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commercial residential property attorney

Short Sales Residential / Commercial Winnipeg Properties

Homeowners who are facing foreclosure or bankruptcy will often try to sell their home through the short sale process. If a mortgage holder defaults on their payment, the lender is liable to begin foreclosure proceedings, which will negatively impact the credit profile of any person responsible for the loan. In order to begin the short sale process, both the borrower and the property in question must qualify and, the lender must be consent. Let’s go through some of the basics of short sales.

What is a Short Sale?

As discussed above, a short sale can only take place once certain criteria are met. The following are general terms and conditions of a short sale. The borrower must have defaulted on the loan by at least 31 days. The current fair market value for the property must be less than the amount owed on the loan. The borrower should not have any other means of paying off the loan and is facing legitimate hardship with repayment. The borrower’s application for short sale proceedings must be presented to the lender prior to the start of foreclosure proceedings. Finally, and perhaps most importantly, the lender must agree to the short sale by weighing their options between foreclosure and short sale on a case-by-case basis.

Short Sale Process

First, the borrower must file a request with the lending institutions loss mitigation department, as this is the department that deals with the numerous procedures surrounding defaulted accounts. The borrower should seek the help of an accountant as well as a real estate attorney in Winnipeg, MB to determine the tax implications as well as the legal aspects of short sale proceedings. The lender will obtain all pertinent information regarding fair market value and, if the appraisal shows the value to be quite low, it is unlikely that the institution will agree to a short sale.

If the short sale isn’t shot down immediately – or, even it if is – it is time to negotiate with the lender. Your goal is for a judgment of “Paid in full without pursuit of deficiency” meaning any remaining difference between the sale price of the home and what is owed on the loan will be written off by the financial institution and the borrower will not be responsible for any of it. If the lending institution issues a judgment of “deficiency” the borrower must pay the difference.

For approval of a short sale application, the lender will require a hardship letter, documents recording assets, bank statements, etc. The fastest way to sell a home that has been listed for short sale is to have a buyer lined up prior to completing negotiations with the lender. If this is not possible, the property will be listed through a realtor as with traditional sale however if the property does not sell within the agreed upon time frame, foreclosure proceedings will begin.

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