Should foreclosure be disclosed?
Foreclosure means the lender has started a legal procedure to have the property on which it holds the mortgage sold at auction.
This may be a short sale, and it also may not be a short sale. A short sale is not a foreclosure but obviously the two situations can be related.
What is confidential here?
Say a property on Adams Avenue “under foreclosure” is presently worth $375,000 and the mortgage balance due is $300,000. Perhaps the seller lost his job…or a divorce has caused the mortgage payments to go unpaid. If the property is sold for $375,000 or is sold for any amount that exceeds $300,000 plus costs of the sale, there is no need to disclose that the property is in foreclosure as it not a “material fact.”
It does not affect the seller’s ability to perform on the proposed purchase contract and it is a confidential situation.
-----------------------
If loans on a property on Maples Street are $430,000 and Maples Street is presently worth less than $430,000, then the property and the situation can be considered a short sale. In this situation, there is a “material fact;” the seller’s potential inability to perform. This fact needs to be discussed with the seller; consent obtained from the seller and probably disclosed to the transaction.
Confidential information cannot be disclosed without your client’s consent. If it’s not confidential information…just go one more step and get consent to disclose information about the seller in writing anyway.
---
This is a discussion of market conditions and various real estate, lending, and legal procedure. I’m not offering legal advice. I’d suggest legal assistance if you have questions about the legal stuff. In Utah, an attorney is required to obtain a real estate license if she or he regularly processes real estate transactions on behalf of clients.
from The Porch…
Prof Mike • Class Star®
ClassStar offers two, 3-hour core courses a new Utah Law series, and several live courses. www.ClassStar.com. Your business and referrals are appreciated.
The Porch weblog and all contents herein are © 2009-11 Mike Ballif. All rights reserved.
