A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts. The lien holders then agree to release their lien on the real estate and accept less than the amount owed on the debt. In the mortgage space, this means the homeowner (the borrower) cannot recover the amount of unpaid principal he owes the lender by selling the property, and the lender concedes to taking the loss. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties. However, in California, legislation was passed to preclude deficiencies after a short sales is approved. The same is true of lenders on first loans and lenders on second loans — once the short sale is approved; no deficiencies are permitted after the short sale.