Nonlawyer Assisting the Short Sale Seller: Ministerial Acts or UPL?

As you know, short sale negotiations (and negotiators) are coming under great scrutiny by local and federal authorities. There are significant new disclosures for non-attorneys, and now the Florida Bar is weighing in on the subject.

In essence, various proposals under consideration by the Florida Bar suggest that a great deal of the short sale negotiation process is considered the practice of law. As such, we strongly recommend that seller’s of short sale property carefully consider whether or not it is in their best interests to engage a non-attorney short sale negotiation team.

The attached article provides an excellent summary of what a non-lawyer can and cannot do in connection with short sale negotiations. In essence, the article suggests that a non-attorney short sale “negotiator” cannot even negotiate a short sale, but is instead relegated to simple paper pushing (or they run the risk of engaging in the unlicensed practice of law (UPL)). Click here for the article.

Stealing Home

So the contract is signed, the earnest money deposit is in escrow, the lender has approved the loan, the survey is clean, the home inspection reveals no issue, and the closing date is set. What could possibly go wrong? You show up to closing only to find out that the Seller never owned the property! This scenario has…

Relocation to Florida: Looking to your Future, Leaving your Past

We all know about the snowbird, the retiree, the investor, the tourist who asks the question: how do I relocate to Florida, how do I become a resident? Beyond the weather and lifestyle, there are obvious reasons why people want to make that move, including the lack of Florida income and estate taxes, exemptions for property…

Do You Have 2020 Vision for Your Closing?

On behalf of the entire BPE family, we want to wish everyone a Happy New Year. Its times like this where it can be helpful to reflect on the prior year, and since this year is 2020 (presumably the year of “perfect vision”), let’s take a step back and reflect on those instances where the…

Don’t Get Burned By Solar Panels (Or Other Leased Items)

More and more homes are running off the power of the sun these days. Renewable energy has become a trending topic and solar panels are beginning to become prevalent in the state of Florida due to positive environmental impacts and the potential to reduce large A/C bills. Selling a house with solar panels comes with…

Be Thankful You Don’t Receive a Fowl Title Objection Notice

It seems almost obvious, only a plucked turkey would buy property without having a title search conducted to determine if a Thanksgiving feast is in the making, that is to say “title is clear”, or if there are title defects that would render the property unmarketable. This right is provided under the terms and provisions…

Movers and Breakers

Moving day can be an exciting time for many!  However, the thought of moving always causes angst, frustration, and physical/emotional exhaustion.  To avoid most of these emotional and physical moving issues, Sellers and Buyers should research said issues and then eventually hire vetted and reputable moving companies. Moving companies come in all sizes (i.e., National to local) and shapes (i.e., service and costs). …

Survey What, Survey Who?:

A buyer of real property normally is required to procure a survey due to a lender’s requirements. This is not so when a buyer is purchasing real property using cash or private financing. We often see the preceding buyers attempt to reduce their costs by forgoing the cost of a new survey and rely on…

I just noticed something…

Real estate sellers and buyers are often required to provide contractual notices to their counterparties relative to all kinds of different issues.  For instance: cancelling a contract requires timely notice, objecting to title issues requires notice, and financing issues require notice, to name just a few. How does one party provide notice to another?  The…

Standard Or “As Is?” That Is The Question

While Florida law requires no particular form of contract for a real estate transaction, the FR/BAR Contract forms are the most utilized and well-recognized residential contract forms in Florida.  The FR/BAR Contracts, created and approved by a collaboration between the Florida Association of Realtors and the Florida Bar, include two Contract forms: the Residential Contract…

Modern Uses For Life Insurance Trusts

Since the enactment of the Tax Cut and Jobs Act of 2017, the utility of the irrevocable life insurance trust (ILIT) has been in question. The substantial increase in the federal estate tax exemption–$11.4 million for an individual and $22.8 million for a married couple in 2019-greatly reduced the need for estate planning aimed at…

Can I Get A Pre-Nup (Or A Post-Nup)?!?

