In a short sale, the owner still owns the property, not the bank. The bank must approve the "short" payoff. Did you enter into a signed contract with the owner of the property? It sounds like after several months after the "seller" accepted your offer, the bank came back with a 3rd party condition counter offer which was to request another $2600 from you in order to payoff the 2nd lien holder. When you "told the bank" you were going to lower your offer by $2600, how was that communicated from the bank to you and you back to the bank? It seems like you didn't accept their counter and therefore your "contract " would not get 3rdparty approval from the lender. When you say the bank then said they would accept your original offer, how was that communicated to you? And how have they informed you that they now intend to foreclose" When you say "should I be contacting a lawyer?" I ask don't you already have one and an agent for that matter? The information from your post has many loose ends so that none of us can address your issue properly without a lot of further information. As others have already advised you, we are not attorney's and cannot provide legal advice. Navigating through the short sale process successfully without a knowledgeable attorney and realtor is next to impossible, in my opinion.
As you have heard on hear it would have been best to have obtain the services of an attorney from the beginning who is experienced in short sales. At this point that is neither here or there. I will be honest I do not know the laws in Indiana in regards to foreclosure and what the exact foreclosure process is in Indiana. I have notice in our state of Illinois the banks move quicker on properties valued under $250,000 and for the higher priced properties banks drag their feet because they rather have someone living and maintaining the expensive home. I know of several homeowners right now who have been in their $750,000 plus home now at 3 years and have not paid a single penny to live in the home and the banks are finally beginning the foreclosure process. What I do know is that if you retain an attorney at this time it could cost you anywhere from $500 to the entire $2600 difference.
I don't know your exact financial situation and if you are the seller it may be prudent for you to pay the $2600 to get it done and avoid having a foreclosure on your credit report.
Best of luck!
P.S. Why hasn't any Brokers in Indiana responded to you question? Sad.
To have an enforceable contract, all details must be in writing and accepted by all parties. Do you have that? Remember, first you must have a contract with the seller - who you don't even mention in your post. Seller doesnt agree to it, the bank can't sell it. The SELLER IS NOT THE BANK. When the seller accepts, he can only do so with a contingency for 3rd party (meaning uninvolved) approval - that's his bank. When you have a written acceptance from the bank for the deal that is in writing with the seller you have a deal that is enforceable. I can't tell if you have an enforceable contract from your post, but from mine you should know if you do. If you do, then maybe you talk to an attorney who is probably going to tell you that your recourse is against the seller who is actually not at fault in this case, so you can sue but it won't get you anything...probably.
As someone else said, short sales are not for the faint at heart. I understand your frustration but you should have known the risks going in. If your agent warned you and you didn't think it would happen now you know it might. If your agent didn't warn you then get another agent.
1. Always work with someone who knows the process
2. Expect the unexpected
3. Always work with someone who knows the process
4. Understand when you say no to a bank, they expect it means no, and that yes means yes.
5. Get it in writing
6. Always work with someone who knows and understands the process.
You made an offer, it was accepted. You rescinded the offer and offered less.
At that point you lost your negotiating power and voided the first contract. Unless you got all that followed on paper, you have learned what we already know, you no longer have a deal.
If you want the property, engage the lender and see what it is going to take to buy it. Otherwise , move on and understand short sales are anything but short and often the most difficult purchases to make.
You are welcome to contact a lawyer and pay them to find out you do not have a contract, based on what you have shared here.
Trying to drop the price by the demand of the second lien requires that you provide proof of the new value and that holds little water in the first 90 days after the BPO on the property which was used to approve the Short-sale offer.
Number one, you should have retained a lawyer and a Realtor to help you with the purchase from day one. Secondly, do you think you can afford to sue a multi-billion dollar bank that has hundreds of full time attorneys on staff? Number three, read all the documents that you have signed.
You signed away any rights or possible actions you may take in the future. The document in essence, states. you might get the house but might not. And if failure to purchase the house is the banks fault, you agree that it's not their fault......and can not hold them responsible.......and you signed it. That however, is the nature of all short sales.
As others have said, "It's not for the faint of heart."
70% of short sale purchase offers fail in Florida. There is a reason for that.
Unless you are feeling really lucky, you would be well advised to start looking for another house. How this house gets resolved in the foreclosure process may prove even less logical than the short sale experience you just finished. All this for what now appears to be a measly 2,600 dollars. When negations are reopened, the ball can bounce either way.
Best of success in finding your new home,,
Annette Lawrence, Broker/Associate
Reamx Realtec Group
Palm Harbor, FL
This is a most unfortunate and I'm sure disappointing situation. Generally unless approval is accompanied by all essential signatures an agreement is not considered binding.
You have experienced what many real estate agents try to protect their customers from. Knowing the risk and understanding the short sale process going into this venture could have at the very least prepared you for this roller coaster.
Could the lender change their mind again? Anything is possible.....