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Inheritance and Property Rights/Short-Sale release from liability

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Question
Mr. Horner,

I short-sold my home last year and am concerned about the bank chasing me down for personal liability within their 5 year limit.  I tried to be smart about it, but am not sure if I am safe.

I negotiated a $7,000 payment at the time of closing and just received my 1099-C tax form, does that mean that they have completely forgiven my debt and I can relax?

Thank you for your help.

Answer
Take a look at your contract for the short sale.  When we get involved with these we insist on a clause where there is no further liability on the owner's part.  Owing to the fact you got a 1099 they may well have had that clause in play, but you should look at your contract with them to be sure.

Next, make sure you discuss this short sale with your tax advisor as you may NOT have to pay tax on the forgiven debt.

Good luck.

Lee

Inheritance and Property Rights

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LEE HORNER ESQ.

Expertise

Probate estate and trust questions regarding California and Arizona estates.

Experience

I've been practicing real estate, probate estate and trust law in California since 1985 and in Arizona since 2005. I do NOT do homework questions. I am unable to advise on questions involving the laws of other states.

Organizations
Arizona and California State Bar Associations and the Ninth Circuit Court of Appeals.

Education/Credentials
Business degree from the University of New Mexico Juris Doctorate from Lincoln Law School of Sacramento, CA

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