  With respect to real property transactions, understanding contracts is a daily challenge.  Whether it is a listing agreement, an “As Is” agreement, or even a warranty deed, contracts are at the heart of what real estate agents deal with (outside of the actual clients.)  On occasion, non-real estate contracts will creep into a transaction…

Property Sharing: Yours, Mine and Ours

Many times property ends up having some form of shared ownership. Sometimes it is simply in the form of joint tenants or tenants in common, but sometimes more complex forms are involved such as life estates, ownership through entities or even by agreement (such as a co-habitation agreement). Over the years, statutes and common law…

DON’T BE CAUGHT WITH YOUR PANTS DOWN

Have you ever represented a Buyer that literally waits to the last second to inform you, via email, that they want to terminate a contract?  As a Realtor, what are your obligations?  Generally speaking your obligation (as Selling Agent) is to deliver the written notice of termination (or signed Release and Termination) to the Listing…

Am I Bound or Can I Entertain Other Offers?

“Do I have a valid agreement or can I entertain other offers?” In this day and age, this a question that is becoming increasingly prevalent.  For example, you receive a call from a buyer’s agent and the agent indicates that their client has agreed to buy your listing at full price, with no contingencies, closing…

Can Brokers Put a Lien on Real Property for Payment of Commission?

You are the listing agent, and the seller decides to dispute the amount of your commission or breaches the listing agreement and fails to pay your earned commission.  What are your remedies?  We often receive requests from brokers to place a lien for commissions on the real property being sold.  However, this is not an…

Inspection “CYA” in a Demanding Marketplace

Real estate professionals are often asked to perform many tasks for their clients. Such requests can include recommending inspectors, contractors, and even performing final walk through inspections.  In what is an extremely competitive market, it would be nonsensical to suggest that any prudent real estate professional  refuse to provide the best service they can. In…

Size Does Matter

With the rapid increase in new construction, have you ever asked yourself, how is the seller calculating square footages? This might seem like a simple question, but believe it or not, the answer is not always that simple. Do not make assumptions about how square footages are being determined, such as the normal assumption that…

Best Practices – Why is this Important?

Are you aware that most title underwriters, lenders, and insurers are now requiring real estate attorneys/title agents (“title agents”) to maintain a Best Practices Policy and Procedures Manual (“Manual”)?  In fact, some title underwriters may “drop” or not approve a new title agent if there is no Manual in place and lenders have been known…

Time to Get Your Head Out of the Sand and Pursue that Short Sale

Most everyone is familiar with the terms “strategic default” and “deficiency balance.”  In fact, over the years Berlin Patten has repeatedly addressed the importance of getting legal representation in foreclosure actions, short sales, and debt negotiation.  However, we have seen countless instances of people choosing to essentially bury their heads in the sand and ignore…

BUYER IS IN CONTROL OF FOREIGN’S SELLER’S FIRPTA WITHHOLDING UNDER THE REVISED 8/13 FLORIDA REALTORS/FLORIDA BAR (“FR/BAR”) CONTRACT FORMS.

  Under the revised FR/BAR contract forms, Section 18 Standard V replaces the FIRPTA RIDER previously known as Rider I.  Apparently, agents were neglecting to incorporate Rider I into the Contract when the seller was a “foreign person” under the Foreign Investment in Real Property Tax Act (“FIRPTA”).   With the increase in transactions involving foreign…

Increase in Real Estate Transactions Involving Foreign Buyers & Sellers

  The local press recently published an article that spoke to the increase in real estate transactions involving foreigners.  It is true that instances in which a transaction involves a foreign buyer or seller have increased substantially. We expect that trend to continue. Transactions involving foreigners can be quite complex, and involve issues that are…

Follow Up To “New Catch-22 In Short Sale Negotiation”

We have received tremendous feedback to our recent blog concerning lender(s) who are now forcing sellers to use auction companies to further market their property as a precondition to short sale approval.  Our previous suggestions to attempt to address the situation were (a) encourage the seller to incorporate language in their contracts to permit the…

The New Foreclosure Legislation is Now Law and Affects More Than Just Foreclosures

