We have seen proliferation of short sale buyers who are buying for investment and or quick resale. While there may be no issue with this from a legal perspective (assuming appropriate disclosure and compliance with the terms of the short sale lender’s closing instructions), we urge you to do the following if you are representing a party to a short sale transaction involving an investor:
If you are representing the Seller: Make sure the deposit is large enough to confirm that the buyer is serious, obtain proof of funds to close, do not permit the property to be placed into a trust or similar vehicle pre-closing without having the seller consult with an attorney, inquire as to other pending contracts the buyer may have for other property, and attempt to have the buyer perform inspections as quickly as possible (recognizing of course that the last requirement could be tough).
If you are representing the Buyer/Investor: Make sure that you get some sense as to how long the buyer intends to hold the property, and ask your short sale negotiator to immediately advise you and your buyer of any lender restrictions on (or required disclosures pertaining to) the subsequent sale of the property. Lenders have become very aggressive in their attempts to place post closing conditions on the buyer/property (or require buyer/realtor disclosures regarding plans for the sale of the property) as a condition of their approval.
If you have any questions or would like more information, please contact my office at 941-954-9991
Written by Attorney Evan Berlin Esq.
Posted by Karen Gagliardi, Business Development Coordinator for Berlin Patten.