Legal Question in Real Estate Law in Florida

I am negotiating a short sale on my primary residence. The Mortgage company is releasing the lien for the sale to proceed but not issuing a 1099-C. The paperwork I sign says I understand they have the right to further pursue collection of the remaining debt.

3 questions related to the Mortgage Co. wanting to maintian the right to come after me once the sale is done:

How long can the mortgage company have the ability to come after me for the outstanding debt?

If I sign the papers stating I understand they can come after me after the sale, do I limit my option for bankruptcy later if there is no way for me to pay, which honestly there likely will not be?

If the sale is in 2011 and the the 1099-C is not issued until after 2012 when the Mortgage Debt Relief Act is null and void, will I be liable for tax on the forgiven amount?

The house is in FL and the mortgage company is out of IL if that matters.

Thanks!


Asked on 11/06/11, 11:19 am

1 Answer from Attorneys
Stephen Orchard Law Offices of Stephen Orchard

Why would you agree to a short sale and not be released from the debt? Seems that there is no incentive, you've done the heavy lifting for the lender (found a buyer, closed, etc.) and you are getting nothing in return. If you are considering bankruptcy that may be a better option now than the short sale. You should consult with an attorney to assist you in this process.

There is a 5 year statute of limitations on a contract, so the lender will have some time to pursue its claim.

You should carefully review the documents you are being asked to sign for non-dischargeability agreements. Without any such agreement then your bankruptcy options should not be limited.

It's impossible to predict what types of rules and regulations will be implemented for these types of situations in the future.

Best of luck

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Answered on 11/07/11, 7:59 am


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