Home Buying in Las Vegas>Question Details

Cameron Wu, Both Buyer and Seller in Los Angeles County, CA

Lender Cancellation, even after initial approval, of short sale property

Asked by Cameron Wu, Los Angeles County, CA Mon Jun 4, 2012

In Nevada, can a lender to a short sale cancel on a lender-approved short sale at any time for any reason? On closing date, the bank refused to sell my property to the buyer because I believe a better offer came in. The buyer is holding up the property by not signing the escrow cancellation. The buyer did everything it needed to do and is quite angry about the situation.

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Wow, Cameron. Clearly YOU and perhaps the listing agent are at fault on this one. How can you, as the owner, not know that you didn't pay your HOA dues forever? How can the listing agent take a short sale and not know how to deal with the bank? Somebody is at fault and it isn't the short sale lender nor the buyer. Wow, I'm shaking my head. How can you say the lender refused to sell the property? You refused to disclose and now you want to blame everyone else. A poor buyer has had to wait this out only to find out you tried to scam the system. No wonder the buyer doesn't want to cancel the deal and keep you on the hook. Since you are a JD/MBA and a real estate investor, you should have known better. Nobody feels sorry for you nor your story that becomes more and more clear by the minute. Cough up the money to close or I suspect the buyer is going to sue you for fraud.
1 vote Thank Flag Link Mon Jun 4, 2012
Hi David. So if I were a complete novice seller and didn't know what was going on, should the listing agent have disclosed to buyers the HOA delinquencies and found out the status of HOA claims immediately? And what do you mean the Escrow company orders the HOA docs? This has to come from the funds of one of the parties... I am assuming you are referring to Seller who have to order HOA docs pursuant to Nevada statutes.
0 votes Thank Flag Link Tue Jun 5, 2012
YES! In a court of law your expertise would be a deciding factor on who might have been responsible for this happening. I am also assuming that a "seasoned" buyers agent would have requested HOA docs on opening escrow and somebody paying for them. You could have asked thre sellers to pay.
Flag Tue Jun 5, 2012
Every escrow company I work with orders HOA docs the minute escrow opens. Plus, I don't know of any serious real estate agent in Las Vegas that doesn'y know HOA unpaid fees are always part of the equation. And, Cameron, you will reposnible for NOT knowing there was no statement of the arreras of HOA dues. Doesn't sound like you are a novice buyer

David Cooper 702-499-7037
0 votes Thank Flag Link Tue Jun 5, 2012
Please explain more about the fraud and causes of action. Assume I am insolvent. Does the listing broker have a responsibility to disclose the delinquent HOA amounts and can potential liability be placed on the broker?
0 votes Thank Flag Link Mon Jun 4, 2012
I agree with John..the HOA balance is a very important piece in the puzzle!
Most of the time, the sellers know when the HOA is not paid.and it should be disclosed to the agents and buyers. The HUD that the lender is provided by the escrow company is based on the information that is provided to them, and the bank is making the their decision base on the bottom net to lender/investor .

The buyer can cancel this agreement if it was not disclose to them or if this fact was disclosed on the HOA resale package during the due diligence period. As you can tell..its an important piece in this transaction!

Rena Levy
Realty Executives of Nevada
Web Reference: http://www.cvegashomes.com
0 votes Thank Flag Link Mon Jun 4, 2012
Well, that is an important missing piece of information. It isn't up to the lender to disclose how much the HOA lien is, they are the lender not the seller. It is the owner's repsonsibility along with the listing agent and escrow's help to determine that.
0 votes Thank Flag Link Mon Jun 4, 2012
The jurisdiction of the property in dispute, by law, puts the burden of cost of HOA docs and these reports on the Seller. In the line item for prorations in our purchase agreement, it says Seller.

Here's another wrinkle in the situation. The original purchase price was X, and the bottom line that the bank would accept is Y. After the buyer did due diligence and found some mold in the kitchen, they reoffered X-$3k. The lender accepted, but then INCREASED their bottom line amount to Y+$3k. This doesn't make much sense as their would be less money coming in, yet a higher bottom line amount.
0 votes Thank Flag Link Mon Jun 4, 2012
The sale was simply not handled right from the start. if the sale was preapproved, the banks would state the absolute lowest they would take, to try and get them to take less does not work. The listing agent should have already pulled a title report to check liens and checkwed with teh hOA for totla fees owed as well as any taxes or utilities BEFORE even looking for a buyer. That way you know exactly what you have to sell it for to cover the bank, the hoa and any othe rfees so the banks ends up with their net. The bank did what they always do, the other players in the sale did not. The buyer should have found teh amount due in their own title search and their own search of back hoa fees so they did not wait until closing to find this out. A preliminary HUD send in with the short sale package could have found this out from the start
0 votes Thank Flag Link Mon Jun 4, 2012
The agent says the cancellation is valid. A few more details are that there was an HOA lien of $3k that the bank did not disclose to Buyer until the day of closing. The purchase agreement states that for closing costs, the bank will cover only $400 of HOA lien. The $3k puts the net proceeds to the bank below their bottom line. However, I don't think the buyer could have known about the lien because it wasn't showing up in title reports probably because it wasn't recorded. It was only disclosed in the HOA doc report. Honestly, I'm thinking that my bank unfairly dealt with the buyer by telling them there was a certain amount owed, establishing a bottom line net amount, and then springing this on them at the last possible point in time.
0 votes Thank Flag Link Mon Jun 4, 2012
The Lenders are omnipotent; they can do whatever they want to do:
This is exactly why Shortsales have taken on the reputation that they have.

There was a lot of talk, the end of last year, about a Shadow Inventory; houses that the Banks were sitting on, waiting for the Market to recover.

Supposedly, when a Bank refuses a Shortsale, they are supposed to file a report with HUD as to WHY:
If the Bank says; "Seller did not qualify", that is all that is necessary; nothing further.

You can be angry, or you can move-on, or you can be angry and move on.

Good luck and may God bless
0 votes Thank Flag Link Mon Jun 4, 2012
What does your agent say?
0 votes Thank Flag Link Mon Jun 4, 2012
You can be believing and wondering. You need to speak to someone that can tell you for sure what is going on. If there was a contract to buy and sell and if all the signatures were there and no conditions unfulfilled it would seem you could not do what you are saying, but you need to seek legal advice here, or the buyer does. There can be a lot of loop holes in short sales and just another reason they are frustrating to deal with.
0 votes Thank Flag Link Mon Jun 4, 2012
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