What is a Short Sale?

A “short sale” in real estate refers to a sale of real estate that falls short of the loan balance owed on the mortgage. When a property is sold in this manner, the lender allows the property to be sold for an amount less that what is owed to them.  Under a short sale the lender may agree to “write-off” the difference between what remained on the loan balance and what the property actually sold for. It does not necessarily guarantee that the difference will be forgiven by the lender; instead, this is something that has to be negotiated with the lender.

What is a Foreclosure?

A “foreclosure” is a proceeding that allows a lender to end all ownership rights when the owner of a property stops making mortgage payments and is in default. Basically it allows the lender to reacquire the property. While each state is different, in California the lender generally has a right to pursue a property owner for the deficiency owing after the foreclosure has taken place.  This means that if your property is not sold, or the purchase price was not enough to cover the balance on the loan, the lender can turn the loan over to debt collectors, or sue you for the balance still owing, and/or pursue payment from you even if you file for bankruptcy.

However, there is an important exception to this rule:  the lender has no right to collect a deficiency from you if the loan was used for the original purchase of your primary residence, and you still live there.  If you refinanced your home, or if the loan was for a second home, commercial property, or investment property, this exception does not apply.  

Why a Short Sale May Be a Better Option for a Distressed Homeowner

There are a number of reasons that a short sale may be in the best interest of a seller who needs to let go of a property.  One important advantage to a short sale pertains to future home purchases.  For example, Fannie-Mae, the Federal National Mortgage Association, adjusted their guidelines in 2008 to allow an individual that successfully completes a short sale to be eligible for a Fannie-Mae baked mortgage package after only two years.  In contrast, an individual who loses their home to a foreclosure will not be eligible for a Fannie Mae backed mortgage for five years.

Another advantage to a short sale would be in the area of credit score issues.  The impact of a foreclosure can be a downgrade of your credit score anywhere from 200 to over 300 points, and it will affect your score for a minimum of three years.  However, the impact of a short sale on your credit score can be as little as 50 points and its effect can be as brief as 12-18 months.

How to Start a Short Sale

If you think you might be interested in short-selling your home or other real estate, it is best to talk to a legal expert about the process and related legal issues, such as potential tax consequences to you when part of your mortgage loan is forgiven.  The skilled real estate attorneys at San Diego Law Firm have specialized experience in handling short sales as well as a unique knowledge of the real estate market.  To schedule a consultation, please call San Diego Law Firm at 619-794-0243.

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Unlike your real estate agent—whose goal is to complete the sale and earn a commission—your real estate lawyer doesn’t work on a commission.  What’s more, sometimes a real estate agent represents both the seller and buyer.  In these situations, there’s bound to be conflict in representing both sides.  After all, sellers want to get the highest price possible, the buyer the lowest, and the real estate agent’s commission is usually greater if the sale price is higher. 

As your real estate attorneys, it’s not our job to push for a sale.  We focus on protecting your interests because we know there’s a lot at stake in any real estate purchase and sale. 

Take a close look at the property and potential legal problems

Whether you’re a buyer or seller, your lawyer can examine any legal issues related to the property.  Buyers need to make sure their investment will be worthwhile, and sellers need to be careful not to violate real estate laws and/or violate the purchase and sale contract. 

Real estate agents do a lot in a real estate sale and purchase, but their role is not to give legal advice.  Whether you’re buying a home or investment property, there are many legal issues to examine.  For example, we’ll:

      ●    Examine the title (including the history of ownership for the property), and check whether there are any clouds on the title that need to be cleared

      ●    Look for any liens, easements, property line disputes, and zoning violations

      ●    Advise you about inspections and disclosures

      ●    Prepare your purchase agreement (see below for more on this)

Understand the deal, and know what to ask for

There’s a lot of paperwork involved in buying and selling a home and other real estate, which means there are a lot of terms to negotiate if you know what to ask for. 

Your sale or purchase officially begins with the Purchase Agreement.  If the buyer’s offer is accepted by the seller, you’re both in a binding contract.  In most situations there can be serious consequences for backing out in violation of the contract, but your lawyer can build in protections in case things go wrong later. 

The key terms of the deal are in the purchase contract, but often the real estate agent will use a standard fill-in-the-blanks contract that won’t necessarily keep your personal interests safe.  Here are a few examples of what your real estate lawyer can help you with when preparing the purchase agreement and overseeing related issues: 

      ●    Will the seller make any promises and guarantees to the buyer when transferring ownership?

      ●    If you’re a buyer, will you be let out of the contract if you can’t get a loan, or aren’t able to sell your current home?  Also, are the terms offered by the lender good for you in the long run?

      ●    If inspections reveal problems, will the seller be responsible for any and all repairs?  Will the buyer be given credits instead?  And at what point can a buyer cancel the deal?

