Short Sales After Bankruptcy? Yes, You Should.
This is a question that gets asked ten times a day around here, and the answer is: If you received a discharge in a bankruptcy case in which you surrendered a piece of real estate, then you don’t HAVE to do a short sale in order to rid yourself of the mortgage debt associated with that real estate. However, there are several other factors to consider that just may convince you that a short sale is still in your best interests.
1. Condominium and/or homeowners association dues and assessments. As long as the property is still in your name (which remains the case until title transfers through the completion of a foreclosure proceeding, deed in lieu of foreclosure, or other transfer of title), you remain liable for association dues and assessments even if you surrendered the property through a bankruptcy proceeding. This can be extremely frustrating if you have already vacated the property and want nothing to do with it anymore. Unfortunately, there is no way to force a lender to take title to a property or to move forward to completion of a foreclosure sale. So, if your lender seems to have no interest in taking title to the property in a speedy manner (or at all), the next best option may be to arrange for someone else to take title through a short sale. That way, as soon as the short sale is completed and title transfers to the new owner, you can officially wipe your hands clean of any future liability for condominium and homeowners association dues and assessments.
2. Personal liability. While you may no longer be on the hook for any mortgage debt associated with your surrendered property, you may still remain personally liable for accidents or injuries that occur on the property as long as you are still the owner of record (see explanation regarding transfer of title above). This why it is important to keep liability insurance in place as long as the property is still titled in your name. Completing a short sale will rid you of this potential liability.
3. Code enforcement violations. Again here, as long as the property is still in your name, you are responsible for maintaining it to the satisfaction of code enforcement rules and regulations. A short sale will help you avoid fines for things like not cutting the grass.
This blog was written by Holly McFall, Esq. of The Dellutri Law Group, P.A. Attorney McFall practices in the areas of Foreclosure Defense and Bankruptcy.
