Real Estate - Short Sales
A short sale is when an owner sells a property for less than the total amount of the outstanding mortgages on the property. To do this, all mortgage holders must approve the sale because they will be getting less at closing than what they are owed to satisfy the mortgage. If you are going through the short sale process, you need to protect yourself from the lender pursing you for the difference between the money it receives at closing and the total amount due under the note. Buyers and sellers of short sale properties should retain attorneys to represent them at closing. Sellers need to protect themselves from liability and Buyers need to insure they are getting clear title. Issues are often overlooked when an attorney is not retained to investigate other looming liabilities, such as past due real estate property taxes and Homeowners’ Association dues. Many people do not realize that a closing agent does not represent either party and is not able to give legal advice regarding these issues.
Often short sales are an excellent strategy to avoid Florida foreclosure. A Florida short sale can be an alternative to falling into default on a mortgage. However, a short sale in Florida is an alternative to a foreclosure, not a solution. In most cases the credit of the borrower is often negatively affected as a result of a short sale. Additionally, a majority of lenders require the borrower to prove an economic or financial hardship resulting in the inability to pay on the balance of the debt.
Note that Florida short sale approvals do not necessarily release borrowers from their obligations to repay on their loans unless specified and agreed upon by all parties involved. The deficiency is the difference between what the lender would have received under the contract and the final property value. When the deficiency is forgiven as part of the short sale approval, the lender is prevented from later suing you for the deficiency. Therefore, it is important to consult a lawyer to make sure your rights are protected.