Short Sales in Florida Demystified: Legal Overview

March 26, 2024

If you’re a homeowner facing financial hardships that make it impossible to make your mortgage payments, you may want to consider a short sale. Generally, this involves selling your property for less than you owe on your mortgage with your lender agreeing to accept it as full payment.
While this is typically a more favorable route than going through the foreclosure process, navigating the ins and outs of short selling usually requires the expertise of a seasoned legal professional.
At Ziegler Diamond Law, our Florida short sale lawyers are here to help you understand the legal and financial implications involved, while guiding you through the process step-by-step. Reach out to us today to schedule your free initial consultation with an attorney you can trust to advocate for your best interests.

What is a Short Sale in Florida?

A short sale meaning is when you (the homeowner) sell your property for an amount less than the outstanding balance on your mortgage. Your lender agrees to forgive the debt that remains, which allows you to avoid foreclosure. For example, suppose your mortgage balance is $250,000, and you find a buyer willing to pay $220,000. In that case, your lender might agree to a sale.
If they do, it would effectively release you from any obligations to repay the $30,000 difference. Not only can this save your credit, but it can also provide many benefits for lenders under tight conditions.

Short Sales vs. Foreclosure: Is There a Difference?

When a homeowner can’t make timely mortgage payments, they may go into foreclosure, or explore alternative methods like short sellings. However, there are key differences between the two that you should be aware of, they include:

  • Control: When you go into foreclosure you lose all control. Your lender takes full ownership of the property and forces the sale of the property. On the other hand, in a short sale, they stay in control during the sale process while negotiating with the lender.
  • Credit Impact: It’s important to note that both foreclosures and short sales can negatively affect your credit scores. However, short selling usually has a less severe impact. Additionally, foreclosures typically stay on your credit report for much longer.
  • Timeframe: The foreclosure process isn’t fast. In fact, it can drag on for months or even years, depending on the situation. While sales short aren’t necessarily a “short” process, they typically resolve faster than foreclosures.

If you’re not sure which option is best for your situation, we’re here to help. Contact us today to speak with a foreclosure defense lawyer in Florida that you can trust.

Specific Regulations of Short Sales in Florida

When it comes to short selling, there are specific guidelines and protections baked into Florida law to help consumers considering this option. With that in mind, here are a few absolutely crucial points to keep in mind:

  • Deficiency Waivers: This isn’t always a guarantee, but generally, lenders in Florida are required to waive deficiency judgments in short sales. This means they’re not allowed to sue you later for the difference between the sale price and the outstanding loan balance.
  • Eligibility: Qualifying for a short selling typically requires you demonstrate a genuine financial hardship that’s preventing you from keeping up with your mortgage payments (e.g., job loss, medical issues, divorce, etc.).
  • Fair Market Value: You can’t just sell your property for the lowest possible amount. For the most part, the sale price needs to align with “fair market value,” which is typically determined by getting an appraisal. This step helps protect the lender from approving a sale for an unreasonably low amount.
  • Approval Process: Specific procedures vary depending on the lender and other factors. However, it’s essential to note that all sale short agreements in Florida must be approved by every lienholder on the property.

The Legal Process of a Short Sale in Florida

Every short selling is different, but generally, when you go through the process – You can expect the following legal process:

  1. Consult an Attorney: A foreclosure defense attorney can assess your eligibility, explain your legal options, and guide you through the entire process.
  2. Gather Documentation: You can’t just say you’re experiencing financial hardship, you’ll need to prove it with evidence. That can include income statements, medical bills, and more.
  3. Submit the Short Sale Package: In many cases, your attorney will work with a real estate agent to develop a comprehensive and compelling short selling package to submit to your lender.
  4. Negotiation: This isn’t one way communication. It’s a negotiation. Thus, in many cases, your lender will review your package and come back with a counteroffer or request further documentation.
  5. Approval: If the lender approves the short selling, you’ll get an agreement that states the terms, including any deficiency waivers and other conditions.
  6. Finding a Buyer: Your real estate agent will list your property with the goal of finding a buyer that’s willing to pay the agreed-upon price.
  7. Closing: Once a buyer is secured, the closing process is similar to a traditional real estate transaction, with the lender receiving the sale proceeds.

The short selling process can be complex, time-consuming, and intimidating, to say the least. Having experienced legal representation can help ensure that your best interests are protected and negotiations are handled strategically.

Benefits and Challenges of Short Sales

Opting for a short sale Florida can provide many advantages to the homeowner and lender. However, there are also a few potential challenges to be aware of before moving forward.

Benefits for Homeowners

  • Avoid Foreclosure: A successful sale stops the foreclosure process, preventing the severe credit damage and emotional distress that typically accompanies it.
  • Potential Deficiency Waiver: Lenders in Florida often agree to waive the right to pursue a deficiency judgment, protecting you from further financial liability.
  • Faster Than Foreclosure: It’s not a speedy process, but Florida short sales generally resolve faster than a lengthy foreclosure process.
  • Less Severe Credit Impact: While your credit score will be affected, a short sell typically causes less damage and allows for faster credit recovery compared to a foreclosure.

Challenges for Homeowners

  • No Guarantee of Approval: Your lender has the right to deny a short selling. If they believe they can recover more money through foreclosure, they may refuse.
  • Time-Consuming and Stressful: The sale process entails a significant amount of paperwork and negotiation, which can be time-consuming and emotionally draining.
  • Potential Tax Liability: Forgiven debt from a short selling might be considered taxable income by the IRS. Consult with a tax professional.
  • Finding a Buyer: Market conditions can make it difficult to find a buyer willing to pay the agreed-upon price within the timeframe set by the lender.

How Do Short Sales Affect Homeowners?

While a sale short can help avoid the worst consequences of foreclosure, it’s important to understand the broader impact:

  • Credit Score: Your credit score will take a hit, but generally less so than a foreclosure. Recovery time depends on your individual circumstances.
  • Future Homeownership: A short selling might prevent you from qualifying for another mortgage for several years.
  • Emotional Toll: Financial hardship and the process of selling your home can be emotionally taxing.

Role of an Attorney in Short Sales

Trying to navigate a short sale without legal representation is like attempting a complex surgery without any medical training – It’s not likely to work out well. With that in mind, working with a foreclosure defense attorney specializing in short selling can provide you with invaluable advantages throughout the process, including:

  • Eligibility Assessment: Your attorney will evaluate your situation to ensure a short sell is the right option for you and not potentially a worse alternative.
  • Negotiation Expertise: They will work on your behalf to get the best possible terms including a deficiency waiver and a favorable timeline.
  • Document Review: These sales are document-heavy. Your attorney will meticulously review all agreements, ensuring every detail is in your best interest and protects your legal rights.
  • Obstacle Navigation: Short-selling approvals, even with experienced lawyers, sometimes face hurdles like junior liens or uncooperative lenders. Your legal representative will use their expertise to find not-so-easy to spot solutions and get your short sell across the finish line.

Essentially, having a skilled attorney working for you significantly increases the chances of successfully navigating the short-selling process and minimizing the negative repercussions.

Contact the Attorney Debt Fighters

If you’re on the verge of losing your home due to financial hardship, it can be emotionally draining and mentally overwhelming. Working with an experienced short sale attorney in the Tampa area can help ensure your rights are protected and you obtain the best possible outcome in your situation.
At Attorney Debt Fighters, we’re here to help you navigate the process step-by-step. We have a deep understanding of foreclosure and short sale laws in Florida, and are here to offer you legal guidance during the process.
Don’t wait until it’s too late to seek the legal advice and representation you need. Contact us today for your free consultation with a foreclosure defense attorney in Florida today.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.