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Miami Real Estate Dilemma

By Rick & Ines - Miami Beach Real Estate

Real Estate Agent with Majestic Properties 3061802

May 11, 2007 04:04 AM

Talk about a real Miami Real Estate Dilemma! - I have to tell you about this current situation with a real estate customer and we would like your opinion on this matter. Who do you think dropped the ball?

We have a seller that accepted an offer from a more than qualified buyer and everything seemed to be going perfectly.....until......let me tell you the sequence of events so you can know the facts.

The buyer came in with a very strong contract: Miami Real Estate Dilemma

20% down in escrow
pre-qual letter for a loan amount in excess of purchase price
inspections were done
appraisal was perfect
condo approval completed
commitment letter from lender received
closing date verified

It does not get stronger than this, but then we got a call from the title company the day before the closing stating that the bank package had not arrived for the next day morning closing. We proceeded to contact the bank where the loan officer informed us that the underwriter requested an updated work permit or green card for the buyer.

WHAT??

We knew that the buyer worked for a large national fitness chain company and had filed taxes in the US for the past 5 years, and had a social security number. What we did not know was that the buyer was not a US citizen, was here on a worker's visa, and his green card had expired 1 month before.

You need to realize that when you work the Miami Real Estate Industry, you deal with a lot of foreigners on a daily basis. We had never encountered these types of problems with someone who had filled taxes, had a social security number and worked for a major corporation. You would also assume that a large corporation would not have employees that are not legal in the US. Now we had to have the seller sign an addendum extending the closing date until this is resolved. The buyer is in limbo, the seller is in limbo and so is everyone involved in this transaction.

Should we begin asking for current work permits from all our customers? We definitely feel partly responsible for assuming he was current with his immigration status and have learned a valuable lesson. Let's hope it is resolved quickly so we can finalize the transaction and make everyone happy.

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Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Randi - it never ends, no?

Angie - no problem - by no means did I want to insinuate that doing business with non-US citizens is not good practice - the total opposite, we deal with a lot of foreign nationals.

May 11, 2007 07:02 AM

Beth Butler

Beth Butler - Big Mouth Consulting - Miami, FL

Hi Ines- wish I could say this doesn't hapen all the time, but it does. The only way I know to avoid it is to ask any buyer to be prequalified by your trusted mortgage person as a condition to the contract. It steps on some toes, but it does the job. You can't really expect the buyer to know exactly what is needed - they are not experts. We trust our business and our reputations to anyone that comes along... especially in Miami - this is a hazardous practice. When you don't know who you are dealing with, we owe it to ourselves and our sellers to have an expert interview with someone you know and trust before taking the property off the market for 30-45 days only to watch the deal go down the tubes. As Realtors, we don't have to know all of the questions, much less the answers, we just need to have a good team of lenders, attornies, inspectors, etc. to help us along. Only someone with mortgage experience would have known to ask for a copy of the work permit up front. Hope this helps and I hope your deal closes.

May 11, 2007 07:21 AM

Dena Stevens

Rocky Mountain Realty - Canon City, CO

Putting The Real Into Realtor Since 2004

I'm with you and Debi, you can't go around asking everybody for work permits. And what if you didn't ask just one person for theirs?

May 11, 2007 08:00 AM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Beth- I totally see your point, but that scenario belongs in a peachy world where everything is perfect. When customers start finding you on the Internet because they are educated consumers, they will usually come pre-qualified and ready to go with an offer. You better believe we always try for buyers to be pre-qualified by our team, but it doesn't always go our way and the last thing you want to do in this market is loose a good, ready and willing buyer.

This gentleman's loan was being handled by a big local bank, not a little unknown mortgage broker. In addition Rick is very good about managing the transaction and making sure everything is in place - now we'll know one more question to ask. Thanks for the advice.

Dena - the problem here is that there were no red flags or no sirens going off to let us know something was wrong - this is purely a sign of bureaucracy at its best - this guy is a respectable citizen who abides by the law and pays taxes.....let's hope it's resolved quickly.

May 11, 2007 08:25 AM

Lisa Hill

Florida Property Experts - Daytona Beach, FL

Daytona Beach Real Estate

Wow. I can't believe, in this day and age, that someone would let their green card expire; especially when you may have trouble even getting another one.

May 11, 2007 09:49 AM

George Souto

George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT

Your Connecticut Mortgage Expert

Ines, in this cases it is easy to access who is at fault, it is the Lender/Loan Officer unless the Borrower lied to them, I will explain. One of the questions on the forth page of the 1003 (Loan Application) the "Declaration Page" is are you a US Citizen, if "Yes" you move on it "No" the next question asks if they are a Permanent Resident Alien, If the answer is "Yes" then the Lender/Loan Officer needs to get a copy of the Resident Alien Card (Green Card) and check the expiration date on it. If the card expires within the next 12 months then the Lender/Loan Officer needs to have the Borrower file an application to renew their card. The process to renew a card takes time, but the Lender can accept a signed copy of the application that has been stamped as received and in process by the proper authorities.

So as you can see, if the Lender/Loan Officer had done their job, this would have been known at the time of application and could have been taken care of right away, that is unless the Borrower lied to them. This is not uncommon and not a big deal as long as the Loan Officer asks all the questions on the 1003, and collects the proper documentation upfront as he is suppose to. The only time that something like this should ever be a surprise is when the 1003 is first taken and the Borrower does not know that their card will expire within the next 12 months, but after that it should there is no excuse.

