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Law Pro
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Category: Real Estate Law
Satisfied Customers: 23649
Experience:  20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
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Hello, I recently put a bid on a house that was a "Bank

Resolved Question:

Hello,

I recently put a bid on a house that was a "Bank Approved Short Sale" and a placed $10K "good faith deposit" in an escrow account. I was told that the seller had accepted my offer but we needed to wait for bank approval. I recently discovered that: 1) The mortgage was sold to another lender. 2)There have ben several open houses on the property 3) The house was put up for auction by the new lender. Can they do this, even after our accepted offer in good faith?
Submitted: 9 months ago.
Category: Real Estate Law
Expert:  Law Pro replied 9 months ago.
Hi! My name is XXXXX XXXXX I'll be the attorney assisting you.

Sorry for your situation.

However, for there to be a valid binding short sale contract 3 parties MUST sign the agreement: 1) the buyer (that's you), 2) the seller, and 3) the lender or mortgage lien holder.

Although you had 2 parties signatures - you did not have the bank's signature.

As such, you did not have a "accepted" offer - you and the seller only made an offer to the bank.

I am sorry that I don’t have better news, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers, even when an answer is not favorable to the customer.
Customer: replied 9 months ago.


So, we can assume, since the bank has taken further action (ie the auction), that they did not accept our offer? (According to the auction site the bid which won the auction was slightly higher than ours but did not meet the seller's reserve price.) Also, what happens to my $10k, is it possible to get it back?

Expert:  Law Pro replied 9 months ago.
So, we can assume, since the bank has taken further action (ie the auction), that they did not accept our offer?

Correct. They might not have known about your offer either given the confusion of the sale of the mortgage to another lender (who knows). But you absolutely needed their signature for there to be a binding contract.

The reason being - the mortgage lender has to agree to the short sale or accepting less than the mortgage balance. Most times they want the seller to sign an unsecured note for part of the balance - if the seller refused - then the mortgage company usually won't consider the short sale in other than extreme situations.


(According to the auction site the bid which won the auction was slightly higher than ours but did not meet the seller's reserve price.) Also, what happens to my $10k, is it possible to get it back?

Yes, you are absolutely entitled to get back your deposit. I would be contacting them tomorrow asap as to when they will be refunding your deposit.

Sorry. But given the situation - most likely the glitsche was the transferring of the loan to a new mortgage company.


Law Pro, Lawyer
Category: Real Estate Law
Satisfied Customers: 23649
Experience: 20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
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