The law, signed on July 15, 2011, becomes effective immediately. It applies to properties, held by individuals, comprising 1-4 residential units. Senate Bill 458 accords the same restrictions on seeking a deficiency judgment as SB 931 mandated for the senior lender.
Before these two bills were enacted, a secured lender who agreed to a short sale might reserve the right to collect the shortfall from the seller. Too often, the selling homeowner was not aware until very late in the transaction whether he would emerge free of the debt or still owing the lender.
Now, for transactions covered by this legislation, consent to the short sale is a waiver of future action against the borrower.