Expert: Jim Root - 3/9/2010

Question
im currently in escrow for a short sale in CA. i have signed all required documents with closing dates on them. my closing costs also have been wired to escrow, and i have turned on utilities at the property. however, the day the loan was supposed to fund, my agent told me that they just discovered that there was a second loan out. they didnt know about it because the first bank sold it to another little bank. my offer has been accepted for six and half months and they just found this ( also i paid his debt to the HOA, which didnt come out till months later. it was not in the contract). i was wondering if there is any type of recourse for anyone. every other day there was a new closing day. then i singed the official docs with a closing date and thought that that would be it. but then this last loan came out and everyone was "surprised." how did they not know. can i renegotiate something. i would like recourse for them and is it a breach of contract. can they string me along like without repercussions.

Answer
Hi Amanda--

Short Sales are always difficult.time-comsuming and full of surprises! Oten the Buyer has to shell out some money  that was not expected in order to get the transaction closed! BUT, in my 35+ years as a Real Estate Pro, I can't say I've ever seen one as fouled up as this one.

You've asked about any recourse.--reimbursement for the extrame and money you've put into purchasing this home. And you've asked about whether or not there's a breach of contract here.

Because on a Short Sale there's usually several parties who must sign away their rights to the home,there are usually seveveral contracts  between the Buyer & Seller, and the Seller and the Bank who holds the 1st Mortgage,any Mortgage Insurance Providers :FHA (Insurance) VA (Guarantee) or PMI (Private Mortgage Insurance.)As the Buyer you MAY be a party to any or all of these Contracts, too.All of these folks are trying to see that someone other then themselves gets stuck with the losses.The fine print MAY point to you!

After 6 1/2 months of this, I think you need to consult with an Attorney who specialzes in Real Estate matters.Let the Lawyer go through all your paperwork and detail what's happened to you as you proceeded through your escrow. He/she will be able to determine your "position" and will help you obtain financial recourse if possible.

Short Sales may seem to be "bargains," but as you're seeing now, the problems far outweigh the savings one MAY make in buying a property for less "than it's (currently) worth.

Sorry, and GOD LUCK!

--JIM

PS If you can't afford an Attorney, check with the ocl Bar ssociatrion or Legal Aid Society. One of these Organizations may provide a Lawyer "Pro Bono!"