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Short Sale Lack of Disclosure Creates E&O Nightmare

Posted by Jesus (Jesse) Gonzalez on August 2, 2009 at 8:47am
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.
Tags: creates, disclosure, e&o, lack, nightmare, sale, short, of
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Posted by Jesus (Jesse) Gonzalez

Jesse Gonzalez is a highly accomplished and respected real estate professional with a wealth of experience in the industry. With a career over 15 years, Jesse has established himself as a leading real estate sales and marketing expert.

As a licensed real estate agent since 2005 and a broker since 2008, Jesse has a comprehensive understanding of the complexities of the market. In 2013, he founded his firm, Liberty House Realty, LLC demonstrating his entrepreneurial spirit and commitment to delivering exceptional service to his clients.

Jesse's expertise extends beyond traditional real estate transactions. He obtained his Registered Appraisal Trainee in 2019, providing him with valuable insights into property valuation and market analysis. Although he decided to focus primarily on sales, his appraisal background gives him a unique advantage in understanding the intricacies of property values and trends.

With a dedication to excellence, Jesse consistently achieves outstanding results for his clients. Last year alone, he closed over $20 million in sales and received the prestigious Sapphire Award from his local association, recognizing his exceptional achievements in the industry.

Beyond his successful career in real estate, Jesse is passionate about education and personal growth. He is completing his undergraduate degree in Forensic Psychology, with plans to attend Law School in the fall of 2024. Jesse's ambition is to become a real estate litigator, focusing on real estate consumer protection law and advocating for the rights and interests of homebuyers and sellers.

As the owner/operator of the nation's largest social network for REO professionals, <a href="http://www.REOProNetwork.com">www.REOProNetwork.com</a>, Jesse has positioned himself as a thought leader and industry influencer. Through this platform, he fosters collaboration and knowledge-sharing among REO agents, attorneys, asset management firms, and other professionals in the field.

With a commitment to professionalism, integrity, and providing a personalized experience for his clients, Jesse Gonzalez is a trusted advisor and a driving force in the real estate industry. Whether assisting clients with buying or selling properties, he consistently goes above and beyond to exceed expectations and ensure successful outcomes.

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Comments

  • Jesus (Jesse) Gonzalez August 2, 2009 at 12:28pm
    Dee, the best thing to do is ask an Attorney. You can try googling it but, not sure if I would completely rely on that.
  • Dee Spraker August 2, 2009 at 11:34am
    Jesse, Even though I have disclosures regarding the possabilities of not only deficiency judgement but also future attachment etc when I do a short sale listing now, how would one find out if their state is a recourse state or not. I am considering getting my license in the state where I grew up and plan to move there within the next year or so. I would like to know what the laws are there regarding recourse - so where would I find that information? Thanks
  • CJ Oliver August 2, 2009 at 11:20am
    I really don't like his chances and I think you hit the nail on the head. Too many agents trying to crack into this segment without proper foundation or in some cases understanding of the basics. There have been numerous suits over the tax implications without proper documentation too. Fortunately, the IRS has eased up on that one. I can't imagine doing one without at least a hold harmless clause built in somewhere.
  • Jesus (Jesse) Gonzalez August 2, 2009 at 10:41am
    Yeah, i think he is going to loose as well. Too many people are claiming to be "Short Sale" experts and they don't have a clue. All my Short Sale I turn over to the bank's negotiator have a seperate Shot Sale Addendum for the bank to sign off on that requires them to promise no future deficiency or promissory...and 9 out of 10, they sign it.
  • Carlos H. Silva Sr. August 2, 2009 at 10:32am
    It sounds like your friend is in a pickle and will probably lose the case.
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