I am a buyer for a short sale property. The short sale was approved by the bank last week and we are scheduled to close in the middle of July.
However, the bank approved the HUD-1 as prepared by the seller's attorney and at the time the short sale contract was drawn up back in March we didn't know how long the process will be so they just threw a dart and say it's June 1 being the settlement date.
In the HUD-1 they therefore calculated the property tax from Jan 1 to May 31 being paid by the seller and after that it's my responsibility. Now that the short sale is approved and the bank says nothing can be changed they need to net this exact amount by this date blah blah blah.
The seller's attorney says since nothing can be changed, they will not be able to re-prorate the property taxes such that the seller is responsible till July 15, because doing that changes the number the bank will net.
Is this typical of short sale transactions? How is this normally handle?
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I guess if it's not much $,you could pay. But six weeks of our property taxes would be almost $1500,so I'd certainy have pushed back.
The bank's approval letter to the seller is very specific. Their net discounted payoff to the cents. They named us as the buyer, they specified the sale price, the maximum commission to the brokers etc...
The sellers has a clause in the contract stating they will not pay a dime out of pocket at closing on anything the bank will not absorb. So far on their column of payout includes: Commission, pro-rated property taxes, title search, title insurance, state tax stamps, Florida property search.
The amount is about $350. Since I am getting a good deal I guess I am not too keen on pushing the issue.
I have the inspection schedule next week, depends on what I find I guess. I can walk away if inspection is bad.
Thanks,
OK can you elaborate further?
Because once the seller accepts it could be 3-6 months and sometimes more before we hear back from the bank. Most times the deal go south because of a variety of factors such as the bank did their own BPO and wanted to raise the price or they want to impose a deed restriction or they want the seller to contribute cash in exchange for debt forgiveness and the seller refuses...a bunch of factors could come into play, why would you want to spent several hundred dollars on an inspection when seller accepts when everything is so tentative? We don't even put a deposit on short sale contracts (EMD upon lender acceptance is common here).
Jack - "Normally" the short sale lender will agree to modify its net in the case of tax prorations, since no one could have predicted how long the approval process would have taken. If this lender is taking a hard stance, you can 1. ask if the file can be escalated to a supervisor 2. say "no" and see if the seller can bring the funds to closing 3. just pay it - it cannot be that much....