Legal Question in Real Estate Law in California

Re: short sale gone bad

Ms. Cowin's answer is very good and accurate. An atorney would have to review all the paperwork to see who is liable. From the facts you present, the one with the greatest liability is the Bank as they negligently breached their contract with you causing the damages you listed which are reasonably forseeable and the loss of profits on the sale/re-sale of the property [if it was your intent to flip the property].

I would suggest you get a copy of the deed of trust that has been filed and calculate what the sales price was, try to find out the location of the new owner [the more work you do yourself, the fewer the hours your attorney will charge you, unless you foul things up] as eventually you will need a statement from them as to what happened [they would have no liability unless they knew about your contract [then intentional inteference with a contract].

For your escrow, make an appointment with the escrow officer and their supervisor,hopefully also their legal counsel. Point out that escrow can not be completed because the bank no longer owns the property, that that is at least a constructive breach ad cancelation of the escrow contract so you do not really need to cancel escrow as it no longer exists. As point blank what they knew about the other potential buyer and sale and ask them to verify that in writing [they will refuse but follow up with a letter setting forth whatthey told you and to correc anything not accurate; that has little force also but gives you something to justify releasing them if you must].

I personally think title Insurance Co. are a rip off employing sub-prime minds, so if they will not release your money you want to add to the release form that you are releasing the Title insurnce company only based upon their representations that the had nothing to do with the foul-up. if yuo can wait a week ortwo to first get an attorney, then just write the title company with the constructive cancellation argument.

As to the Bank, if you plan on going into the business of buying and selling foreclosures, you want to try to avoid alienating them, especially if the work then gets around to other banks You might want to see if you can work out a deal with them that instead of money,or a smaller amount, they give you the inside track on several other short sale homes. .

Re: short sale gone bad

Second half

Bank officals save face, the bank saves money, you have greatly reduced attorney fees [unless you sue for tort damages alleging pain and suffering --not a very strong argument it that occurring beyond what a jury would consider the normal reaction--or their is a provision for attorney fees in the contract that covers the Bank's error as opposed to the duties of the TitleInsurance carrier], the maximum you wuld be awarded is the actual damages you prove plus recoveral court courts. From that sum you have to pay non-recoverable costs, attorney fees, etc. So you would be lucky to get back perhaps 75% of what your actual damages were.

Interview several real estate attorneys in your area. Good luck

Re: short sale gone bad

In a short sale, the bank is not the title holder. The current homeowner is. The bank is just agreeing to cooperate with respect to timelines, and if the offer is less than what's owed on the mortgage, to take a lesser sum. However, unless you have anything in writing from the bank otherwise, the bank is usually not trying to bind itself and will usually continue with the foreclosure process.

What documents do you have wherein the bank is agreeing to something? What about documents where the realtor was making representations about timelines or the bank?

In the event you have a claim, (which will depend upon a review of the documents), and you prevail, you may have a couple of options. First, you are likely entitled to the loss of the bargain, which is usually measured as the difference in the price you agreed to pay and its fair market value at the time of breach. Appraisals are usually backward looking and are usually done for the purposes of mortgage financing. In a declining market, appraisals are scrutinized, because what sold 6 months ago does not tell the story about current market values. So, although the appraisal was $480, it's actual fair market value may be something different. The price paid at the foreclosure sale, if a purchase was made, will also be evidence of fair market value. Second, you may be able to force the sale of the property to you (specific performance) if the foreclosure process wasn't completed, or no one purchased the property leaving the bank as title holder. For this second option, you would have to prove that the bank made specific promises to you that you relied on, and therefore the bank should, in equity, be forced to sell the property to you.

To give you more specific advice on your situation, I would need to review the documents and obtain more facts. Feel free to email or call.

Re: short sale gone bad

The short answer is probably yes. At a minimum, you have a claim against the listing agent's E&O coverage and you need to get your money promptly out of escrow without waiving any rights. The problem is that, although your description of the problem is fairly complete, there is no way to provide good advice without looking at the paperwork. Please call for an appointment or see another reputable real estate attorney. Many attorneys will give you a free initial consultation to see if the case is something they are willing to take. This also gives you a great chance to interview several attorneys to see who you are comfortable retaining. Good luck and sorry your good deal ended up being a big hassle!