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SB 931 Does Not Apply to Short Sales of Unimproved Real Property

I recently wrote about SB 931, California’s latest bill and a strong tool in helping distressed borrowers.  There is one additional exclusion that must be pointed out, especially since many landowners are simply that-land owners and not homeowners.

Among SB 931′s exclusions are deficiencies arising from the short sale of raw land.  SB 931 protects borrowers from deficiencies of a first deed of trust where the lender consents to a short sale of the property, but the property must be improved by one to four dwellings.  Single-family residences, duplexes, triplexes are included.  Raw land is not. 

For the borrower who owns title to a parcel that is now underwater, a short sale does not gain the protection of SB 931 (soon to be California Code of Civil Procedure Section 580e).

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