The information you obtain at this site is not, nor is it intended to be, legal advice.
You should consult an attorney for advice regarding your individual situation.
Contacting an attorney does not create an attorney-client relationship. Do not send,
e-mail, or provide confidential information or information you do not wish to be
publicly disseminated until such time as an attorney-client relationship has been
established and requested to do so by an attorney.
Copyright 2009 Law Office of Craig W. Little, P.A. All rights reserved. You may
reproduce portions of this site or materials available at this site for personal and
non-commercial use. All copies of portions of this site or materials available at this
site must include this copyright statement.
Analysis of Short Sales of
Residential or Commercial Property
Contrary to popular belief, a property owner does not have to
be in foreclosure or even behind in payments on the their loan,
before they can undertake a short sale. But before negotiating
a short sale or entering into an agreement to short sell property,
the seller should be familiar with the aspects of short sales that
uniquely impact the seller.
As noted, the lender that holds the loan that is secured by the
short sale property must approve the proposed short sale
transaction. The approval of the short sale transaction includes
a determination by the lender that the seller should be permitted
to short sell their property and have a portion of their loan
forgiven; therefore a property owner contemplating a short sale
should first consider if they are likely to be approved as a short
sale seller. When lenders examine owners who would like to
short sell property, they require that the sellers submit detailed
information and documentation. Sellers should begin compiling
this seller submittal package of documents and information early
in the short sale process because the amount of information
may be rather extensive.
Dealing with lenders as they evaluate a potential short sale
seller and offer is a significant part of trying to close a short sale
and understanding the lender’s involvement and motivations in
the short sale process can help the seller navigate the short
sale process. The potential short sale seller should also be
aware of why lenders reject offers for short sales so that these
potential issues can be avoided.
Once the lender has approved the short sale seller and the
short sale offer, there are several additional items that the seller
should try to get the lender to agree to in order to lessen the
affect of the short sale on the seller. Some lenders will not
agree to these additional terms, but some may and if they do
the affect on the seller will be lessened.
Unfortunately, not all short sales that are approved by lenders
close. The seller should be aware of this and what the result is
if an approved short sale does not close.
But many short sales that are approved by lenders do close.
And while the consequences of a successful short sale are
often less severe for the seller than if the lender is forced to
foreclose on the loan, a short sale is certainly not without
consequences for the seller. The debt that is forgiven may be
considered income to the seller and the Internal Revenue
Service may require that taxes be paid on that income. And
short sales do affect credit ratings. Short sales are reflected on
credit reports as pre-foreclosure matters and while the length of
time such matters appear on the credit report are less than with
a full foreclosure, some creditors may not view them as different.
Return to Analysis of Short Sales of
Residential or Commercial Property
Law Office of
Craig W. Little, P.A.