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A short sale is a real estate transaction where the homeowner sells the property for less than it is worth, usually to avoid foreclosure. If you are in this position, an experienced short sale attorney can guide you through the process, give you sound legal advice, and advocate on your behalf to ensure that your interests are protected.
At Moshes Law, we understand that clients considering a short sale are in a difficult situation. Our compassionate attorneys provide you with the information you need to make the best decision for your unique circumstances.
If you need legal help with a real estate transaction, set up a FREE consultation now.
A short sale is not the right solution for everyone. First, the buyer must be an individual or entity other than the mortgage lender. After the sale, the lender receives the full amount of the sale and then decides whether or not to forgive the balance on the loan.
Short sales are for homeowners who:
You may be denied a short sale if the offer price is too low (that is, the lender could recoup more money through foreclosure proceedings), you have other taxable assets whose sale could go toward mortgage payment shortfalls, you don’t provide necessary hardship documentation, or, unbeknownst to you or your representative, your loan has been acquired by a new lender.
The details of short sales in NYC vary depending on the seller’s situation. Here’s what usually happens:
The details of each individual short sale vary depending on the seller’s situation. Here’s what usually happens.
If you are an individual homeowner considering a short sale, being represented by an attorney from a reputable law firm is essential. After all, your lender undoubtedly has an entire legal team at its disposal. Having your own attorney who knows about short sales levels the playing field.
Among other things, hiring a lawyer creates an attorney-client relationship. Once this relationship is established, the attorney has a fiduciary duty to you. This means he or she must act in your best interest.
Furthermore, there is an important distinction between real estate agents and New York short sale attorneys in this context. A real estate agent can help you with certain aspects of a short sale. However, he or she is prohibited from giving you any legal advice unless he or she is also a licensed attorney. On the other hand, as New York short sale attorneys, we must provide the legal advice and guidance you need to make a fully informed decision about a New York short sale.
If you are considering a short sale, turn to a law firm you can trust. Contact our law offices to schedule a free consultation today.
As short sale attorneys we make sure our clients in New York City and elsewhere are fully aware of what is at stake.
For one thing, a homeowner is not necessarily off the hook if the bank forgives the remaining balance after the short sale. This is because there is no guarantee the lender will release the seller from his or her personal liability. In other words the lender may retain the right to deduct money owed from the seller’s bank account, paycheck and so on.
Ideally, the lender’s rights to take these actions will be detailed in applicable legal documents. However, it is not always included and the lack of language pertaining to release of liability is not indicative that the bank has relinquished its rights.
In any case, a savvy short sale attorney will include provisions in the sales contract or agreement to dissuade a lender from taking these actions.
Providing emotional support is one of the most important things we do for our clients. We do this in two key ways. The first is by demonstrating proficiency in all of the legal aspects of the case,which promotes confidence. The second is by protecting them from lenders or from anyone else who uses unscrupulous means to benefit from their financial hardship.
A property owner involved in a short sale is less likely to be harassed by the latter than a homeowner going through foreclosure or bankruptcy. This is because foreclosures and bankruptcies are public proceedings. Short sales are not. Because short sales are private transactions we know who is involved and can keep outsiders at bay.
With us on their side, clients no longer have to worry about handling phone calls or correspondence from the lender. All communication is channeled through our law offices, giving clients relief from persistent demands for payment, threats, harassment and associated stress.
To reiterate, a short sale is a transaction in which a home is sold for less than the total amount the homeowner owes on his or her mortgage. A lender-approved transaction in which the homeowner still owes $250,000 but sells his or her home for $200,000 serves as a hypothetical example. In this case, the $50,000 difference, less any pertinent deductions is classified as a deficiency.
Ordinarily, a lender may simply choose to “forgive” the remaining debt at this point. But without provisions protecting the homeowner in applicable documents, a lender that wants to be “made whole” might use some of the methods detailed above to try to recoup this amount. The lender may also try to do so by obtaining a deficiency judgment. Put in the simplest terms, this is a court mandate for the debtor to pay the remaining amount.
