law Firm, APC
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Re: Short Sale of Home - Waiver of CA Civil Code 1542

A waiver of California Civil Code Sec. 1542 is a standard provision in many settlement agreements. Not to say that you should agree to it, but it is frequently used by attorneys when a compromise is reached between parties. In effect, California Civil Code Section 1542 provides that a release of claims (think settlement agreement) does not extend to claims not known at the time it is entered into. A waiver of Sec. 1542, as your lender is requesting, means that you are in fact waiving not only any claims you may know you have against your lender, but you are also waiving any claims which you may not know about at this time. It effectively closes the door to your suing your lender at any time in the future. They believe that because they are allowing you to pay less than what is owed, in return for that you are going to waive any and all claims you may now, or in the future become aware of as to this lender. You need to decide if this is a fair trade, but I can tell you that they will not accept your short sale offer without this waiver.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.

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7/24/08, 1:30 pm

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