Short Sale Process
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What Is a Short Sale?
In real estate, a short sale is when the home is sold for a lower monetary amount that what the property owner owes in mortgage debt. Short sales usually occur as a way to avoid foreclosure. They usually happen when the seller is in default on their mortgage payments and has already received notice of an upcoming foreclosure.
Short sales can have some benefits for the homeowner, such as avoiding some of the foreclosure costs and fees. On the other hand, short sales can also have negative effects on the person’s credit.
What Does the Short Sale Process Involve?
The short sale process may involve various steps such as:
- Identification of "problematic" properties
- Notice of upcoming foreclosure related to mortgage default
- Negotiating terms with potential buyers
- Finalizing sales
Lastly, deficiency judgment hearings may be needed in some cases. Deficiency refers to the unpaid mortgage balance that is owed to the lenders. Some states allow the lender to sue and recover these unpaid amounts through deficiency judgments. Not all states allow this, as some jurisdictions enforce anti-deficiency laws that limit the amount recoverable.
Are There Any Legal Issues to Look out for in a Short Sale?
Short sale situations can sometimes give rise to other legal issues. A common example is where a short sale process uncovers outstanding tax debt and other unpaid property expenses. This can put an encumbrance on the title and may delay the sale. In such cases, additional legal proceedings may be needed to deal with such issues.
Also, both buyers and sellers should be wary of short sale fraud schemes. For instance, a seller may list fraudulent information regarding a home, which can be considered a violation. Or, a buyer may employ fraudulent techniques in attempts to gain a better buying price. Short sale fraud is common due to the fact that the seller is often under pressure to complete a sale. Thus, it may be necessary to obtain help from a real estate professional or from a lawyer.
Do I Need a Lawyer for Help with a Short Sale?
Short sales can involve many different legal issues and real estate matters. You may wish to hire a lawyer if you need help conducting a short sale. Your attorney can help inform you of your options and can also address and legal matters that might arise. If you need to file a claim in court, your lawyer can help you with that as well.
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Last Modified: 08-20-2014 12:03 PM PDT
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