One of the most common misconceptions that most people have is; "If I short sale my house-that's it, I have nothing else to worry about."
Unfortunately, this is not always the truth. Unless the lender specifically gives you a waiver of liability - meaning they say "with this short sale we are done" then you may still owe them money.
The lender has the right to come after the borrower for up to 5 years after the short sale to collect what is owed to them. You must think "how is this possible?"
Under Florida Law, the statute of limitations allows the lender to pursue any monies for up to 5 years. Simply put - it's the lender's legal right to do so. How can you avoid this? You could make sure an attorney or other real estate professional negotiates the deficiency prior to closing, which means you get that letter that says "We, the lender, will not come after you" or you can settle it out after the fact or file bankruptcy to avoid a lawsuit. Further, you may have tax liability.
It is important to know your legal rights. At the Alvarez law Firm we help you understand the law.
The Alvarez Law Firm