Uncle Sam is helping out with home buying in the Mountains of North Carolina!

Short sales present problems for closing attorneys because of the need to be sure that the lender accepting the short sale will in fact release the Deed of Trust.  Without being sure, the closing attorney cannot accurately certify that the lien of the Deed of Trust has been satisfied at the closing of the short sale.

Below is a summary of some problems we have seen with short sales and basic practice tips on avoiding them.  The attached memorandum has more details.  Since each transaction is different, please call us any time to discuss issues on your transaction and what we may require to insure the property at closing.

1. Payoff Information. Always get directly from the short sale lender not through a third party.  For property in foreclosure, get written confirmation that the proceedings will be terminated upon closing.   Make sure that any payoff covers fees and costs for the Trustee.

2. Lender Conditions. Watch out for conditions subsequent imposed by the short sale lender that would void the short sale and continue the lien of the Deed of Trust.  Such conditions mean that the certifying attorney cannot accurately certify that the lien of the Deed of Trust has been satisfied at the closing of the short sale.  Examples are in the memorandum.

3. Approving HUD-1. Get written approval directly from all parties of the HUD-1 prior to closing.  The HUD-1 should show all money related to the transaction.

4. Flip Transactions. Both the short sale lender and the purchaser’s lender may have issues with a flip transaction.  Make sure you get authorization from every other party to share the specifics of the transaction with all parties so that each other party can approve it.

5. Arms Length. Short sales should be arm’s length transactions.  Make sure any relationship between the buyer and seller is fully disclosed to all parties involved.

Thank you for your business!