Get expert service & care through San Diego Short Sale Attorney and Broker specializing in Carlsbad, Oceanside, San Diego, and Chula Vista, CA.




Short Sale News


Homeowners and agents alike need to be aware of potential short sale problems before beginning the short sale process. One of the biggest obstacles to a successful short sale can be junior liens. Junior liens are creditors that have a security interest in the property; however, their security interest in the property is subordinate to the primary lien holder. Junior lien holders can take many forms and include, but are not limited to, Home Equity Lines of Credit (“HELOC”), stand alone second liens, mechanic’s liens, judgment liens, tax liens, etc. It is extremely important that both a homeowner and their real estate agent be aware of the existence of any of these prior to beginning the short sale process. Short sale problems start when an inexperienced real estate agent does not investigate the homeowner’s title prior to beginning the short sale process. In a short sale, junior lien holders are typically out of position and are unable to recover any money arising from their security interest in the case of a foreclosure. Junior Lien holders’ power arises when the homeowner wants something from them, such as short sale approval. Junior lien holders will use this empowerment as an opportunity to try and recover as much money as possible. California law prohibits lien holders that agree to a short sale from pursuing a deficiency after agreeing to a short sale. Thus, a Junior Lien holder has the opportunity to either negotiate a full settlement of the account or push the homeowner into a foreclosure and, in the case of recourse liens, pursue the homeowner in an attempt to recover a deficiency judgment. Most Junior Lien holders will negotiate and although they will not always accept the exact amount allocated by the first lien short sale approval, they will put a number on the table which is acceptable to them. Since the homeowner needs clean title in order to complete a short sale and since the junior lien holder has the power to prevent the short sale from being completed by not agreeing to the short sale, homeowners desiring to short sale need to negotiate with these junior lien holders. More problematic are judgment and IRS and state tax liens. These liens must be resolved in order for a short sale to be completed. It is important that homeowners seeking to short sell their homes secure the services of a real estate professional that is capable of handling complex transactions. Once a homeowner has retained a real estate professional to assist them on their short sale it is extremely important that the homeowner disclose any issues that might affect the sale of the property. If properly disclosed, the real estate professional will have time to try and find resolutions instead of finding out about an IRS tax lien at the 11th hour and facing a trustee sale. Homeowners and their real estate professionals are a team and need to work together in order to achieve the common goal of a successful short sale.

July 23rd, 2017

Posted In: Uncategorized

Leave a Reply

Your email address will not be published. Required fields are marked *