      ●    As a buyer, do you know how you should take title to the property?  For example, will it help or hurt you to take title as “joint tenants with right of survivorship.”  If you’re a real estate investor, should you create an LLC or corporation to hold title?

Getting help at the closing

The closing finalizes the transaction and transfers ownership from seller to buyer.  We’ll make sure contingencies have been removed, settle any remaining issues, and ensure you provide and receive all the required documents.  The bottom line is that you need to fully understand the real estate documents you’re given.  We’ll explain the terms, and identify things that should be included in your purchase agreement. 

Your real estate agent or broker does a lot for you, but your agent can’t provide the same kind of legal help and advice that a real estate lawyer can.  We’ll work to protect your interests at every stage in the process and look into potential problems.  Contact San Diego Law Firm’s skilled real estate attorneys at (619) 794-0243.

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As prices go up in San Diego, more homeowners will likely put their real estate on the market.  San Diego’s North County Times reports that median home prices in our county climbed 8.9 percent in January.  If you’re a potential real estate seller or buyer, your focus is probably on the sale/purchase price and financing.  These are no doubt essential terms to the property’s sale and purchase.  For the long run, also think about what type of deed will be given.   If you don’t, you may regret it later. 

What is a deed, and what can it do for you?

A deed is a document that transfers real estate ownership from seller to buyer.  Certain basic information has to be included in a deed for it to be valid.  This includes the names of the buyers and sellers, the property’s legal description (which isn’t as simple as a street address), words that transfer the property, signatures, and so on.

If you’re a seller, the deed can reduce the chances that you’ll be financially responsible for the real estate after you’ve sold it.  If you’re a buyer, the deed can help protect your major investment.  On the other hand, the deed may not give you any protection at all. 

After buying or selling real estate, always double check that the deed was officially “recorded.”  This means that for local real estate, the deed will be filed at the San Diego County Recorder’s office.  Once recorded, anyone is free to check the property’s ownership records.  This simple step is one important way to protect buyers and sellers.  But before the deed is turned in, you’ll need to figure out what kind of deed should be written up:

“Warranty Deed” or “Quitclaim Deed”?  Do you know the difference?

There are many different types of deeds.  Each has its own purpose, but not every kind of deed will be right for your situation.  After a sale goes through, there’s a chance that problems can come to light such as lawsuits, liens, or “easements” that give someone the right to use the property.  But who will be responsible for these problems?  The answer might depend on the deed you’ve negotiated before buying the real estate. 

Two common deed examples are the quitclaim deed and warranty deed. 

     ●  A quitclaim deed only transfers the seller’s ownership interest in the property (if any), and makes no promises to the buyer. 

     ●  A warranty deed can include many promises to the buyer.  For example, a warranty deed might guarantee that the seller will be responsible for existing liens and other problems – even problems created by people who owned the property before the current seller. 

There’s usually more than meets the eye when it comes to deeds, and the promises that should or shouldn’t be included when buying and selling real estate.  With a sale and purchase this big, you need to fully understand what you’re bargaining for.  As experienced real estate attorneys, we’ll advise you on the potential advantages, drawbacks, and other legal considerations.  You can do a lot to minimize risk in your real estate sale or purchase, which means saving time and money later.  Get the information and advice you need with any deed and title problems from San Diego Law Firm’s skilled real estate lawyers.  Reach us at (619) 794-0243.

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In a typical real estate purchase, California law requires sellers to disclose certain defects that they knew or should have known about, and the seller must provide the buyer with an additional disclosure statement.  Not only that, but the seller’s real estate agent must visually inspect the home and disclose any information that can materially affect the property’s marketability.  These types of problems can hurt resale value and seriously affect a buyer’s ability to sell the real estate later on.  So what must a seller disclose? Examples include leaky roofs, defective plumbing, electrical problems, building code or zoning violations, construction defects, insect infestations, and other problems or conditions.  Legal problems that must be disclosed include encroachments or easements, liens on the property, or issues with title to the property.  At times, the seller’s actions may even amount to fraud.

In addition to the mandatory disclosures under California law, when negotiating the deal a seller may decide to go beyond the minimum disclosure requirements and include warranties in the real estate purchase agreement.  Unlike with the state law disclosures, if a warranty in the contract is breached, the seller can be held liable even if the seller had no reason to know that the representation was false.  If you’ve discovered defects in your home after moving in or have been defrauded by the seller, contact our skilled real estate lawyers as soon as possible, before any time limits on your claim expire.  We’ll discuss your options and help you obtain compensation to repair the undisclosed defect or, in some cases, rescind the purchase.  Similarly, if you’re a seller who has wrongfully been accused in a nondisclosure case, we’ll evaluate the circumstances and work toward resolution.  Contact San Diego Law Firm’s experienced advocates at (619) 794-0243 for help with any real estate dispute.

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