Friday, January 28, 2022

Short Sale, Walk-away or Deed in Lieu – eenie, meanie, mynie, moe

Why would you ever want a short sale instead of just a regular sized sale?  Because if you owe more money than your house is worth, your house is considered to be ‘upside down’ or ‘underwater’ and no, that’s not a new exercise regimen or a way of giving birth. There are a million stories in the naked city about how you got that way, but in this article, you’re already there.

If you are unable to negotiate a more manageable mortgage so you can stay in the home, you have to consider other options, like a ‘deed in lieu’, the ‘walk-away’ or a ‘short sale’.  All of these options require that you lose your house, but it’s the additional consequences that will really make you cry.

What if you pick the ‘deed in lieu of foreclosure’ option?  Pretty simple: you give the deed to your property to the bank instead of, (in lieu of) repaying the mortgage. So you ask yourself: if it’s that easy, why isn’t everyone doing it?  Because it’s not that easy and that’s not the end of it.

A ‘walk-away’ is just that: you walk away from the property, usually without the bank knowing about it (some satisfaction there). You move your things out and leave the keys on the counter. I’m not sure why the keys are always on the counter, but I guess that’s nicer than on the floor. So you walk away from your mortgage payments without telling the bank.  Is that legal?  Yes, but other consequences still follow you.

And then there’s the ‘short sale’.  It must be a sale that closes in a short amount of time, right? Wrong!! Because you have to get the bank’s approval, short sales can be the longest real estate transaction ever. (The federal government has supposedly ‘fixed’ this problem by requiring the lenders to give or deny their approval within 10 days.  We’ll see.) Okay, the ‘short’ part means that you are selling your property for a price ‘short’ of or less than the full amount owed on the mortgage. Since your house isn’t worth nearly as much as it used to be, you’d think that the bank would be happy to get some money from you instead of having to sell the property at foreclosure. Nope, not quite satisfied yet. There’s still a pound of flesh that they want out of you – maybe.

After you sign over the deed to the bank or finish the closing in the short sale or leave the keys on the counter, you breathe a sigh of relief because even though it was a hard decision to make, it’s over and done with and you can get on with your life.  Sorry, but that sentence I just wrote, it’s not quite happening yet.  (See Part II – Consequences)

Brenda C. Garretson, Esq. is an attorney with the firm of Rhodes, Tucker & Garretson. She may be reached at P.O. Box 887, Marco Island, FL 34146,
(239) 394-5151, or

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