When a homeowner faces foreclosure, the lending institution who holds the lien on the home may choose to allow the owner to sell the home for less than what is currently owed on the house. If you're in the market for a new home, a short sale can be a great way to purchase a house at a bargain price. However, they can pose some legal pitfalls if you don't know what to watch out for. Following are some of the more common pitfalls associated with short sales.
Banks May Not Disclose
More often than not, homes are sold "as is" in a short sale, which means that the bank will not make any repairs on the home before you take possession. Additionally, banks often do not have to disclose potential problems with the home the same way that a private seller would. If the home is in a flood plain, affected by termite damage, or otherwise damaged, you will not have any legal recourse to seek compensation after you take possession. Any problems with the home, such as non-permitted additions, will also become your responsibility. You may even have to pay fines for problems that you didn't know existed.
Closing Can Take a Long Time
It can take a long time for a bank to approve a short sale because it can take a while for them to investigate the proposal and make a decision. What's more, banks may push back closing dates due to legal issues surrounding the property. They may even pull the plug on a deal at the last minute. The bottom line is that you can't depend on a closing date when you purchase a home through a short sale.
Debt May Be Attached
Debts, such as liens and back taxes, may be attached to a property when you purchase it via a short sale. And since you are purchasing the home for less than what is owed, there may be some unexpected creditors that come out of the woodwork looking for their money. For example, the holder of a second mortgage may seek payment from you once you take ownership of the home.
Since there is so much legal red tape involved with short sales, it's vital that you hire a real estate attorney with experience in short sales. An attorney can help you uncover potential pitfalls before they become problems. An attorney can also research the property to make sure there aren't any liens or debts attached to the home.
Share27 January 2016
Although I am far from perfect, I have focused on abiding by the local laws for the vast majority of my life. Unfortunately, about five years ago, I realized that I was being accused of a crime that I didn't commit. I thought about letting the trial run its course, but then I realized that fighting would be important to ensure my future. I teamed up with a great lawyer, and things became much easier overnight. My legal counsel told me what to do and what to avoid, and he was able to prove the facts in a court of law. This blog is all about choosing to fight charges.