Short sale legal problems!!

**hooks11** · 04-14-2011, 11:58 AM

I put an offer in on a short sale and things were taking some time to come together as expected. The home owner accepted our offer and agreed to the contract within a couple days yet three months later the bank had not given us any response. Then we find out suddenly that the entire time we were waiting the home owner was attempting a mortgage adjustment. This is somewhat confusing to me, how can the homeowner seek a new contract with the bank(mortgage adjustment) while he is under contract to sell the home to me. I realize the bank can always refuse my offer as it was subject to bank approval but how is it that the seller can decieve us and keep us waiting while he is clearly breaching our contract? does this breach of contract warrent us as the buyer start a lawsuit? If we were to seek damages could a settlement be made that the home owner could settle by moving forward with the sale?

**pelletierrealtygroup** · 04-14-2011, 02:13 PM

That is very unfortunate in your short sale experience. Although short sales do take time to process, what you experienced is not common. Because you, as the Buyer, have such specific questions in regards to lawsuit or settlement, you may want to seek legal advice from a real estate attorney in your state.

**jessicahunny3** · 07-10-2011, 12:58 PM

Short sales allow a homeowner to close on the sale of property worth less than the debts secured by it. Typically, the lender agrees to accept the net proceeds from a closing in exchange for releasing its lien. Lenders are not agreeing to a short sale to be generous, they are convinced that it will come out better than it would by foreclosing on the home and pursuing the borrower for its losses.

**Dave Reynolds** · 09-07-2011, 06:02 PM

Short sales are legal and financial mazes. In the situation you described you did not in fact have a valid contract with the seller until you received approval from the bank. The bank must approve all short sale contracts because in essence they are releasing the original owner from their mortgage obligation for less than they owe.

All short sale contracts have a contingency that the contract is not valid until approved by the bank. Until you clear up all of the contingencies than you do not have a valid contract. Because there was not a valid contract in place the seller was free to negotiate a mortgage adjustment with the bank.

Under the Making Home Affordable Act of 2009 the seller has several options available to them in order to avoid foreclosure. One such option is a short sale and another option is a loan medication. In this situation the sellers are well within their rights seek a loan modification from the bank.