It has recently come to my attention that a friend of mine in another state is being sued by a Seller he represented in a Short Sale transaction because he didn’t disclose the fact that the homeowner was selling short in a recourse state and could potentially be sued herself for a deficiency judgment. Needless to say, the seller was issued a deficiency judgment by the court in the amount of $48,000.00.
The seller ended up filing bankruptcy to rid themselves of the judgment but, bankruptcy was something they were wanting to avoid all together, hence the short sale.
The seller’s argument is that the agent did not explain the process and potential risk therefore he was incompetent to practice such a highly specialized real estate transaction and should have never engaged the short sale.
The seller also argued that none of the documentation the agent submitted to the bank protected the seller from any future deficiency judgment and proper due diligence was never done.
The case isn’t resolved at this time however, I would like everyone to chime in and give their thoughts. As soon as I learn more about where this went, I will tell ya.
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