Within real estate a short sale is defined as one in which proceeds from the sale of a residence or property insufficiently meets the balance of debts secured by liens against the property and the homeowner or property owner is unable to reimburse the full amount, yet the lien holder and/or lender agrees to accept a lesser amount than owed on the total debt. In other words, the amount earned on the sale of the property “falls short” of the original amount due and any unpaid remaining balance is referred to as a “deficiency.”
A short sale agreement does not always fully release a borrower or homeowner from their payment obligations to a lender, although in the state of California, legislation was passed to protect homeowners from their responsibility to repay deficiencies following the short sale of their home or property. Once a short sale has passed, no deficiencies are allowed once the sale is made final.
Exploring a Short Sale as an Alternative to Foreclosure
In an effort to minimize exorbitant fees to both homeowner and creditor, short sales are often employed as an alternative to foreclosure on a home. Both foreclosure and a short sale may result in a negative impact on one’s credit report, but both are viable options for debt relief. Homeowners and borrowers must prove that they are unable to repay the remaining deficiency following a short sale due to extreme financial or economic distress.
Liens held against a residence or property may include a primary mortgage, secondary mortgages, home equity lines of credit and homeowner’s association (HOA) liens. Creditors will need to determine the market value for the residence or parcel via an appraisal and homeowners must generate a “Short Sale Package” outlining why the short sale is required, along with all appraised elements included in the home or property.
The processing time of a short sale can take months to reach conclusion, although in the aftermath of the US financial crisis, lenders and creditors have managed to streamline the process due to the high percentage of defaulted mortgages. It is critical to begin the short sale process with the counsel of an attorney who is educated in the specific laws that pertain to California’s foreclosure and short sale processes. Due to the incredible amount of logistical elements that go into the short sale process and the high percentage of failure resulting from an inability for all involved parties to reach an agreement, many short sales fall through prior to a pre-scheduled date of foreclosure. To avoid this unfortunate situation, call our attorneys to today to schedule a free consultation and begin protecting your assets immediately.
Contact a Los Angeles Short Sale Attorney Today
We are proud of the rock-solid reputation we have earned among our former clients and colleagues and look forward to providing you with high quality legal assistance as you deal with the possibility of Chapter 11 or 13 bankruptcy or foreclosure on your home. Please contact our offices located in Sherman Oaks and Los Angeles today to speak with one of our bilingual staff members and to start the process of financial recovery. As a Southern California debt relief agency, we are standing by to assist you. Call us at (213) 699-3055 today for a free consultation.