May 11, 2007 10:32 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Well that's a bummer. Sounds like one of those things that slipped through the cracks. Hopefully they will be able to sort it out quickly so you can get this one closed. I agree with George that the LO probably dropped the ball on this one. I think for the REALTOR to ask for work visas is a little beyond our responsiblity. Heck we can't verify everything. Thats why LOs and title co.s get paid.

May 11, 2007 10:55 AM

Missy Caulk

Missy Caulk TEAM - Ann Arbor, MI

Savvy Realtor - Ann Arbor Real Estate

Why not add a clause on the Purchase Agreement ? Are you a U.S. Citizen ? Be consistent, so you don't violate Federal Housing Laws.

We have added to our contracts in Ann Arbor, MI, " Are you current on all your mortgages obligations? "

Too many foreclosures.

May 11, 2007 11:33 AM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

George - thanks for the explanation, I will have to check on that and make sure the LO did their job. What's sad about this whole thing is that the buyer can loose in excess of $30,000 if the seller does not grant him an extension.

Bryant - I do think it is beyond our responsibility but at times we feel we babysit everyone around us from LO's to title companies and we try for our transactions to go as smooth as possible even if it means doing someone else's job. But you are right...we cannot verify everything. (btw, I was waiting for your opinion on this, you know I respect the way you do business).

Missy - I don't know if that would be consistent with Fed. Housing Laws, but I will certainly check with our company's legal dept.

May 11, 2007 01:43 PM

Monika McGillicuddy

Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH

Southern NH & the Seacoast Area

Wow what a mess! Expired green card is not a good thing. Especially today with all the heightened security. I feel for you Ines.

May 12, 2007 02:20 AM

ARDELL DellaLoggia

Better Properties Seattle - Kirkland, WA

Must be a better word to use there than "foreigners".

May 12, 2007 02:24 AM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Monika - this customer is as legit as it gets, but it is an important oversight.

Ardell - what's wrong with the word "foreigner"? Do you have a better suggestion? I'm a foreigner and don't see any negative connotations but now I am curious.

May 12, 2007 05:50 AM

Tchaka Owen

Galleria International Realty - Hollywood, FL

Rick, I am with Esko on this - the buyer must shoulder the bulk of the burden. In fact, I am surprised that the buyer would not have disclosed that his green card was about to (or did expire). No excuse whatsoever! Paying taxes does not grant one any waiver from following INS rules. We citizens show ID and non-citizens show proof of permanent residency - simple and plain. I agree the LO should have caught it sooner, but I'm not going to throw him/her under the bus.

To answer your last two questions:

1. No you shouldn't ask for work permit info because a work permit isn't a prerequisite for obtaining a loan.

2. You should not feel guilty or responsible. There are certain things that all people know, like brushing teeth in the morning, knowing our shirt sizes, knowing our residency status, etc.

- Tchaka

May 13, 2007 03:44 PM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Tchaka (you should know by now that it's INES - Rick doesn't blog....but I forgive you). - I do feel somewhat responsible because the guy is goint to loose over $30K and the unit will go back on the market. I know that before I became a Citizen my dad was on top of his green card like a hawk - it took a lot of time, money and effort to get it.

May 14, 2007 01:10 AM

Nick M.

Certified Residential Appraiser- West Palm Beach Real Estate - West Palm Beach, FL

Realtor-Appraiser in West Palm-South Florida Real Estate Appraiser

Hey Rick! living in Miami makes this stuff common. the guy was hiding it and very well knew it. by default, 4 out of 10 people in Miami know more visa law than lawyers. ask me something, i know it.

if i was here on a permit, permiso por favor, expiring in a month! come on!! buyer fraud and LO slack. just ask George.

do we have to ask ""let me see your green-card?".. i wouldn't ask anyone, unless of course he didn't speak English.. then i would be so bold, to ask in Spanish. it's a tough sitch to be in Finesse, hope they get that guy some kinda loan or time to hunt another buyer.

thanks for sharing the experience, i think it will help others in South Florida to be aware.

"oye, donde esta su tarjeta whey" is just not cool to say.

May 24, 2007 04:35 PM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Slick Nick -are you talking to me?

What are you doing talking to Rick - what's wrong with you - show me your green card buddy! : )

May 24, 2007 05:50 PM

Tchaka Owen

Galleria International Realty - Hollywood, FL

Dang, soon Miami will be like South Africa during apartheid!!!

May 24, 2007 06:06 PM

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Tchaka - that's a statement!

May 25, 2007 12:28 AM

Anonymous

Gianni

Is there a law regulating realtors as far as asking or having to find out a buyer's legal status in this country? Thanks!

Oct 03, 2007 12:07 PM

#27

Rick & Ines - Miami Beach Real Estate

Majestic Properties - Miami Beach, FL

Gianni - although your question is very general, I will try to answer with different scenarios. When a Realtor works with a buyer, they will usually pre-approve them and find out different relevant information in order to help them with their search - this is done in order not to waste either the costumer's or the Realtor's time. Pre-approval may involve mortgage and legal status knowledge.

- in a place like Miami that is an International Hub - it's important to ask about Legal status because there will be different legal requirements necessary for the purchase or sale of a home. One example is a federal government regulation that Realtors need to be aware of regarding the purchase of real property in the US by foreign sellers. The IRS requires that buyers withhold 10% of the gross sale price. The buyer then needs to report the purchase and pay the IRS the amount witheld - there are exception to the rule but Realtors should encourage buyers and sellers to consult the IRS or a tax specialist regarding the application of this rule.

I hope that answered your question.

Oct 03, 2007 02:39 PM