On July 1, 2013, many revisions to the Florida foreclosure statutes went into effect. While many of the new provisions are technical in nature and primarily effect attorneys practicing foreclosure law, the overall effect is a dramatic change in the foreclosures process and the rights of struggling homeowners. Also, most of the changes are retroactive,…

Tips on Inspection Periods for Short Sale Transactions

As most of you have likely seen, the demand in today’s market for short sale properties is very high, with decreasing inventory and a large pool of buyers.  In fact, property prices are increasing in many areas because of this high demand, and short sale sellers are often receiving many offers – some possibly even…

The AS-IS Contract And Disclosure

When a transaction is an AS-IS sale, the seller often insists that the property is in “AS-IS” condition in an attempt to reduce repair limits/credits and possibly shift the responsibility for determining the true condition of the property to the buyer.  It is well known that the buyer is typically given a specified period of…

Should I Order A New Survey Or Rely On A Prior Survey?

Our clients often ask this question when they are purchasing residential property. You can only rely on the prior survey if the Seller has an existing survey accurately depicting the property and the Seller can sign an affidavit at closing that there have been no changes to the property since the date of the survey.…

Substituting Contract Pages

We have noticed an increase in a practice, that if not done with full and proper disclosure, could lead to substantial trouble for the parties involved, including civil liability, license forfeiture, or worse yet, criminal sanctions.  The practice involves changing and/or substituting pages to a fully executed contract.   While we recognize the reality that…

Preventing Post Closing Issues

Many clients, their agents, and unfortunately some closing/title agents believe that the end of a real estate transaction occurs when it closes and funds.  Too many times we have seen post-closing glitches, oversight, or lack of follow-up lead to problems with the future sale of a property.  Over the last few weeks we have run…

Dealing With Entities As Buyers In Investment Properties

As most of you are aware, more and more investors are coming to this area to invest in distressed properties. The result is an increasing number of short sale contracts in which the buyers are entities (such as LLCs) rather than individuals. Typically, short sale lenders require the seller to provide a slew of documentation,…

Navigating a Short Sale – Tips & Reminders

With the extension of deficiency waiver tax relief, we have seen no slowdown with respect to short sales, and do not anticipate a slowdown in the foreseeable future.  With that in mind, we wanted to remind anyone who routinely handles short sales to consider the following: Do not forget about how critical it is to…

How to Effectively Use an Attorney From a Realtor’s Perspective

We have found with our experience that most real estate professionals are not aware of how they can most effectively utilize an attorney throughout a real estate transaction to not only protect themselves, but to better serve their clients. Many real estate professionals (and/or even their clients) are under the assumption that they will receive…

Another Reason to Complete Your Residential Real Estate Transaction in 2012

Beginning January 1, 2013, a new 3.8% tax on some investment income will take effect.  The tax was passed by Congress to help fund the health care and Medicare overhaul. Recently, we have been receiving multiple inquiries regarding the new 3.8% capital gain tax and what impact it will have on residential real estate transactions. …

Bankruptcy Follow-up: Short Sales Post Bankruptcy

Originally Published by Berlin Patten on October 12, 2012 With the proliferation of bankruptcy filings over the last several years, we have received a number of inquiries regarding the completion of a short sale following a bankruptcy.  Yes, there are lawyers who may suggest that a homeowner who has been discharged from a bankruptcy (and…

Removal of Second Mortgages in Chapter 7 Bankruptcy Cases

Previously, the general rule in bankruptcy was that if a homeowner wanted to “strip off” or remove a second mortgage, he or she could only do so in a Chapter 13 bankruptcy.  However, that has now changed. In McNeal v. GMAC Mortg., LLC (In re McNeal), 2012 U.S. App. LEXIS 9589 (11th Cir. 2012), the…

Home Affordable Foreclosure Alternatives (HAFA) Short Sale Update

Originally Published: 6/19/2012 Effective June 1, 2012, the following changes were implemented in the HAFA Program: TIME FRAME EXTENDED: The program has been extended to Dec. 31, 2013. The HAFA short sale can be initiated up to Dec. 31, 2013; however, the transaction must have a closing date on or before Sept. 30, 2014. ELIGIBILITY…

