Question on how to remove a seller's judment from a short sale house in contract
Hello, we are in contract to purchase a single home which is in short sale. The seller, and both lenders have approved the sale. We have ordered inspections and very close to closing. I just made tentanive arrangement for the termite treatment/tenting because we had reasonable expectations the we were going to close within a couple of days. Tonight I have received a call from our agent, who has explained that he has received a call from the sellers agent indicating that one of the owners of the property (there are two unrelated owners are on this property) has a judgment against her, and that we cannot close escrow until the judgment is settled. Wow!!! Since we have a binding contract signed by both sellers, and the banks, there are no leans against the property, does this seller have a legal ground and ability to stop or hold up the close of escrow? If so, what does it take to release the judgment attached to the property, since there are no proceeds to go to the sellers?
Thanks so much for taking the time to answer. We are very concerned as we have given notice and must move out within two weeks.
Replies to This Discussion
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Permalink Reply by Marta Phillips on
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Thank you! I do see your point, and it is a valid one. The thing is, we are simply not in the position to"contribute" and the amount is $14k or so. However, we are not giving up, we will work with the agents and see what can be done to get this sale completed. We do want to get into this house, and I did not mention the trials and tribulations we went through to get to this point. Suffice it to say that we have waited over six months and hundreds, no exageration, of emails, phone calls, etc... went into this so far...
Thanks again:), appreciate the input
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Permalink Reply by Teresa Keeler on
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You mention that the judgement is against one, not both owners. If the current title is held "tenants by the entireties" then the judgment against the one person cannot hold up the sale. If it is Tenants In Common then yes, it will have to be negotiated.
If it can be held, then the best thing to do is have whoever negotiated the short sale with the lenders call the judgement holder and ask for what they will accept now, to release their lien. A judgement can be negotiated just like any other debt, and does not have to be satisfied in full if the lienholder states they will accept less.
I totally agree with above, the title should hve been pulled early on, so for that, yes live and learn.
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I will check with our agent to find out how the title is held as this seems like it was a business deal, since the two owners are unrelated...
I am impressed by the number of replies and the quality of the information I am getting. THanks so much!
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Permalink Reply by Michael Crawford on
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I had a similar situation on a short sale I was involved in. Title did not find lien until shortly before due to close. The seller had no money, buyer was unwilling to come up with enough to settle the lein and bank was unwilling to cover it due to the fact that they had already given up alot of money in the short sale. The ONLY workable solution was for myself and the buyers realtor to give up a large portion of our commission. In the end, my total commission on this transaction was a little over $900 once all was paid but I felt that I would rather get a check for $900 than nothing. Also I felt at least the transaction would close, the buyers, sellers and bank would be happy. Although I spent alot of time working on this file for what works out to less than minimum wage, the sellers will soon be in a position to re-purchase a home again and they have stated there is NO question they will use me again as their realtor due to the fact that I went above and beyond expectations in order to get their home sold. They remember what I did and tell all their friends about me so I get referral business and will have them back as a buyer again soon. You must look at the "big picture".
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You are a smart man, and a decent one! I am sure you will be rewarded for your good deeds!- , and I agree, I would do the same, something is better then nothing, and long term what seems like minimum vage now, maybe a whole new line of clients that could become quite profitable.
THanks for your answer!
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What State is this sale being conducted in? Depending on the state and if it is the sellers primary residence (homestead) property check to see what the homestead exemption is and if there is a statute that would negate the judgment.
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This is in CA
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Permalink Reply by ralph gilford on
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My background is over 42 years in the collection industry. As long as there was an abstract of judgment filed in the county where a property exist, the judgment follows that individual to any property he owns, or is on title. Most people an companies know that when they have a judgment against another that they are in the drivers seat.
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thanks for that info.
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I'm glad you clarified it's in CA. All posters should identify the state in their first post, to eliminate a lot of irrelevant/incorrect answers. In Florida, Tennnants By The Entireties is only for married couples. In florida, how tennancy is held is irrelevant as to whether a lien attaches to properties (it always does).
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Also dont forget in California a judgment is good for 10 years, interest is accrued at 10% per annum, and the judgment can be re-newed every ten years. In essence at the end of the first ten years the judgment pretty much doubles. It is very possible that the Plaintiff might subordinate out, and come back in after the transaction has been completed.
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Permalink Reply by Sheyenne Schultz on
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This will not be easy to remove. A lien is different than a judgement folks. Title should have seen this right away and yes, either title or escrow should have done a statement of information right away. If you take a listing from now on, do this first..right away and from the pre lim check any and all possible liens and after ordering the statement of information, see if there are any judgements against the seller or sellers. I had a short sale, where the seller never paid a credit card debt he owed. The credit card company was never able to collect from him..so they turned it over to an attorney who took it to court and won a judgement of about $10,200 against the seller. I naively thought I could negotiate with the credit card co. IF the amount of the debt was STILL with the CREDIT CARD CO, then this would be easy to negotiate for pennies on the dollar, and then buyer or buyer and agent's could split it 1,2,or 3 ways and pay. Once the credit card company went to court and won a judgement...it is a different ball game. Dealing with a judgement filed in court with interest accruing every day is much different than negotiating down an amount owed in collection. I hate to say it, but be prepared the attorney or firm to either possibly be nice and settle for x amount on the dollar to allow the short sale. OR, be prepared that they will stand firm on their amount no matter what and insist on settling for the original amount owed, yet wipe away the interest. This happened to me....after many negotiations back and forth...they insisted on original judgment of $10,200. I was able to get the buyer to pay this BECAUSE the approved sales price was WAY BELOW market value and we had 36 offers in line waiting to get this property and happy to pay this small price for getting a home almost $80,000 below market value. Or I would have insisted buyer and buyer's agent split this. Or in worst case situations...the listing and buying agent and buyer could contribute to get it done. Either this judgment is an amount that can be negotiated down OR if not, hopefully it would be an amount that split 1,2, or 3 ways will still get the job done. Hope this helps!!!...
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