Legal Question in Business Law in California

We own a building purchased in 2005 with 10% down using an SBA 504 loan. The property is now being sold as a short sale and we will be left with a deficiency of approxmately $350,000 . The lender has agreed to a short sale. We have signed the normal personal guarantees with the sba Please let us know if we have any future liability for the deficiency amount?

Thank you


Asked on 3/20/12, 4:15 pm

1 Answer from Attorneys
Anthony Roach Law Office of Anthony A. Roach

It depends on some more facts. As the borrower you would not be liable to the lender agreeing to the short sale, if the loan was for a dwelling of not more than 4 units, under a new law embodied in Code of Civil Procedure section 580e. http://law.onecle.com/california/civil-procedure/580e.html

It's not clear from your post what kind of building this is, such as a dwelling with four units or less, or a completely commercial building.

There is also an issue as to the guarantee. Normal personal guarantees cannot be used to circumvent California's antideficiency legislation. But that doctrine has never been applied to "true guarantors." So it would help to have more facts about who the loan was for, and who signed the guarantee.

I suggest that you speak to a competent real estate attorney familiar with this area of the law, as soon as possible.

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Answered on 3/22/12, 4:14 pm


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