Kiritsis & Associates


What is a deficiency judgement? Kiritsis Law Group 212 922 0005

May 13, 2021

By: John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

Generally, it refers to the holder of the note being able to obtain a judgement against the maker of the note, for the difference needed for a foreclosure sale to be sufficient to pay the note in full at the end of the foreclosure sale. A deficiency judgement is almost always an unsecured money judgement. The possibility of a deficiency judgement is often determined on whether the borrower obtained a recourse or a non recourse loan from the lender. Also, the permission of deficiency judgement could often depend on which legal theory of mortgages, a jurisdiction follows. A jurisdiction which has adopted a title theory would tend to disfavor deficiency judgement, because it tends to allow lenders to exercise faster non-judicial foreclosure procedures. However, jurisdictions which have adopted the lien theory are more receptive to permitting deficiency judgements, because they tend to require judicial foreclosures. Depending on the jurisdiction, a deficiency judgement, may bring a borrower’s credit score down. Also, in some cases a deficiency judgement may make a property worthless, because it may lead to lack of adequate title insurance and/or dissuade a potential buyer from buying a property that is moved in litigation.


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