Cancellation of Foreclosure Sale by Filing Bankruptcy

Originally Published: 6/13/2012 In many cases, during the process of negotiating a short sale, the lender may have already begun foreclosure proceedings. When that happens, a race begins between the seller and the bank: either the lender forecloses first, thus preventing the short sale, or the seller completes a short sale before foreclosure. Many sellers,…

SHORT SALE CONTRACT DEPOSIT DEADLINES – EFFECTIVE DATE OR UPON SHORT SALE APPROVAL?

Originally Published: 5/4/2012 With 2012 being the year of the Short Sale, you need to be familiar with differences in the contract forms being used in the marketplace. Typically, in a short sale transaction, we are seeing the Florida Realtors/Florida Bar (“FR/BAR”) As Is Residential Contract form (“As-Is Contract”) being used along with either the…

Deficiency – What is it and How Much Time Does My Bank Have to Sue?

Originally Published: 3/27/2012 When an underwater home is sold in a short sale or a foreclosure, the greatest concern is almost always over the remaining mortgage balance owed by the homeowner (known as a “deficiency balance”) and how long the lender has to try to collect it.  When a property is sold in short sale,…

How Bankruptcy Can Backfire on Homeowners in Foreclosure

Originally Published: 3/12/2012 Many homeowners resort to filing bankruptcy in order to stop an imminent foreclosure on homestead property when no other legal options are available.  While, in most cases, the mortgage holder can still foreclose on the property, it cannot do so until the property is released from the bankruptcy estate.  This can take…

Backup Offers

Originally Published: 2/22/2012 Most short sale addenda have provisions for backup offers if you check the appropriate box. It is our opinion that, generally speaking, you should not check the box permitting backup offers when dealing with a short sale. It creates too many unnecessary legal and practical issues. Most importantly, many lenders and their…

Cautionary Tale Regarding Wells Fargo

The Sarasota Herald Tribune recently published an article that stated that Wells Fargo had a short sale incentive/fast track program in place. The article, which is consistent with other published articles we have seen, suggested that Wells Fargo would be willing to fast track short sale approvals and even make payments to short sale sellers…

Foreclosure Update

As most are painfully aware, Florida foreclosures suffered tremendously last year after the discovery of apparent rampant fraud by both lenders and foreclosure attorneys in prosecuting foreclosure actions. Many existing foreclosure lawsuits came to a sudden halt, and new filings dropped significantly. As a result of this, along with the poor foreclosure practices of many…

Bank of America Short Sale Seminar Summary

The Berlin Patten short sale negotiating team recently attended a Bank of America Short Sale Seminar.  The following is a brief summary of what Bank of America advised its seminar’s attendees:  Short sales are about two primary things to Bank of America:  Hardship and net proceeds Investors are reluctant to postpone foreclosures as the buyer…

Response to Anonymous Blog Entry: Title Agents should still not be conducting short sale negotiations

On or about September 30, 2011, an anonymous reader provided a response to a blog Berlin Patten had sent to its readers regarding who can or should be engaged in the negotiation of short sales. While we debated whether or not to further comment on the subject (as the blog response did not really specifically…

Short Sale “Pre-Approvals”

We are frequently asked about listings being marketed as “pre-approved” in the MLS. We suspect this designation is intended to imply or suggest that there can be a quick closing.  We feel that the use of the term “pre-approved” can be misleading and lead to unrealistic or false expectations. Other than a pre-approval under HAFA,…

Short Sale Negotiations

We have been asked by several real estate agents to investigate whether or not a title company or title agent can conduct short sale negotiations. One of Berlin Patten’s contacts at the Florida Department of Financial Services, Bureau of Investigation, Title Services, responded to our inquiry as follows: “The license for a title insurance agent does not…

