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Real property

deficiency balance on foreclosure

A deficiency balance on foreclosure—also known as a mortgage deficiency or deficiency balance—occurs when a home or property is foreclosed on and the sale proceeds are not sufficient to pay off the mortgage. The remaining balance owed on the mortgage is a deficiency balance or mortgage deficiency.

Laws vary from state to state and a state’s laws and the terms of the mortgage may determine whether the mortgage lender (bank or mortgagee) will pursue a mortgagor who defaulted on a mortgage for any deficiency balance.

In South Dakota, if a property is foreclosed upon and the sale does not generate enough funds to cover the outstanding mortgage balance, the lender may seek a deficiency judgment against the borrower for the remaining amount. This is known as a deficiency balance. South Dakota law allows lenders to pursue deficiency judgments following both judicial and non-judicial foreclosures. However, the pursuit of a deficiency judgment must adhere to certain procedural requirements. For instance, after a non-judicial foreclosure sale, the lender must file a lawsuit to obtain a deficiency judgment within 30 days of the sale. The amount of the deficiency judgment may be limited to the difference between the mortgage debt and the fair market value of the property at the time of the sale, rather than the sale price. Borrowers should consult with an attorney to understand their rights and potential liabilities in the event of a foreclosure in South Dakota.

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Real property

deficiency balance on foreclosure

Individual & Family Legal Plan

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South-Dakota State Code

South-Dakota State Code

Real property

deficiency balance on foreclosure

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