QUESTION: I am in the middle of a short sale. Our lender approved it, but only if I contribute $75,000, paid back over 20 years. That’s unacceptable, and I want to decline it and try again. How will this affect me?
ANSWER: I can certainly understand why you don’t want to drag out this process with payments for the next 20 years. But you can’t make the decision until you have all the information.
You will need to look at your contract with your real estate agent. Many of these agreements state that if your agent finds you a willing buyer, and you choose not to close, you still need to pay the agent a commission. You also will need to check the sales agreement that you signed with your buyer and see what your obligations are. Remember, your buyer has spent time and money, and you might be contractually responsible to reimburse him or her - or even be forced to go forward with the closing.
I hope that when you signed your contracts with the agent and buyer, you specified that you did not have to close if the terms of the short sale were not acceptable to you. That’s something I recommend all sellers include. Finally, you need to think about what the consequences will be with the lender. For example, if you have been sued for foreclosure and are facing the possibility of a $300,000 deficiency judgment, $75,000 might not be such a bad deal.
I would check again with your lender to see if it will renegotiate how much you owe.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program. Send him questions online at http://sunsent.nl/mR20t7 or follow him on Twitter GarySingerLaw.
The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.