Legal Question in Real Estate Law in Arizona

Re: Short Sale - NOT DISCLOSED

You have a valid claim against the Seller, but it doesn't seem worth pursuing if the Seller doesn't have any money.

Does the Seller have a Realtor? If so, you *might* have a claim against the Seller's Realtor for not disclosing this likely inability of the Seller to deliver clear title.

I have never researched this particular issue, but it's very interesting. Call me on Monday if you want to talk about it.

Re: Short Sale - NOT DISCLOSED

In a real "short sale" the lender agrees to be shorted on the loan payoff to avoid having to take the property back in a foreclosure, because a regular sale at the market price cannot pay off all the mortgage lien. It is agreed in writing with the lender before the closing, and is disclosed to the buyer. These are complicated, and many sellers try to negotiate these in the face of lenders who will not agree. Usually the lender will not agree unless there is a contract already in existence.

A short sale does not necessarily mean that the seller has no money. You have a claim (lawsuit) to enforce the sale, but you can't get clear title at your sale price. One thing to do is get the realtor to waive commission, which will help, in exchange for a release of claims.

This is complicated. You will need an attorney to get through it. It might not be worth it. It is possible to also get someone who knows these transactions to convince the lender to reduce the lien. Short sales are by their nature complicated and tricky for the seller and the buyer as well. See an attorney.

Good luck.