How can I be sure my lender will not sue me for the deficiency of a short sale after they have accepted a lesser amount?

In the short sale documents, you must insert a clause for the lender to waive (give up) any rights it may have to pursue a deficiency judgment.

Usually when a short sale lender approves a short sale they will send the seller/borrower a Short Sale Approval Letter specifically stating that the short sale lender agrees to not sue the seller/borrower for the deficiency. (The deficiency is the difference between what is owed on the property and the amount that the short sale lender will net from the short sale). You as the seller/borrower should attempt to obtain a Short Sale Approval Letter from your short sale lender(s) that specifically waivers the bank's right to pursue the deficiency as part of the negotiation with your lender(s) in connection with your agreement to sell the property. You can use your agreement to sell the property, and the fact that you have found a buyer to purchase the property, as leverage in connection with obtaining a waiver of the deficiency. This is because the short sale saves the bank time and money. The short sale means that the bank will obtain funds for the property and will not have to go thorough the process of foreclosing on the property and then marketing and selling the property. You may need legal assistance to effectively negotiate with the bank to obtain a specific waiver of the deficiency in the Short Sale Approval Letter. Sometimes if the deficiency is very large the bank may only agree to a partial waiver of the deficiency and demand a Promissory Note for the portion of the deficiency they will not agree to waive. Again, you may need legal assistance in connection with your efforts to work the best deal with the bank and to stop the bank from foreclosing on your home before you can get the short sale completed.

That protection must be included in the short sale agreement.

A lender cannot sue you for a deficiency after a short sale anymore. Both the law in California and their short sale approval letter in essence says so.

A full release of liability should be part of the short sale agreement. Ask your broker about this, or carefully read the sale documents to ensure this release is included.

You should have language in your short sale agreement that protects you from any deficiency amounts. Make sure an attorney reviews the agreement.