Fraud Investigation – A Top Priority for Freddie Mac

In previous blogs, we have discussed our concerns about short sale fraud and the warning signals to watch for.  According to Freddie Mac’s Mortgage Fraud Officer, Short sale fraud has also become the top priority for Freddie Mac’s fraud investigation unit as well. Per the attached article, recent trends that Freddie has been alerting Real…

Assignable Contracts & Specific Buyers

Please be advised that short sale lenders are getting very strict about approving the specific buyer identified on the contract. As such, lenders are carefully scrutinizing assignment provisions in contracts. Short sale lenders who are reviewing contracts (that permit the contract to be assigned) are kicking back the contracts more and more frequently.) Lenders are…

Berlin Patten’s Short Sale and Bankruptcy Services

Real Estate professionals are frequently confronted with listing a short sale property encumbered by two or more mortgages and a seller who is strongly considering bankruptcy as its “exit strategy.” We have struggled with that same scenario… working on a short sale for months, and then the seller decides to file for bankruptcy. At that…

HAFA Policy Changes for Servicers

Lenders’ inconsistent eligibility requirements seem to be the most consistent thing we have seen with respect to the Federal Government’s HAFA (Home Affordable Foreclosure Alternatives) Program.  The Federal Government seems to have taken notice. On August 9, 2011, the Home Affordable Foreclosure Alternatives Program adopted certain policy guideline changes.  The changes, we presume, are in…

The Importance of a Municipal Lien Search

Performing a municipal lien search is crucial when purchasing property in this day and age. In many cases there are unknown or undisclosed fees, costs or other issues that will impact a buyer post-closing. In addition a municipal lien search generally will assist a seller in complying with contractual terms to avoid a default. Examples…

Short Sales – Working with Second Lenders

Anyone who works with short sales knows that it can be very difficult to get short sales approved when there is a second (or even third lender). To successfully complete a short sale, ALL lenders (among others) must agree. The problem is that in many instances, they do not. In fact, we have seen situations…

A New Buyer Can Be Substituted for One Who Walked

We have learned of a very interesting development with respect to Bank of America. Bank of America has advised that it will permit a new buyer to step into the shoes of a buyer who has walked away from a transaction.  Furthermore, Bank of America has advised that the process will not have to begin…

Deficiencies and Deficiency Judgements

We spend a great deal of time counseling prospective short sale sellers regarding the advantages of attempting to pursue a short sale rather than allowing their property to go through the foreclosure process. Many people do not realize that the foreclosure process is a two step process. The first step is the sale of the…

Bank of America Realtor/Broker Listing Agent Certification – Questions and Answers

The new Bank of America Realtor/Broker Listing Agent Certification (the “Certification”) has fostered some significant concern among real estate agents. The most common questions and our comments/responses are as follows: 1. Question: Does paragraph 1 of the Certification mean that Bank of America will not pay a commission. Answer: No! Bank of America never paid…

Wells Fargo Short Sale Addendum

As expected, Wells Fargo has followed suit with Bank of America and has put out a new Short Sale Affidavit (attached hereto). Similar to the agreements recently published by Bank of America, Wells Fargo appears to be getting more aggressive in trying to curb flips and low offers and is now requiring realtors and closing…

Bank of America Document Warning

Please be advised that Bank of America is now requiring the parties to a short sale transaction to execute certain form documents before they will consider your short sale for approval. The buyer and seller will be required to execute a new addendum, and somewhat interestingly, the agents involved in the transaction will also need…

FTC Issues New Rules for MARS

The Federal Trade Commission (FTC) has issued new rules that might impact real estate practitioners who represent clients involved in short sale transactions. The Mortgage Assistance Relief Services (“MARS”) regulations define anyone providing services which assist or attempt to assist the consumer in negotiating a short sale as a “MARS” provider. Depending on certain factors,…

“No Cost” Short Sales

You may have seen solicitations from companies announcing “NO COST” Short Sales that can be closed quickly, sometimes as quickly as 45 days. We suggest that you use great caution when engaging these companies or recommending these companies to short sale sellers. First, there is no such thing as a free ride. In most cases,…
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