Most short sale lenders prefer that the short sale seller continue to live in their house as long as they are maintaining the house (utilities on, cutting the grass, etc) and are actively marketing the house for sale. However, once the lender has approved the short sale, then it becomes an ongoing battle as to what expenses they will allow paid from the sales proceeds.
Uniformly, most short sale lenders will pay the full 6% real estate commission and some fee for recording costs, termite and attorney services. However, these lenders will not usually pay all outstanding HOA dues and/or real estate taxes.
(It's interesting to note, if the real estate taxes and/or insurance are being escrowed, these same short sale lenders will continue to pay both taxes and insurance. Even if the Borrower is no longer making monthly payments, the lenders will normally continue to make these payments.)
The final approval by the short sale lender may not allow all of the delinquent HOA dues to be paid from the sales proceeds. The same may apply for current and/or delinquent real estate taxes. Accordingly, money from outside sources (usually a combination of the Seller, Purchaser or some other third party such as the Realtor) may be needed to resolve these title problems. If the Purchaser is getting a loan, their lender will require that all real estate taxes and HOA dues are current.
The Realtor should continue to encourage the Seller to keep their HOA dues and non-escrowed real estate taxes current. Also, alert the Purchasers in advance that they may be required to assist in clearing these problems, as the Seller, due to their hardship, may not have any funds to pay these bills.
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, VA 434-973-7474
Lake Monticello (Palmyra, VA) 434-589-3636