Home Buying in Marlborough>Question Details

Ally, Home Buyer in Marlborough, MA

Short sell: Should the Seller's attorney draft a P&S based on what the bank approves? Seller's attorney's fault?

Asked by Ally, Marlborough, MA Sat Nov 28, 2009

We tried to buy a condo. The seller/the bank withdraw at last minute. We think it is the seller's attorney's fault.
1. The seller's attorney sent us the original P&S agreement AFTER the bank approved our offer - contract to purchase.
2. The original P&S says "Seller to pay 3% of purchase price towards closing costs and prepaid items". Our buyer's attorney revised as "Seller to pay 3% of purchase price towards closing costs and prepaid items to BUYER at closing".
3. The seller's attorney approved the revised P&S (email & phone)
4. The seller's attorney approved the "Settlement Statement" on all the dollar amounts, and set the closing day
5. The seller's attorney did not show up on closing - claimed that they're running late and suggested us to sign everything and we did
6. The seller's attorney later informed us the bank did not approve the closing (on 3% credit)?!
Now that the closing did not go through but we have to pay all related costs. And we lost another opportunity due to this.

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Ally’s answer
More updates. It is confirmed that it is the Seller's attorney who made those mistakes. Yet, the Seller's attorney still tries to find excuse to cover up. On top of that, NOT a single word of apology.

Be careful when you deal with a short sell, especially someone like this Seller's attorney. Hope nobody become a victim in the future, either a seller, a buyer, a lender, an agent, or anyone involved.

Just curious, it is probably not common for an attorney to behave like this, isn't it? Any other experience to share?
1 vote Thank Flag Link Wed Dec 2, 2009
Unfortunately short sales are their own animal. If you deal with listing agents and attorneys who have limited experience with short sales it can create a lot of heartache for a lot of people.

Not all lenders/banks will be willing to pay seller paid closing costs, though 80% of them will pay up to 3%. All parties should have signed a PS with language stating that the sale is subject to third party approval acceptable to the seller and you would be provided evidence of approval prior to closing. The demand letter or "short sale approval" would have stated the terms of the short sale and whether the lender would agree to the 3% back. Someone should have picked up on that.

Unfortunately, when dealing with short sales if the PS is written correctly, the terms can change at anytime. That does not mean you have to accept the terms as a buyer, it is your choice to accept or back out. Did you, your attorney or buyers agent ever see the short sale approval?
0 votes Thank Flag Link Tue Nov 1, 2011
several options:
a. wait for the Bank to respond - our offer is very competitive, well above the appraisal.
b. take the loss
c. take some compensation from the seller side
d. legal action

At the time when the bank approved the sale, it should be either with the approval on the credit back or without.
1. If with the credit, then the bank should not have a last minute change (the bank may not have an incentive to withdraw considering our offer was so competitive). If this is the case, is it legal for a bank to change their mind? Any experience?
2. If without, then it is simply the Seller's attorney's fault and the Seller's attorney has to take the responsibility (if the attorney is a professional).

Thanks!
0 votes Thank Flag Link Sun Nov 29, 2009
What does your attorney say are your options? This would be a question of law best handled by an attorney to review your specific options available. It's unfortunate to have to experience this but it's not uncommon in short sales for last minute changes to occur, sometimes with lousy results.

Let us know what happens, it's a rapidly evolving market with short sales, good luck in your future searches,
Web Reference: http://www.MedfordHouse.com
0 votes Thank Flag Link Sat Nov 28, 2009
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