Presently in a short sale nightmare. we were backup offer and bank counteroffered to the first and they withdrew their offer. Subsequently, our contract was supposedly submitted to bank by seller's attorney. We thought this would be a relatively painless process as our contract amount was nearly identical to what the bank was seeking in the initial first offer. Soon thereafter, seller advised their attorney to stall/hold up the deal (even though our contract was already into the bank for consideration). Seller's attorney indicated that PNC (2nd mortgagee) is seeking $21,000 in order to release the lien/deficiency, and that is what is holding up the deal. Seller is completely unwilling to put forth any additional monies. Although we, as the buyers, are willing to put forth money to the deal I have a feeling any $ will be scooped up by the first mortgagee. When I mentioned this to the attorney, they agreed but suggested that it would likely have to be outside of the HUD, which I know is completely fraudulent. It is clear from all of the seller's actions that he is trying to stall the deal as long as possible to delay the foreclosure action against his home. Finally, we have also never been provided any written documentation of either lender's responses and are receiving conflicting information. Here are my questions:
1. Can the attorney unilaterally advise BofA to place a hold on the short sale contract?
2. Aren't we as the buyers entitled to a copy of the HUD or written approval/denial by the first & the second mortgagee in order to negotiate with the lender? (we don't believe that the lender has ever come back with any offers on our contract. It appears that the sellers attorney is basing everything on what happened in the initial contract with the first offer)
3. Do we have the right to negotiate with the lender(s) directly? (Seller's attorney keeps making all these assumptions without allowing us to at least submit something to the bank).
4. What are our rights and how can we force this deal to close?? (Seller is attempting to stall and control this deal, when it should be the banks' that decide. Money is not the issue with this property).
PLEASE PLEASE PLEASE HELP.
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Replies
1. Attorney represents Seller, thus per Seller's instructions can do so.
2. Buyer is not legally entitled to the Seller's HUD
3. The contract is with the Seller and not the Bank, therefore, you must deal with the Seller's Attorney and Banks don't want to deal directly with the Buyer.
4. Short Sales are a risk like gambling in Las Vegas - there are no guarantees nor control - The Short Sale addendum you should have signed specifies their risk. You have no recourse that I know of....Sorry.
In a short sale I represented, a Buyer went directly to the bank and the bank would not disclose anything to them nor deal with them. The contract to sell is with the Seller, not the Bank.
Good Luck,
Lillie
Vanessa,
I agree with you 100%, a short sale is NOT any different than an equity sale, it just has one more contingency that needs to be met in order to proceed. Not much different than a financing contingency or a home inspection contingency, they have to be satisfied in order to move forward also.
Vanessa Calhoun said:
Harry, I have no doubt that is what you were told by the attorney. Does not make any sense at all since the lender does now own the home and their only role is to release the lien. Not sure how California would be different than any other state in regards to homeownership. Since CAR believes the lender is party to the contract, does that mean that the lenders name is on the contract next to the seller? Is the owner of record then not required to sign the contract, just the lender. Sorry for all of the questions. Always appreciate your input!
Harry Clay said:
Thanks Harry. We have very similar documents. I still don't see anything in there that states that the buyer and seller are not under a legally binding contract. I just do not see how that can be a true statement. NO where is the term "executory contract" used. The addendum refers to a Purchase Agreement and a contingency.
Let me ask you this. If the buyer and seller both signed the purchase agreement and the SS addendum and the buyer agreed to place a deposit and give the seller 90 days to get short sale approval. In 21 days the buyer decided to just walk away. Would he be in breach of contract? Would the seller have legal recourse (claim the deposit)? If so then it is a legally enforceable contract. Wouldn't you agree?
Harry Clay said:
So Harry, Is the legal counsel implying that an inspection contingency, appraisal contingency, financing contingency or any other contingency in a CONTRACT makes in NOT a contract? Since these contingencies may also also change the terms of the contract at a later date. A contract is a contract. A contract with contingencies is still a contract. An executed contract is a contract where all terms and conditions of the contract have been met and the contract has been performed. A contract in real estate is executed at time of closing.
An executory contract is mainly used in bankruptcies. Interesting that he considers the purchase agreement an executory contract. This would make sense if the lender was a party to the contract but they aren't. I'll need to get my head around this.
Harry Clay said:
Although I can understand your frustration, I would strongly recommend that you speak with a real estate attorney. The reality is that this entire short sale scenario is between the seller and their lender. You're simply on the sideline looking in. In GA, our short sale addendum specifically states that either buyer OR seller has the right to terminate the contract up until X amount of days prior to the expiration of the agreement or contractual closing date. As you've stated that the seller has received a higher offer, they may have exercised a right as outlined by your contract.
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