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Short sales and their consequences

As a Florida homeowner, you may wonder about the implications and options with a short sale. A short sale is when a home is to be sold for an amount that is less than what is owed to the mortgage holder on the property. Economic changes may create the conditions that cause a homeowner to consider such an approach to disposing of a property, especially if housing values have decreased to the point at which it is unlikely that a sale would be able to recover the amount outstanding on an existing mortgage.

It is important to coordinate a short sale with an experienced attorney due to the fact that a deficiency will exist if a home is sold for less than you owe. Improper handling of a short sale could leave you vulnerable to action by your creditor after the sale of the property has been completed. In some cases, a creditor might wait to seek reimbursement for this amount until you reach a point at which you are financially able to repay part or all of the deficiency.

Because a short sale is often viewed as an alternative to a foreclosure, it may be viewed as a way to gain relief from a financial obligation that exceeds your ability to pay. Mishandling of the process may result in the unintended consequence of later collection actions. Proper handling should include the establishment of an agreement with the bank or other mortgage lender to forgive your deficiency so that you can proceed after the short sale without worry of a future problem.

As you consider options for dealing with a residential property that you can no longer afford to keep, the current real estate market may affect your options for a short sale. For further information in this regard, please visit our residential real estate page.

Source: DL Jones Law, "Miami Short Sale Lawyers", September 04, 2014

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