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When a Short Sale Doesn’t Happen

May 8, 2009

banging-head-on-wallThere’s a pretty intricate process we go through when we work through a short sale to a successful closing. Not only do we have to get agreement from any underlying mortgage holders but quite often there may be judgements and liens against the property that have to be released in order to close on the property.

I had that issue today. Got an accepted offer, got the lender to agree to a reduced pay off in order to close. There were 6 outstanding liens against this seller,thus then tied to the property. I got on the phone last week and started contacting the lien holders. I negotiated, on behalf of the seller, to get releases from each of these lien holders in order to be able to close today.

I received verbal acceptance from each on the terms and conditions that would allow us to close. I sent release agreements to each. I received them signed by the lien holder on every one but 1. Today, 1 week after they verbally agreed to a payoff of some dollars to release their lien rights on this property, they decided it wasn’t enough money. They refused to sign the release and thus the closing didn’t occur.

Here’s where this gets frustrating. You see the property is in the process of being foreclosed upon. Once the foreclosure happens, chances are this lien holder, being in 7th position in the line, will not see any dollars for their position.

I was able to get them some payment at this point had they released their lien rights today.

We got the buyer and seller to agree to a 1 week extension. I’m hopeful reason will prevail over the weekend and the lien holder will answer their phone on Monday and agree to the release.

Never a dull moment.

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