Short Sales: Full Disclosure Needed

More than a third of the homes on the market now are short sales. If you are one of these sellers that face this reality of selling your home for less than the amount owed on your mortgage, make sure that you disclose this fact to your realtor. Failing to do so could give you an even bigger problem with a buyer who enters into contract only to find out further into the transaction that you are without enough funds to complete the transaction. This buyer will likely sue you for their damages suffered in reliance on the contract representations.

If you are a realtor, it makes sense to ask the appropriate questions concerning the amount of debt that needs to be paid off on the property, including mortgage balance, taxes,water bills,tax liens, etc. If you fail to ask these questions and proceed to list the property without disclosing on the listing “subject to the approval of the present lender”, you will most likely be added as a party to the buyer’s lawsuit. The allegation against you will be that you were negligent in your responsibilities as the realtor by not inquiring and not disclosing the seller’s financial situation. Read More

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