Florida Short Sale Listings

I am still amazed at the number of REALTORS® that continue to list short sales and either attempt to process the short sale themselves and/or turn the file over to a third party title company. In many of these instances I have noticed the title company charging “short-sale processing fees” at closing in direct violation of the law. In fact, such a charge may be considered a felony as it violates Florida Chapter 494.

 

Federal and Florida laws involving short sales and their processing have continued to evolve over the past 2 years. Attorneys are now a most necessary and intricate player in the short sale process.

 

Florida Sellers be aware that it is unlawful for anyone other than a Florida admitted attorney to charge a fee in order to process a short sale. Real estate professionals and/or title companies are NOT permitted to charge any additional fees relating to the short sale and/or its’ processing. Only standard commissions and/or fees are deemed permitted.

 

Many title companies are attorney owned. However, such ownership does not make it lawful for that title company to charge a short sale processing fee. Title companies do not provide legal representation. Most typically, the title company’s attorney owner also does not provide legal representation to either the Seller or Buyer; their representation is typically considered transactional.

 

In the typical short sale all Sellers should consult with a competent attorney familiar with the short sale process and possible long term financial consequences. The short sale negotiations with the lender(s) should be handled exclusively by the attorney providing the Seller with legal representation. Such representation will typically be detailed in a representation agreement between the Seller and their attorney.

 

Our company routinely requires any and all short sale Sellers to consult with an attorney. Typically, we introduce the Sellers with a specific attorney that processes almost 100% of our short sale listings. This attorney has extensive short sale experience along with substantial real estate, litigation and bankruptcy experience. This provides for the best combination of professionalism and compliance with the law. Furthermore, our short sales are processed much more efficiently and to the benefit of all concerned parties.

 

I am not an attorney and this blog is not intended to provide legal advice. Quite to the contrary, my advice as a real estate professional and recognized expert is that all Short Sale Sellers should engage the services of an attorney to process their short sale negotiations. Do not reply on the REALTOR® and/or a title company to provide such important legal representation.

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Comments

  • One last thing, what really prompted this post was a local listing Realtor that continues to require potential Buyers to agree via addendum to pay a named title company a $1500.00 fee for short sale processing in the event the short sale lender refuses. This is done in direct violation of Florida law and the Federal SAFE ACT.
  • Again, for clarification: I didn't mean to suggest the file would be better processed by an attorney. Personally, I have negotiated numerous short sales and I am licensed under FL s494 as a mortgage lender in addition to my licensing under FL s475. I have not processed any in the past 1-2 years so as to avoid any potential liability.  All of our short sales have been successfully processed. In conclusion, I'm suggesting that licensees are better to identify a competent attorney for processing purposes and concentrate their efforts on the sale of real estate.
  • cute typo and probably true, should be "successful" short sale - not stressful.
  • Bingo....you're 110% correct, "competent" is the word I always make certain to include. The only attorneys charging a monthly fee as you've described in my experience has been those providing actual foreclosure defense, not short sale processing.  If a lawyer is requiring an upfront fee I would seek a new attorney.  If someone needs a referral of such an attorney just let me know.  Our attorney collects only in the event of a stressful short sale and only then from the lender. Although I would agree with your statement that an experienced real estate professional "can do just as good a job as an attorney can", I would equally discourage such involvement unless it becomes absolutely necessary. For example, once the issue is raised (and it is in 100% of the cases) how to handle any possible deficiencies and the non-attorney real estate licensee comments they have crossed the line into the area of the unlawful practice of law. The Florida AG's opinion letter on real estate licensee's involvement with the lender in short sale negotiations clearly advises the licensee's actions should be very limited. That's almost an impossibility.  The legal exposure is great.  Bryant, you working for yourself knowing your abilities and willing to accept the inherent risk is one thing.  It's totally different than the typical situation in which individual licensees are out crossing these lines and putting themselves and their broker in harm's way. They should align themselves with a "competent" attorney and work closely together.  This will help eliminate the liability, better assist the parties, stay legally compliant and free themselves up to be able to list and sell more properties.  We cannot get paid for this extra work, way accept the risk?  Especially, when the statute of limitations is up to 5 years for a claim to be made against the licensee.
  • All sellers should definately ALWAYS seek legal advice but to say that an attorney can do a better job than an experienced real estate agent is not accurate.  In my experience, I have seen the attorneys hand the file off to one of their assistants or paralegals and the majority of the time the agents had to fight just to get any communications. Not all are bad, not all or good.   An experienced real estate agent can do just as good of a job or better than an attorney.  No attorney will be working my short sales anytime soon.
  • You know Stephen I have dealt with short sales that were being handled by an attorney and didn't notice one single thing that was different for my seller. Except it took longer. I guess the qualifier is if the seller is going to seek legal advice make sure the attorney is COMPETENT. Many are not.

    In fact I have had to jump in and help sellers that were totally screwed by an attorney attempting to handle their short sale. The last one was charging the seller $1,500 a month while they went through the process. After 4 months and $6,000 the property had not even been placed on the market yet!!

    Now having said that I have worked with Richard Zaretsky down in your area and he was very good.

    All sellers should seek legal advice. But I strongly believe that an experienced agent or broker can do just as good a job as an attorney can. And we don't charge for that service. What a deal.

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