Short Sales in Miami

Arturo R. Alfonso P.A. represents Miami-Dade homeowners, in English and Spanish, who need to sell a home for less than they owe on it. A short sale needs the lender’s written approval, and every other lien on the property still has to be paid or released before the buyer can take clear title. This page explains how the firm handles a short sale from the first review of your loans to the recorded deed, and what to read before you sign anything.

If you are behind on payments or have been served with a foreclosure lawsuit, start with our pages on foreclosure defense and on whether bankruptcy can stop a foreclosure; a short sale is one of several options we review there. For how liens work when any home is sold, see what a lien is and how it affects selling your home. This page covers the short sale itself.

Stage 1: Deciding Whether a Short Sale Fits

A short sale is a sale at a price that does not cover the mortgage balance, where the lender agrees to accept less and release its lien. It is not the only path when a home is worth less than the loan. Depending on your situation, a loan modification, a deed in lieu of foreclosure, a bankruptcy filing, or defending a foreclosure case may fit better. We start with the whole picture: every loan on the property, whether a foreclosure case is open, your income and hardship, and what you want to happen next.

We also pull the title. A short sale closes only if every lien is dealt with, so we look for second mortgages, home equity lines, judgment liens, unpaid property taxes, and association balances in the Official Records of the Miami-Dade Clerk of the Court and Comptroller. Under Section 197.122, Florida Statutes, property taxes are a first lien, superior to all other liens, from January 1 of the year they are levied. For many Miami-Dade properties we also suggest a municipal lien search, because open code enforcement cases and utility balances do not always appear in the recorded documents.

Stage 2: Building the Lender Package

The lender decides whether to approve a short sale, and it decides on paper. Expect to provide a hardship letter, proof of income, bank statements, tax returns, and, once you have a buyer, the listing agreement and the sale contract. When the request goes through your servicer’s loss mitigation process, the federal mortgage servicing rule sets timing duties. Under 12 CFR 1024.41(c)(1), if a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, it must evaluate the borrower for the options available and send a written notice of its decision within 30 days. Because the date the application becomes complete matters, we help you assemble it and keep a record of what was sent and when.

Stage 3: Negotiating Every Lien

The first mortgage lender is rarely the only party that has to agree. A second mortgage or home equity lender may ask for a payment out of the sale before it will release its lien, and the buyer’s title cannot be cleared until it does. If the property is in a condominium or homeowners’ association, the association’s balance has to be accounted for as well.

For condominiums, Section 718.116(8) requires the association to issue an estoppel certificate within 10 business days after a written or electronic request from the unit owner, a unit mortgagee, or either one’s designee. Section 718.116(1)(a) makes a new owner jointly and severally liable with the previous owner for assessments that came due before the transfer, which is why buyers expect the balance to be settled at closing. Our guide to HOA estoppel letters explains how those certificates work.

Stage 4: Reading the Approval Letter Before You Sign

The lender’s approval letter is the central document in a short sale, and we review it with you line by line. It sets the approved price, the closing deadline, the costs the lender will pay, and anything you must contribute. It also says whether the lender keeps the right to pursue the balance left unpaid after the sale, called a deficiency.

Florida law speaks to that balance. Under Section 702.06, a deficiency decree is within the sound discretion of the court, and for owner-occupied residential property the deficiency may not exceed the difference between the outstanding debt, in the case of a short sale, and the property’s fair market value on the date of sale. Whether the lender reserves any claim at all is a matter of the written terms it agrees to, so if the letter is unclear we raise it with the lender before closing, not after.

A forgiven balance can also carry tax consequences. Federal law counts income from discharge of indebtedness as gross income under 26 U.S.C. 61(a)(11), and 26 U.S.C. 108 lists exclusions, including debt discharged in a bankruptcy case or while the taxpayer is insolvent. Whether any exclusion applies to you is a question for your tax professional, and we suggest you ask it before you sign.

Stage 5: Closing and Recording

At closing, the sale proceeds are paid to the lienholders on the terms of their approvals, and the deed is signed before two subscribing witnesses as Section 689.01 requires. The deed and the lien releases are then recorded with the Miami-Dade Clerk’s Office of County Recorder. Our page on residential closings walks through those closing steps in more detail.

If a foreclosure case is pending in the circuit court of the Eleventh Judicial Circuit, a sale date the court has set stays on the calendar until it is canceled or reset through the court. We watch the case docket and the Clerk’s online foreclosure sale calendar alongside the short sale file and keep the lender’s attorney informed of the closing date. After closing, we confirm that the releases were recorded and follow up on the dismissal of any pending case.

What to Bring to Your First Meeting

• Your most recent statement for every mortgage or home equity loan on the property.
• Any foreclosure summons, complaint, or notice of sale, with the date you were served.
• Letters from your lender or servicer, including any loss mitigation application you already sent and proof of when.
• Recent pay stubs, bank statements, and tax returns.
• Your listing agreement, any sale contract, and any condominium or HOA account statement.

Related Pages

• Real Estate Law in Miami
• Foreclosure defense in Miami
• What is a lien and how does it affect selling my home?
• Can bankruptcy stop foreclosure in Florida?
• What is an HOA estoppel letter and who pays for it in Florida?