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 authorize the agent to negotiate short sale transactions, or any type of loan modification.  A person who wants to negotiate a short sale needs to be licensed by the Office of Financial Regulation as a loan originator (I believe).  The alternative is to be an attorney eligible to practice law in Florida. The Florida Supreme Court has made it very clear that title insurance agents are allowed to issue documents related to a closing only when those documents are directly related to the title insurance transaction.  By creating new documents, or modifying existing documents, these agents may be engaging in the unlicensed practice of law as defined by the Supreme Court.” (Emphasis Supplied)

Consequently, it is Berlin Patten’s opinion that a title agent who wishes to conduct all or any portion of the short sale negotiations on behalf of a client must also possess a license with the Office of Financial Regulation or be a licensed attorney. Any referral to a non-licensed title agent to perform such services could be a negligent referral.

It is also our opinion that this same analysis applies with equal force to licensed real estate agents who are conducting short sale discussions/negotiations for their sellers. The failure to possess a license with the Office of Financial Regulation or a Florida Bar license could cause any such real estate agent who is conducting short sale negotiations for their sellers to lose their real estate license, no matter how good their intentions.

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