Sure, this sounds opposite of what many realtors may say. But it’s the truth. A short sale is not always the right answer. Be sure you connect with a good attorney from the beginning. Be sure you will be protected down the line. In California, there are some very specific protections for homeowners with your original (first) loan on the property. They call that a “purchase money” loan in California, if it’s your primary residence, it may be considered NON RECOURSE. That means in a foreclosure, the lender can NOT go after you for any further remedies, damages or deficiency. HOWEVER, tucked away into many of these short sale letters of “approval” is language that potentially change that for you. Some of the worst offenders have language such as that you will be liable for the deficiency. Or that they MAY reserve the right to pursue you for the deficiency balance. The most blatant language is from Bank of America that says very plainly that if you do move forward with the short sale, YOU ARE turning the remaining amount owed into a “collectable balance” and you will be forwarded to collections. So are you turning your “non recourse” debt into a collections? Possibly. Do you know what you are agreeing to when you complete a short sale and sign off on their approval? You better…

The worst offenders:

1. Bank of America
2. Countrywide

Recent client received a letter from HOA stating they were being turned over to collection agency….client wondered what this exactly meant.

First-We are  not attorneys, but basically what has happened due to non payment of HOA fees  the seller has been turned over to collections which means the seller cannot contact the HOA now to make up back HOA FEE payments. Further the HOA most likely has placed a lien against the title of the home. This will show up as a negative on the sellers credit report. The past due fees will incur interest and penalties and any fees charged by the collection agency.

Any liens or clouds on title must be considered when the bank negotiates a short sale. If missed the subsequent buyer will be responsible to pay any liens unless dealt with ahead of time.  

As a seller , adds damage to your credit.

As a buyer, you must perform due diligence to ensure any and all liens have been addressed in your purchase offer or you will inherit them.