Question

I have been going thru a short sale since the begginning of the year. We got a buyer and submitted the offer. Back in Augost we got an ok to proceed. Since then the buyer has been lingering the process over two months, there explanation is that they have to complete their shortsale to complete their purchase. Meanwhile, we turned off water, gas and stopped hoa payment thinking it would close soon. My realtor did not inforce the signing of a document that if they break the contract we keep their deposit. I'm loosing money now due to their negligence. Could I go after them for their deposit? or more



Answer

You've got big problems. If you are in a short sale, you are probably in default on your existing loan. Normally, during a short sale, the seller, a willing buyer and your lender agree to terms, which include reconveyance of the deed of trust, for the balance of the purchase price provided by the buyer. The deal is usually negotiated for the lender to waive any deficiency remaining, because the property has been sold "short."



The buyer usually qualifies for his own financing. If he is going through his own short sale, there will not be anything, if at all, left from his short sale, because his buyer's purchase money is going to his existing lender. This means he is also in default, and his credit is bad. It is hard to see how any institutional lender would be willing to give him a loan with an existing default on his credit record.



If your short sale was made contingent upon your prospective buyer obtaining financing, then he has not breached when he fails to get financing, but rather there has been a failure of a contingency. You are going to have to consult with an attorney familiar with real estate law and bring all of the relevant paperwork.