A short sale in real estate occurs when the outstanding loan balance against a property is greater than what the property can be sold for at fair market value, and all lien holders agree to take less than the full amount owed and will release the lien against the property. Short sales allow both the lender and the homeowner to avoid the time and expense associated with the foreclosure process. However, there is no guarantee that a lender who accepts a short sale will release the homeowner from deficiency liability (i.e., the difference between the outstanding balance of the mortgage and the sale proceeds actually realized by the lender at closing). Moreover, depending on whether the property is a principal residence or an investment/second home, even when a lender does agree to waive deficiency liability, a homeowner may also face potential income tax liability on any debt forgiveness by the lender.
Short sales are more complicated and time consuming than an average real estate sale, making it important to retain an experienced real estate attorney to oversee and negotiate the transaction. Our firm will prepare a comprehensive package to send to the lender and will include a full financial overview as well as supporting documentation to establish your overall financial circumstances and expedite this process. Additionally, we will also negotiate directly with your lender following receipt of approval for the short sale to either eliminate deficiency liability or significantly minimize the amount of deficiency for which your lender will hold you responsible as a condition of the short sale.
Some services we provide during short sales are:
- Reviewing your loan documents to determine the nature and extent of your obligations
- Advising you of the consequences of a default under your mortgage, including potential for deficiency judgment and cancellation of debt income
- Helping you develop the best strategy for your situation
- Negotiating with lenders and drafting, review and negotiation of agreements of sale
- Attending closings and acting as closing agent
- Serving as the title insurance agent in connection with the short sale
- Preparing a property for sale