A lien, or legal claim to other assets, is usually issued against the debtor to ensure he or she pays the amount in question. This is different from the original legal claim against the assets used as collateral to secure the mortgage. The purpose of the original lien is to protect the lender or “lienholder” by allowing it to sell those assets if the borrower defaults on the loan and cannot repay it. The lender relinquishes its right to execute the original lien as part of the short sale.
The short sale agreement is perhaps one of the most important — if not the most important — legal documents used in this process. It is also one of the most complicated.
It sets forth all of the details of the transaction, along with each party’s legal rights and responsibilities. These terms include but are not limited to the listing price; cancellation clauses; what can be deducted from the sale price; who is responsible for maintaining the property during the listing; and the submission of sales contracts. Other important stipulations generally include those pertaining to the suspension of foreclosure sales; release of personal liability; circumstances under which the agreement may be terminated; and the lender’s rights if the deal falls through.
Due to the length and complexity of this document, we always take extra time to ensure our clients understand associated aspects of estate law.
Clients involved in short sales often worry that the lender will foreclose. Two things generally determine whether the lender can do so. One is the language in the mortgage agreement. The second is the language in the short sale agreement.
For example, the lender may reserve its right to begin or continue the foreclosure process if the language in the mortgage documents allow it to do so. If it so chooses, the lender can also include language in the short sale agreement that reflects its willingness to delay the foreclosure sale date. In most cases, a lender that is willing to delay the foreclosure date will only do so until the short sale agreement expires or the day the short sale is finalized. In most cases the suspension is also contingent upon the seller’s compliance with all of the terms of the short sale agreement.
Another question that struggling homeowners often have is whether a short sale is a viable option if they are also thinking about filing for bankruptcy. As with so many legal and financial issues, the answer depends on each homeowner’s individual circumstances.
Before providing a definitive answer about bankruptcy and short sale, our New York short sale attorneys assess each client’s situation. Are they filing for chapter 13 bankruptcy, or for chapter 7 bankruptcy?
In most cases clients will not benefit from a short sale after chapter 7 bankruptcy. Why? This type of bankruptcy allows the homeowner to relinquish his or her rights to the home along with any outstanding associated debt. The lender gets the house back. The homeowner no longer has to worry about paying for it. As an added bonus, a homeowner that gives up his or her house by declaring chapter 7 bankruptcy isn’t liable for paying taxes on forgiven debt, as he or she could potentially be after a short sale.
On the other hand, a homeowner that declares chapter 13 bankruptcy may benefit from the completion of a short sale. The reason is that a short sale reduces the amount of debt assigned to the homeowner. Therefore, the homeowner will have less debt to pay back through the chapter 13 bankruptcy plan.
Of course there will likely be other considerations, which we will discuss with the client.
For homeowners experiencing financial hardship, deciding to go through a short sale is a serious matter. Someone in this situation needs a short sale attorney who is familiar not only with relevant New York laws, but also with the frequent changes to them.
Our attorneys also make sure our clients have all of the details and support they need to make fully informed decisions. If you’re asking, “is a short sale right for me,” contact our law offices for a free consultation today.
Thanks to the Professionalism and Outsanding Customer Sevice demonstrated by The Law Office of Yuiry Moshes. I've completed many Real Estate Transactions in my years as a NYS Licensed Salesperson and Real Estate Broker. I congratulate your organization for the attention to detail and integrity you company displays.
We had a great experience with the office of Yuriy Moshes during the purchase of our home. Mr. Moshes or his colleagues were quick to respond to any questions or concerns during the process. I would not hesitate to recommend them to others. Thanks a lot!
Hired Yuri to help me through coop purchase process. Yuriy and his staff answered all my questions promptly, I've had attorneys in the past that once paid would take their time and de prioritize your mails, etc..Not the case here. My initial purchase wound up folding week before scheduled closing date due to seller negligence. Almost a year later, I received same level of effort from Yuriy second time around, closed, and am very happy with professionalism and expertise provided.
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