SELLER BEWARE - Massachusetts and New Hampshire short sales - check your arms length transaction paperwork.
My company is a pre-foreclosure acquisition company. We specialize in the purchase, negotiation and resale of short sales in New Hampshire and Massachusetts. Short sales can be a great way for homeowners to avoid foreclosure. We resell the property we take title too, so our disclosures are very specific. Most homeowners and purchasers are required by most lenders to sign an arms length transaction. I will explain that more in a minute, but because we are investors we seem to fall under watchful eyes more than most buyers. That's fine with me because everything we do has been checked, and double checked by my team of lawyers, title companies, agents etc.
We get several calls per week from distressed homeowners and agents wanting to sell us their property and most of these calls are the normal every day calls. We take a LOT of information from homeowners that we are purchasing from. At first I thought it was a fluke, until one week between myself and 2 agents that had called we took 5 phone calls from homeowners that wanted us buy their homes and then either sell or rent them back.
The last call provoked me to write this today. The homeowner had been approached by an investor that stated they would rent the property back to the homeowner. I caution ANY homeowner that accepts this type of arrangement.
Here's why. When we get an approval from a lender and even before we get an approval, typically we are required to sign arms-length-transaction paperwork by the lender. The statement is generally one outlining that we are not related to the homeowner, but in a lot of these we sign a statement that in no way are we going to sell the property back to the homeowner or allow the homeowner to take back possession in any form. Now, because investors in this industry have fallen under a lot of scrutiny I prefer NEVER to do anything that would raise an eyebrow legally. TWICE I was asked to sell a property back to the homeowner's friend or family member. Now legally, that could be done, but I would never do that. To me, that's making an arrangement behind the lender's back for the homeowner to take possession again.
What I told the homeowner who called and said another investor offered her that sort of deal was to make sure that written in her purchase and sale it was COMPLETELY DISCLOSED that the buyer intended to resell the property back to the homeowner. If it wasn't disclosed she better run for the hill, because not only would she and the buyer be party to a potential lawsuit so would the agent, negotiator, and anyone else involved in the transaction. NO THANK YOU, I prefer not to be party to anything that might jeopardize my bread and butter.
This is an example of the verbiage we've seen in a lot of the arms-length-contract addendums:
"Neither the Buyers, or Sellers, nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this Short Sale transaction. None of the parties shall receive any proceeds from this transaction except the approved sales commissions."
Most homeowners are unaware of this type of language in the contracts until it's too late. Most investors work diligently on making sure they follow the guidelines and rules of purchasing and reselling short sales, but then there are those few that will try to bend things, which leaves all parties involved at risk.
Maryann Little is a preforeclosure acquisition specialist and works with homeowners facing foreclosure in New Hampshire and Massachusetts. She is owner of Rapid Property Relief, LLC which specializes in purchasing and negotiation of short sales. Her team of negotiators has completed over 2300 successful negotiations.