Colorado Springs Vintage Homes Blog

Oh no, don’t tell me you have other liens on your short sale property

 Are you thinking about a short-sale on your property?

I learned a very valuable lesson last week on a short sale listing.   I was having a conversation with a title company; and the Escrow Officer reminded me that I should order an O & E (Owner’s and Encumbrances) on my short sale listing.    I did so, and surprise ……… there were two extra liens on the property; two judgements.     The seller is diligently working to see if he can negotiate to get these liens released; but he’s not sure he can get them to go away.  The liens are a large enough dollar amount, that if we don’t get them released, I don’t think we’ll get the lender to accept a short sale.

Consequently, I now ask these questions when pre-qualifiying a seller for a short-sale listing; as not every seller is a good candidate for a short sale.  As much as I want to help sellers in trouble, I need to remind myself that I can’t solve all of their problems; especially when it comes to liens on the property.    Some of the questions I now ask are:

1. Do you have a second mortgage on the property?  Or two? Even by an individual?
2. Who owns those mortgages?  Please provide your most recent statement.
3. Do you have an IRS tax lien on the property?
4. Is there a judgment against you in the county where the property is located?
5. Are there any other liens on the property?  (ie. mechanic liens)

I don’t want to find out after three months of bank negotiations that there is an undiscovered lien the Short Sale lender will not pay.    Lenders will normally will not pay a lien unrelated to the property itself.  That is, the lender will usually cover past due homeowners association fees,  mechanics liens and nuisance fees to a second mortgage holder, but  not others.   The liens have to be paid before the sale can close.

• Colorado Springs Homes, 4 things to know about a short sale - Part I of Short Sales Series
• Avoid Foreclosure, Know Your Options - Part II of Short Sales Series
• Colorado Springs Home Foreclosures – 11 benefits of a short sale - Part III of Short Sales Series
• The final step in the Colorado Foreclosure process – Part IV of Short Sale Series 
• How long does it take to do a Colorado Springs Short Sale? - Part V in Short Sale Series
• What are the credit consequences on a short sale? - Part VI of Short Sale Series
• Are there tax ramifications to a Colorado Springs short sale? — Part VII of Short Sale Series
• What you MUST know about short sales on FHA loans - Part VIII of Short Sale Series
• How do you price a Colorado Springs short sale? - Part IX of Short Sale Series
•  21 reasons short sales fail - Part X of Short Sale Series
• 8 Things You Must Know About VA Short Sales - Part XI

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Kathy (719-287-1049)   KTorline@msn.com

Tags: colorado springs co foreclosures, Colorado springs colorado homes, colorado springs realtors, colorado springs short sales, real estate in colorado springs co, short sales in Colorado Springs

This entry was posted on Wednesday, February 4th, 2009 at 4:33 am and is filed under For Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. On No, don’t tell me you have other liens on your short sale property : Low Cost Loan said at March 2nd, 2009 at 8:07 pm

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