Short Sale approved but not by Bank? (agent, commission, contract)

[dragon.fly22]

I just got off the phone with my lawyers office. I've been told that the Sellers Bank (Chase) hasn't approved the house for short-sale. Some background: In February I made an offer. It was accepted. I then had the house inspected and found that it needed work such as a new furnace, mold and a couple other things. I then placed a counter offer. Again, it was accepted. I have a signed contract from the seller, I have all the documentation and monies lined up, my bank even sent out an appraiser. I've been sitting here watching the mortgage rates go up and can't get to a good place to lock in. My questions are: Do I have a signed contract or not? How could this process get to this point if the house was never approved for short-sale? and what are my legal options here?

[chet everett]

Legal options? As in can you sue the seller and their agent for not knowing what they are doing?
Probably not worth the effort.

Unless the LENDER is approached well before hand and is prepared to authorize a sale below what is owed the seller is not really able to "accept" an offer, unless they are just how you say "loco de la cabassa" and perhaps WANT to bring a pile of money to closing to satisfy the lender...

[dragon.fly22]

Well, there is no pile of money to bring. But if the Seller wasn't authorized to sell the house - does that mean that the contract is non-binding?

[chet everett]

Originally Posted by dragon.fly22

Well, there is no pile of money to bring. But if the Seller wasn't authorized to sell the house - does that mean that the contract is non-binding?

Like I hinted at, you could probably go to court, and the judge may find that the seller in essence "cheated you" out of something. Since the seller is unable to deliver title (as I suspect they do not have a big ol' pile of cash) the judge could, theoretically, award you a right to SOMETHING from the sellers end.

In the case of a normal deal that the seller backs out of judges have found that the seller was attempting to cheat the buyer and they enter a lis pendens against the title so that down the road when the seller DOES sell the jilted buyer gets something.

The seller in a short sell though get NADA and the lis pendens sorta inflicts a pointless mark against the title...

Probably not worth wasting time.

If you were really mean you could also name the dodo agent in the suit and a judge might find that whatever commission they recieve will somehow be proceeds that you have a right to, but that would take some pretty creative lawyer, and one that expects no future business for the real estate business in town, if you get my drift...

[palmcoasting]

You weren't told it is a short sale and sign a short sale addendum?
Yes, you have a contract. Apparently the seller can't live up to the terms of the contract...unless there is a short sale addendum.
People are strange.

[TexasHorseLady]

Was the house marketed as a short sale initially? Did you sign a short sale addendum? If so, what date did it give for the bank to approve the short sale or the contract would fall out?

[dragon.fly22]

Thank you Chet. As you can imagine - I'm at my last tether and potentially out money, time, and effort.

[2bindenver]

If the seller accepts an offer it is a contract. If the seller needs permission from their lender to release their lien without paying them in full - it is a short sale.

It looks like you have proceeded with the terms of your contract.

You will either need to wait for approval of the sale with the seller's lender or talk to your attorney about getting a release. You have to know what you want.

I can't tell you that you jumped the gun and spent money you didn't need to yet, because I don't know when you learned that this was a short sale. Or how much the seller is deficient. Or who told you what.

[Lake Conroe resident]

Originally Posted by dragon.fly22

I just got off the phone with my lawyers office. I've been told that the Sellers Bank (Chase) hasn't approved the house for short-sale. Some background: In February I made an offer. It was accepted. I then had the house inspected and found that it needed work such as a new furnace, mold and a couple other things. I then placed a counter offer. Again, it was accepted. I have a signed contract from the seller, I have all the documentation and monies lined up, my bank even sent out an appraiser. I've been sitting here watching the mortgage rates go up and can't get to a good place to lock in. My questions are: Do I have a signed contract or not? How could this process get to this point if the house was never approved for short-sale? and what are my legal options here?

Of course the seller is going to "accept" the offer, they're going to accept any offer you bring as they're not going to see a dime anyways... Here's the deal; you really don't have an accepted contract on a short sale until the bank (lien holder(s)) sign off on it.
If you brought the sellers a contract for a hundred bucks they would sign it; like I mentioned they don't see a dime anyways so they could care less.

Why your realtor would advise you to go through with inspections and a lender would send appraisers out without having a contract is the real question here; am I missing something?

Bottom line with shorts; no bank approval, no contract; doesn't matter what the sellers have signed.

[Silverfall]

Originally Posted by Lake Conroe resident

Bottom line with shorts; no bank approval, no contract; doesn't matter what the sellers have signed.

No true. You have a legal contract. In a short sale the seller is the legal owner of the property and can create a legally binding contract with you.

The lender's acceptance of a short sale is a CONTINGENCY in the contract just like a home inspection, appraisal, or financing. They are not the owners they are just satisfying a contingency.
Are you working with an agent or attorney on this, or going FSBO?