In Florida, get a title search before entering into a short sale agreement
In the past few years, short sale transactions have become more prominent in Florida due to the decline in the real estate market. Buying a home in a “short-sale” means that the lender is accepting less than the total amount due on the existing mortgage.
Most homes that are sold as short sales are already in the foreclosure process and as real estate values decline more lenders are accepting short sales or discounted payoffs, rather than holding a large inventory of real estate on their books.
Many people are under the impression that because they are buying a home in foreclosure through the short sale process, that they are receiving a home that is free and clear of liens and similar encumbrances. This is not the case; the new home owner will be responsible for liens that pass with the property such as property-tax liens, IRS liens, homeowners’ association liens and municipal liens.
Once a bank approves a short-sale, there is frequently a sense of urgency on behalf of the bank and the seller to sell the property which is often in foreclosure. The purchase and sale agreements are regularly as-is and void of title, lending, appraisal and inspection contingencies. Therefore, the buyer is often in the dark about the condition and state of the property that they are buying.
Serious buyers should proceed with caution and order a title search, which is often obtainable within 24 hours, prior to proceeding with entering into the short-sale purchase agreement for the purchase of the home. Once the title search is reviewed, the buyer may find that due to the existing liens, the house they were thinking of buying is not such a great bargain.
Here at Federal Title our attorneys can assist the buyers with negotiating with the lien holders directly to extinguish the liens for less than face value prior to closing. Federal Title will also assist the buyer in obtaining an owner's title insurance policy which protects the buyer from title defects that weren't disclosed by the seller at or before closing. Using Federal Title and Escrow Company will ensure that you do not get the “short end of the stick” on your short sale.