Espinoza v. Bank of America, N.A.
United States District Court for the Southern District of California
823 F. Supp. 2d 1053 (2011)
Espinoza (plaintiff) defaulted on a Bank of America (defendant)-held deed of trust; Bank of America began judicial foreclosure, but Espinoza instead completed a lender-approved short sale in March 2010. The reconveyance deed released only the lien, not the underlying debt, and Bank of America demanded repayment of the remaining balance. Espinoza sued, arguing California's anti-deficiency statute barred collecting the deficiency; that statute wasn't amended to explicitly cover short sales until January 1, 2011, after this short sale had already closed. Bank of America removed to federal court and moved to dismiss.
Whether anti-deficiency statutes apply to lender-approved short sales.