Let’s dish, some deals just end up so complicated that you feel like banging your head against the wall. I recently had a short sale purchase that started very smoothly with the other agent, but as we proceeded through the escrow process, some very complicated items began to emerge. Short sales are short sales for a reason. This seller had 7 different liens on the property, including the first and second mortgage holder liens, that needed to be cleared before the sale could close with my buyer’s new loan in place.
Getting the first and second mortgage lien holders to agree to the short sale ended up being the easy part of this sale. Additional Lien number one was a Federal income tax lien, the second lien was a State Franchise Tax Board income tax lien, the third lien was an unpaid California State Board of Equalization lien for unpaid sales tax, the fourth lien was unpaid homeowners association monthly dues, and the last was a homeowners special assessment lien. Unfortunately, the listing broker, who should have had the responsibility of clearing these liens, showed herself to be entirely incapable of doing so, so it was left to me to negotiate the release of these liens.
Clearing the Federal income tax lien ended up being the simplest of all of the liens and involved the process of documenting with the IRS that there was no equity in the property and that their lien was worthless. We provided them with a copy of the lender’s appraisal of the property to do so. You can imagine the bureaucratic nightmare we faced in getting to the right people in the IRS to provide the appropriate lien release . The seller of the property, fortunately, was willing to negotiate a payment plan with the State Franchise Tax Board for his unpaid income taxes, and we obtained the release of the State’s income tax lien.
In seeking the State of California Board of Equalization to also release their worthless lien, this became a more complicated process. The State of California was willing to release their lien after providing the same documentation that the property was underwater, provided that no junior lien be paid out of the sales proceeds. The problem, however, was that the HOA was not willing to release their junior liens, even though they were clearly worthless. We tried to argue with the HOA that they could continue to pursue the current owner personally for the unpaid liens and that the only way that they were going to get HOA fees paid again on a current basis was to approve the lien release in order to get a new buyer to start paying dues.
Unfortunately, the HOA was completely unreasonable and insisted that the new owner agree to pay the unpaid assessments. After receiving credits in escrow from the listing broker’s sales commission, my client agreed to pay these unpaid HOA fees after closing, and we were finally able to close.
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.