Breach of Contract/Legal Negotiations
It is very important to understand that once you have defaulted on your loan, you are in breach of contract. The short sale process involves legal negotiations and settlement of claims in resolution of your breach and a limitation on your future liability. In fact, you are assisting in the mitigation of damages to the lender by cooperating in the disposition of the home in a short sale. Because of the legal nature of this settlement negotiation, we believe you are ill-served if you forego legal representation in the process. We also understand that most people facing financial difficulty simply don’t have the money to retain an attorney. That’s why we formed Lawyers Realty Group. You get an Attorney/Realtor® without charge. Your lender has a lawyer, and you should too!
Deficiencies and Deficiency Judgments
With a successful short sale, you will be released from your obligations under the mortgage. If the short sale doesn’t close, you could be exposed to foreclosure, eviction and future legal action for the collection of amounts owing on second liens and HOA fees. An outstanding, unaddressed deficiency balance post foreclosure is a ticking time bomb. In California, a lender may have as long as 4 years to commence legal action against the borrower after the original default (search our website for “Second lien liability”). This means the borrower is in jeopardy for years after foreclosure. Once the lender obtains a Deficiency Judgment from a court, they can start drastic collections procedures such as garnishing wages or attaching (taking) bank account balances.
If you are pursuing a short sale, make sure you have representation that understands Recourse & Non-Recourse Loans, Judicial & Non-judicial foreclosures, the California anti-deficiency laws (CCP 580b, CCP 580d, CCP 726) and their application to your loan(s). Real estate agents are barred by California law from discussing ANY of these issues with you. In fact, the California Association of Realtors has admonished its members by stating “Realtors should avoid giving a client a definitive answer as to what is best [short sale or foreclosure]… It is ultimately up to a client to decide, based on the various legal, tax, credit, and other consequences” (Oct 2011, California Real Estate Magazine, “The Devil’s in the Legal Details”). You must engage an Attorney/Realtor® to receive the protections you need in the short sale process.
One of the greatest benefits of a short sale is the ability to negotiate away all obligations associated with your property (including second liens and HOA fees).A short sale provides the best opportunity to address these obligations. Don’t leave this legal task to a “local” real estate agent; reach out to us and we will show you the Attorney/Realtor® short sale advantage.
A short sale is a very difficult real estate transaction that requires a significant amount of paperwork and extensive negotiation with your lender(s). Almost all of the issues raised in a short sale have serious legal and tax consequences. You only have one chance to make a short sale work. If you have a real estate agent who makes a mistake or misses an important legal issue, you could end up losing the home to foreclosure and facing eviction and a deficiency judgment. Alternatively, if your short sale closes, you might find that you have a whole new set of liabilities because of the terms in your contract.
No matter how much training a “local” real estate agent may have (e.g. Certified Distressed Property Expert, Certified Foreclosure and Short Sale Expert, or any other weekend certification course currently being offered to agents), they simply don’t have the authority to give you legal advice about the short sale contract, the approval letter/settlement agreement, deficiency liabilities, tax implications or the resolution of your breach of contract with the lender. Traditional real estate agents can’t speak to those issues, BUT THOSE ARE THE MOST IMPORTANT ISSUES YOU FACE. The real estate sale is ancillary to the legal settlement of your loan default. How can you feel comfortable in a situation where your representative can’t speak about 90% of the issues that are important to you?
We know how the lenders work. We have worked with and represented lenders for years. We know how to get short sales approved while looking out for your best interest. We understand the tax and legal implications of a short sale, and, more importantly, we can actually provide you with advice and counsel during your short sale transaction. This is something a traditional real estate agent can’t do.
Your lender has a lawyer, you should too. We feel that anyone wishing to complete a short sale should have an Attorney/Realtor® without cost. That’s why we formed Lawyers Realty Group.
Why You Should NOT Hire a Real Estate Agent for Short Sales
Many real estate agents advertise that they can assist you with the short sale process. While real estate agents can technically facilitate and close a short sale, they operate at a distinct disadvantage and cannot offer the same services as a professional lawyer.
You should always choose to hire an attorney over a real estate agent to oversee a short sale for the following reasons:
- Real estate agents cannot advise you on tax exposure or legal liabilities. A short sale can confer tax and legal liabilities that must be carefully evaluated, analyzed, and negotiated. Real estate agents cannot lawfully discuss or facilitate any negotiation of these elements, which can potentially result in damaging legal and financial vulnerabilities following the completion of the short sale. Our legal team can assess potential tax and legal implications and ensure that a short sale is in your best interest.
- Real estate agents cannot draft or revise contract provisions. They are only permitted to using boilerplate forms when facilitating a short sale. Any additional language must be written by a qualified real estate lawyer. Our team can create custom contract addendums that will work to protect your interests.
- Attorneys hired by real estate agents may represent a conflict of interest. Many real estate agents will assure you that they will hire a lawyer to facilitate the short sale agreement. These lawyers represent the real estate agent, not you. They cannot file litigation on your behalf or advocate for you in the same way. Our attorney realtor can provide the services of both an experienced real estate agent and a qualified legal professional.
- Real estate agents generally struggle to secure qualified offers. Short sales require a buyer that is interested in the property. However, most buyers will not make a formal offer unless they are confident that the short sale will be approved. Real estate agents cannot provide the necessary assurances, keeping them from locking down advantageous offers. Our firm has the tools to secure closings and reach viable buyers.
- Real estate agents cannot advise you on your bankruptcy options. Filing for Chapter 7 bankruptcy can help you eliminate debt and deficiency liability. When combined with a short sale, bankruptcy can facilitate a protective exit from your mortgage agreement. Real estate agents are not qualified to assess or advise on these options. Our team can offer you free bankruptcy services in conjunction with short sale support.
Our Irvine short sale Attorney/Realtor at Lawyers Realty Group is committed to helping California homeowners address their mortgage default as efficiently and safely as possible. We will thoroughly analyze every element of your current situation to determine if a short sale makes sense for you. Our team will also help you understand and work to minimize any potential tax or credit consequences that could result from a short sale. We will serve as your advocate throughout the process and ensure that you are free from all mortgage liability once the short sale has closed.