Home Selling in Los Angeles>Question Details

Bill Gross,  in Los Angeles, CA

For any attorneys in California: What are risks of short sale during bankruptcy?

Asked by Bill Gross, Los Angeles, CA Mon May 24, 2010

I am a real estate agent with a prospective client in Chap 7 bankruptcy and losing her house which is way over-encumbered. What legal risks, if any, does she face by listing the house and trying to sell it short after the BK clears. Reasons she may be better off with a short sale would be possible cash for keys compensation, shorted negative credit period, and input into the ultimate buyer of the property in a community where she knows many of the neighbors.

Help the community by answering this question:


Hi Bill,
I'm no attorney and this is not legal advice.
Banks do not accept short sales during bankruptcy.
it is usually better for the client to short sell then bk if possible.

I would not take the short sale if the person has any intention of B K til short sale is done.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate License # 01312992
1 vote Thank Flag Link Thu May 27, 2010
Hello Bill, your client would need to wait until the BK is cleared or she can obtain a letter for the lender. She has no legal risks unless she refinanced, or has a 2nd lien as far as recourse. Most lender with the exception of Bank of America will write in writing paymetn in full however. I am not an attorney, however I list and negotiate many short sells throughout the country and they are very similar. Best of luck.
0 votes Thank Flag Link Mon May 24, 2010
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