I received a couple of questions while I was out on vacation. Here they are, along with our responses:
Q: (Gina De Leo)       My clients made an offer on a condo, April 17. At that time, the MLS stated the HOA dues are $363. We received a counter offer back stating – “Buyer is aware HOA dues have been increased and are now approx. $450 per month.” My buyers feel they are being duped. Is there anything they can do regarding the difference in HOA amounts?
A:       Gina, first this question is really a buyer legal matter, which I cannot technically answer. You should, of course, refer your client to their attorney to determine their legal rights. That being said, while technically a “misrepresentation” was made, I think that the correction of the amount in the counter offer, and therefore before your clients were bound to buy the property, means they never really relied on that representation and therefore they would have a weak claim against the seller. In truth, I think your buyer should decide if they are willing to pay the increased HOA and move forward based on that decision. It doesn’t make sense to buy the condo under the assumption that they are somehow going to be reimbursed by the seller. Getting that reimbursement would be a long, difficult and very unpleasant process.
Q: (Dave Finburgh)       I have a client who initially asked me to represent him in a ‘short sale’. Today, this same client informed me that his ‘credit cleaner’ has highly recommended that he not put the property on the market and attempt a ‘short sale–’ instead, he has given my client a company who will acquire his property from him at the full value of the outstanding note and will then turn around and re-negotiate the terms and value of the note, either by filing a lawsuit against the lender for loan issues or by some other unknown negotiation.
This client is ecstatic that this avenue is available to him and now wishes to pursue this asap. My advise to this client was that I believed that this scenario was too good to be true and that there most likely was a potential for fraud on the bank to be committed. The client refuses to believe me and wanted a ‘legal’ opinion.
In his opinion, the fact that he is Selling his property to this entity at an agreed upon price and that he has no control or knowledge of what the Buyer will ultimately do with the property puts him in the clear! Would appreciate your thoughts on this.
A:       Dave, while I can’t give your client a “legal opinion” I am as skeptical as you are. First, it doesn’t sound like there will actually be a “sale” from him to this company. After all, if that occurred, they would have to negotiate with the lender at the time this transaction closed and any discount would make the deal a short sale. As you describe the transaction, however, the payoff to the lender would be later, after the buyer takes title. That, of course, means that your client would probably be in breach of the due on sale clause in his loan documents. Further, because the bank did not get paid off at the time of his transfer to the buyer does not necessarily mean that any discount taken by the bank would not show up on his record. After all, the loan being discounted is his. So, while there are a lot of facts that we don’t know which would make this proposed transaction clearer, I don’t understand how it would all work to save your client’s credit. I would recommend that your client see his lawyer because, as you said, this whole thing seems “too good to be true.”