Selling a home can be tough, especially over time when the market and economy changes. Leftover mortgage payments can cause house selling to be a tough task, for no one wants to have existing debts with the bank. For this reason, short sale becomes the best option. A short sale is an agreement with the bank and owner to sell property for less than what the owner’s debt is and omit any unpaid balance owed.
While this method can be a beneficial way to relieve heavy debts, it comes with restrictions. When finishing a short sale, the owner and the buyer sign an Arms Length Affidavit, signifying that that no buyer/seller agreements have been made and that the seller is bargaining in their own interests. Signing this document also states that the buyer is an unrelated third party. If relatives were permitted to buy short sale home, there would be a high potential for mortgage fraud, as it would very likely that the relative would buy the home simply to relieve another of high debt.
In simpler terms, it is illegal for an individual to make a short sale with a relative. Doing so can result in a fine and/or jail time. While this method can be successful if a relative is distant enough to not reveal any relations, it is a risky move and should be taken very seriously as the consequences can be severe.
New buyers are always looking to get a good house for an even better price; the benefits of selling to a relative aren’t worth the costs. But if you wait for the right time, the right people will come and buy your house to help with your debts.
Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.