Q: (Charlotte Laws) Two people have a house owned jointly as tenants in common 50 -50. The loan, however, is only in the (common law) husband’s name. The jointly-owned house is worth around 1 million dollars. The loan is 500k. The husband dies. The property profits will have to be split between the wife and the husband’s heirs. Will the common law wife have roughly 500k to spend on a new house? Or does she owe half of the 500k loan and therefore only have 250k to spend on a new place? The clients never put anything in writing about what would happen to the property if one were to die.
A:      First, and I hate to say this, but you are asking a legal question for your client which we cannot answer. We are your attorneys and not your client’s, and advising the client on this issue would be giving them legal advice. You need to refer the wife to her attorney. That being said, the general rule is that, without authority from Cotenant A, Cotenant B cannot encumber the entire estate and any deed of trust given by Cotenant B only affects his interest in the property. Therefore, upon sale, the loan would be paid off only from the proceeds of the cotenant who gave the deed of trust to the lender. Be aware that this answer does not address any community property issues that might arise from the “common law” marriage you describe. That issue would need to be discussed with the client’s attorney.
Q: (Corinna Albert) When does a property need to be placed on Back up status or Pending during a short sale? Is it when we receive written approval from the lender or when the sellers accept an offer? Thank you.
A:      In the short sale context, upon acceptance of the offer by the seller, you would mark the property as contingent rather than back up or pending, which will notify other agents that a short sale offer has been accepted but will keep the property’s status as active.
Q: (Gwyn Carter Rice) Is there any difference between a “Deed in Lieu Of” and “A Foreclosure”. If so what is the difference?
A:      Yes, there is a difference between a “deed in lieu” transaction and a “foreclosure.” A “deed in lieu” means that, rather than go through the foreclosure process, the property’s owner/borrower will instead sign a deed immediately transferring title of the property to the lender. While this process does save the lender the time and costs involved in foreclosure, in the case of a property with multiple liens it does not give them what they really want: clear title. When the owner deeds the property to the first trust deed holder, the property transfers subject to all other liens that exist, including junior ones. It is the foreclosure process itself that extinguishes junior liens and gives the first trust deed holder clear title. So, unless there is only one lien holder on the property, a deed in lieu is not very practical for the lender.
Q: (Janet Hoover) We are representing the seller in a short sale of his property. He has started the proceedings for bankruptcy. Will this affect the short sale and how?
A:      If your seller files bankruptcy, then the sale of the property comes to a halt and everything has to be done through the bankruptcy court. The sale would need to be approved by the court, as would your listing agreement. So, if there is a bankruptcy, you should ask your seller to contact his bankruptcy lawyer so you can discuss the sale and get an update on how they are going to proceed with the sale of the property, if at all.
Q: (Pablo Chocano) This is an REO house owned by Freddie Mac. Escrow opened on 2/17/11. Stewart Title & Escrow, says that no escrow instructions will be provided (?) Title Report still shows previous home owners on schedule A & B. (not Freddie Mac). Requested any evidence of Freddie Mac as legitimate owner/seller but not received any. Buyers should be removing contingencies by 3/3/11.
A:      I would not remove any contingencies until you can confirm that title is in Freddie Mac and they can perform the contract they have signed.
Q:(Christie Horn) I see new rules have come out – additional disclosures that we must make when we are negotiating the Short Sale on behalf of our clients directly with the lender. Does this make hiring a Short Sale Negotiator more advisable now, or do you not see this as a problem — just complete the mandatory disclosure and CAR will have a form for it on Win-Forms?
A:      You are referring to the new MARS (Mortgage Assistance Relief Services) rules promulgated by the Federal Trade Commission. Those rules require some additional disclosures in certain short sale transactions. We are in the process of evaluating the rules and will have instructions for you and the Company very shortly. Additionally, CAR is creating documents that would satisfy the disclosure requirements of the rule and, when they are completed, we will circulate them to you.