Legal Question in Real Estate Law in Florida

Your mortgage contains a "due on sale" clause. This means that the mortgage must be paid in full upon transfer of the property to anyone. You cannot do a short sale without the bank's cooperation. A short sale means that the bank does not get all of their money. Obviously, the bank is not going to be happy about this. Therefore, you will have to prove that you have NO money and NO assets that can be used to satisfy your debt, and you must convince the bank that foreclosure is imminent. Otherwise, why would they allow you to walk away from your obligation? You will not be allowed to walk away with $10,000. You will not be allowed to walk away with any money from the closing. You will be lucky to not have the bank issue a 1099 for your "windfall" of forgiven debt, (you would owe IRS taxes on the money that you didn't pay back) The bank may require you to repay the $25,000 difference in payments over time. You may qualify for a loan modification as well. You will need an attorney to help you with this.

If you have assets, then you would be smart to rent the property to your potential buyer, assuming that he will pay a rent that exceeds the amount of the Principle Interest Taxes and Insurance on the property. This way, you can keep some excess from the rental payments to provide for maintenance and repairs that will inevitably crop up. You will need a real estate attorney, because rentals for periods of more than 1 year can trigger the "due on sale" clause referenced in the first line of this response. When/If the value of the house goes up to the point that the mortgage is no longer higher than the value, then you can sell the property to him, or anyone else.

If you are truly destitute, then contact the bank and fill out their mountain of paperwork for a short sale, and then wait, and then wait some more. You will have to disclose every detail of your finances including counting the change in your piggy bank. Short sales take 3-10 months. If you don't have a second mortgage, then probably less than 6 months. You will need patience as the bank will lose your documents at least 3 times and make you send them again, so keep copies. Calling them repeatedly and yelling will only move your file to the bottom of the pile on some clerk's desk. You will feel like you are pushing a rope up the hill, because you are. If you can afford to hire an attorney familiar with short sales, they will get better results faster.