My question is, if I allow the Condo to go into Foreclosure, can anyone come after me for the difference of sale price and what I owe?
A: If you have only one loan against the property, then Cal. Code of Civil Proc. 580b; 580d, 580e and 726(a), combine to prevent the lender or any debt collector from attempting to recover the unpaid loan balance.
However, if you are delinquent on your HOA assessments, the HOA can sue to recover any unpaid balance. This is usually not a risk, because when the new buyer comes in, the bank will make them pay off the HOA fees. But, legally, you could be sued during the time that the property sits empty.Will the IRS count it as additional income for the year?
A; No. Neither will the State Franchise Tax Board. As long as the foreclosure occurs prior to Jan 1, 2013, which is the date when the tax breaks expire (IRC 108(a)(1)(E).
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