Patricia's home in Monmouth County, New Jersey was sold at a sheriff's sale for $280,000. Her outstanding mortgage balance was $310,000. After the 10-day upset period expires without challenge and the sheriff's deed is issued, what is the term for the lender's potential claim against Patricia for the remaining $30,000?
Correct Answer
B) Deficiency judgment
When the proceeds from a sheriff's sale are insufficient to satisfy the full mortgage debt, the lender may seek a deficiency judgment against the borrower for the remaining balance. In Patricia's case, the $30,000 difference ($310,000 owed minus $280,000 sale proceeds) is the deficiency. In New Jersey, a lender must apply for a deficiency judgment within three months after the sheriff's sale. The court will determine the deficiency based on the greater of the fair market value of the property or the sale price.
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