Deficiency Judgments in CT: What happens to a deficiency in a short sale
September 7, 2017

A guide to understanding deficiency judgments in CT and how to avoid one.

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What happens to the deficiency in a short sale?

Connecticut is a recourse state. This means the lender that suffers a shortage in a foreclosure has the right to pursue a deficiency judgment from the borrower. They can and sometimes do sue the homeowner for the losses they have suffered and will move to collect these funds. You will have no control over this in a foreclosure.

HOWEVER - If you are involved in a short sale, you (with your short sale agents assistance) will have the opportunity to negotiate how the loan is settled and to get this deficiency forgiven.

Picture of money owed

The terms of your short sale will be spelled out in your approval letter which will not be attained until your short sale is approved. When the approval is reached, if the terms are not to your approval, you will have the ability to renegotiate these terms. As your short sale agent I always seek to have the short sale approved at terms most beneficial to you - which would be to settle the account in full.

WE ACHIEVE FULL DEBT FORGIVENESS WITH A DEFICIENCY WAIVER IN 99% OF OUR SHORT SALES.

Is this ALWAYS possible? No - not always. There are some very rare situations in which the lender(s) will not waive their right to pursue a deficiency and then it will be your decision whether to go through with the short sale or not.

A short sale is not a perfect solution 100% of the time, but it is almost always the most beneficial one. A short sale negotiated by an experienced agent is your best chance of settling the debt at your terms, preventing a foreclosure and minimizing your damages.

Minna Reid

Minna Reid is The Broker - Owner of Reid Real Estate Group. Reid Real Estate Group is a full-service Connecticut residential real estate brokerage, specializing in helping homeowners with legal and financial challenges including short sales, probate sales and tax lien complications.

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