Doing short sales of condo units has its own nuances. Our short sale was not supposed to be a out of the ordinary. But it came with a twist…
We work with a buyer, so the ball is not in our court. Checking properties going for foreclosure auction, we notice that this unit is going into foreclosure. And it is not the Lender; it is the association that forecloses on the unit. Not being paid in years, they just got frustrated and decided to take action.
We are calling the listing agent. Of course the agent has no clue about foreclosure. We are happy that we caught it on time, and there is time to take care of the problem.
Checking with the agent. He tells us that nothing can be done, period. The attorney for the association advises them to go ahead with foreclosure even though they know about the short sale in progress. At this wonderful moment I get into the Hospital with a heart attack, and I am out of the picture. My assistant turns to the attorney we work with locally, and checks with them.
The attorney places the call to the Association, then to the association‘s big shot out-of-town attorney, but yes, they insist on foreclosing the unit. My assistant calls the Listing agent and explains that we can involve our attorney in the case and try to resolve the issue but then he would have to agree that our attorney does the closing, as otherwise we need to pay legal fees.
By this time I am back from the Hospital, but still lightheaded and easily confused. I am asking my assistant how the things with this deal are, and he tells me that we could not do anything.
The agent said that in Florida the Seller pays Title Insurance and chooses the Title Company, and they will be closing with their Title Company. Yeah, we know that. I called the attorney. Could something be done when everyone is against? I know that the answer is yes, as we have done it twice already. We start discussing the details, and then I am told that it is too late, the auction is 7 minutes away… Should I get out of the Hospital a day earlier, we would have most probably stopped the foreclosure sale.
The association forecloses. Now they are the owners. Of course, subject to the lender in the first position. Which is in itself a very interesting scenario, but this is a topic for another blog…
The listing agent was right. The Seller pays the Title Insurance and has the right to choose the Title Company. However, in the short sale situation the party actually paying for the Title Insurance is the Lender, not the Seller, and the Seller could not care less who does what for as long as they avoid the foreclosure.
But when agency ambitions come to play, then who cares that the Seller loses the property to foreclosure? Who cares that there was a chance to salvage the deal but pride took precedence?
Yes, you have the right to choose, but can you close? It was an ambitious but wrong choice…
What can the listing agent do now? He was representing the Seller, but now the owner is the Association. We have the Buyer, what does he have? The hole from the bagel?
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