(Short Sales and Early Possession – Part 2) Last week’s Tuckers Tip discussed the possibility of allowing the Buyer of a Short Sale property to “early occupy” the house prior to the approval by the Short Sale lender. The obvious benefit with early possession is to allow the necessary time for short sale approval.
In addition to having a patient buyer, other benefits include the ability to escrow the rental payment to create a “contingency fund.” Since the Seller is not paying the mortgage payments, the rental income can be escrowed and allowed to accumulate. This contingency fund can be used to deal with extra Short Sale lender demands or closing costs the lender will not allow to be paid from the sales proceeds. Another benefit in allowing the Buyer to occupy the house is that someone is now maintaining the property instead of allowing it to deteriorate if it is vacant. Finally, the Buyer, while living in the house, will be further invested in the approval of the short sale. Accordingly, the Buyer may agree in advance or be willing to help participate with additional cash contributions.
Even if the short sale is unsuccessful, and a foreclosure eventually happens, the Buyer will not have to vacate immediately. Foreclosing lenders are required to provide tenants ninety days to vacate and they may even pay moving expenses to the Buyer (now the tenant.) In other words, the Buyer will probably be offered “cash for keys.”
Again, this “Early Possession by Buyer” strategy for short sales is not without risks. It should be carefully reviewed based on the specific circumstances of each particular short sale. But if the facts warrant it and parties understand the risks and benefits, then the “early possession” may be very beneficial for a successful short sale.
Please contact our firm if you have questions or need legal advice.
Tucker Griffin Barnes - Where deep insight equals powerful advantage.
Tucker Griffin Barnes - Where deep insight equals powerful advantage.
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Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
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