Buying a short sale but taken off the table by sellers lawyer?
I was in the process of buying a short sale CT Hartford area until suddenly my realtor said the deal fell through due to the sellers lawyer putting a stop to it. My deposit was in, all offer paper work was signed, the seller signed and accepted the offer, and it was currently with the bank. How does this make sense? My realtor says that the lawyer is afraid the seller will have to come up with the difference of what he owes of the sale price. The agent and short sale attorney tried telling him that NEVER happens and he wouldn't budge. What would be his motives for this, would rather foreclose?
Replies to This Discussion
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Permalink Reply by Wayne Brooks on
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Sounds like a BK attorney, trying to convince the client to BK. IF what you say is true, I'd threaten him with a bar complaint, as the seller could always wait until the actual approval letter is reviewed, then reject if it doesn't include a waiver of the debt balance.
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Yes a BK attorney. What is a bar complaint? I'll tell my realtor that, but by the sounds of it he just wants me to sign a termination contract on sellers behalf due to "advice from sellers attorney" and be done with it. I Just dont know why they want to let this sale fall through because the bank might come after the difference in money that he owes before his bankruptcy and after the deal is closed?
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a BK makes sense, usually only if the seller has substantial other debts. But, a BK does eliminate the issue of income taxes that May be due after a short sale, if the MDRA isn't extended. A short sale can still be done after a BK, but the incentive is less.
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So what do you think I can do, my realtor got back to me with the below response..
I just spoke with the attorney and he said that they can't be sure of the timing of the bankruptcy and the timing of the short sale. The bankruptcy attorney told the real estate attorney that if he wanted to claim responsibility to pay that tax on the loss should there be one after the sale, we could go through with it but obviously no one wanted to volunteer for that.
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"I just spoke with the attorney and he said that they can't be sure of the timing of the bankruptcy and the timing of the short sale. The bankruptcy attorney told the real estate attorney that if he wanted to claim responsibility to pay that tax on the loss should there be one after the sale, we could go through with it but obviously no one wanted to volunteer for that." Because of that they can just terminate the deal?
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Okay, that is a different issue verses the actual debt being waived. The BK will eliminate any tax liability from from the forgiven debt. It's up to the seller to make that determination, based on what his tax liability May be if the MDRA isn't extended verses the effects of a BK. He Really should talk to a CPA as depending upon his overall financial situation, he could have no tax liability, a small one, or a large one.
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Is there any way I can now keep going with the sale if it's technically bank owned due to foreclosure, instead of waiting for it to get on the market in god knows when. The offer was at the bank to sign, it was extremely close to finally going through. Wouldn't they rather sell than see the house sit for years?
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No. If it gets foreclosed, your contract is irrelevant. If the bank gets it back at the FC, they will list it on the MLS at some point, and won't talk to you in the mean time.
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