What is a short sale?  When the sale price of the home is less than the loan amount and the lender accepts a lower payoff.

Nevada is a deficiency state.   During a foreclosure or short sale, if the lender does not receive a full payoff, they have the legal right to sue the borrower for the difference.   If successful in the lawsuit, they may be able to obtain a deficiency judgment.

The time frames in Nevada are as follows:

Foreclosure:       1^st Mortgage:     6 months

2^nd Mortgage:     6 years

Short Sale:          1^st Mortgage  & 2^nd mortgage:    6 years*

*A short sale the lender may agree to accept the proceeds as payment in full and release the homeowner from any future liability and/or judgments.  In this instance, I recommend you obtain something in writing from the lender. The lender should put specific language in the short sale approval letter.

I also recommend making the offer between Seller and Buyer contingent upon the short sale lender releasing the homeowner from liability.  Below is an example of language you may include in an offer:

“Offer is contingent upon short sale lender accepting short sale amount as payment in full with seller paying zero at close of escrow.  Lender agrees to release homeowner from future liability and not seek future deficiency judgments.”

I am also including language recommend by Darren Welsh, Esq. to be inserted into the Greater Las Vegas Association of Realtors Short Sale Addendum:

“The contingency of paragraph 1, page 1 shall not be met until all terms and conditions of Lender Approval are approved by the Seller, at Seller’s sole discretion, and shall include the Seller being released from any future liability from all parties with a vested interest in the forgiven debt.”

If you are facing foreclosure or considering a short sale, it is important to discuss the situation and consequences with an attorney familiar real estate law (in the same state as the property is located).

For other consequences of short sales, please see my blog on credit issues and tax consequences. These are two other separate issues related to short sales and foreclosures.

Please contact TEAM CARVER for all of your real estate needs.  We are Certified Short Sale Professionals.  We look forward to working with you!

TEAM CARVER;  www.TeamCarver.com; sold@TeamCarver.com ; (702) 436-3615

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