Arizona Real Estate License Practice Exam

A deficiency judgment is specifically designed for situations where a lender wants to recover the remaining balance owed on a loan after a mortgage foreclosure. In a foreclosure, if the sale of the property does not cover the outstanding loan amount, the lender can seek a deficiency judgment against the borrower for the difference. This is often necessary, as the lender may incur substantial losses if the property sells for less than the mortgage amount.

In contrast, other types of judgments do not serve the same purpose. A judgment lien, for example, is a court's decision that attaches to a property to secure the repayment of a monetary obligation, but it does not inherently allow for recovery of a deficiency after foreclosure. Monetary judgments generally refer to a court's decision that requires one party to pay a specific amount of money, but they do not directly address post-foreclosure deficiency amounts. Equitable judgments often involve non-monetary remedies, such as injunctions or specific performance, rather than assessments of what is owed after a financial shortfall.

Thus, a deficiency judgment is the only type of judgment that specifically addresses the lender's right to recover losses after the foreclosure sale has occurred.