Buying, selling, insuring your property
Ask a real estate pro: Who gets any money left over after a foreclosure?
Board-certified real estate attorney Gary M. Singer answers housing questions in this space each Friday. To ask him a question about short sales, mortgages, refinancing, homeowner’s associations or any other residential real estate topic, click here.
Q: My friend is facing foreclosure, but she has a good amount of equity in her home. If she does get foreclosed on, and there is money left over, does she get it? – Dean
A: Yes. Any money left over from the amount that the property sells for at the foreclosure auction after paying back the bank would go to the homeowner. But that’s after all costs and fees for the foreclosure and all subordinate lien holders have been paid. To get the money, the homeowner must make a claim with the clerk of court. If your friend is able, she would be much better off just selling the house now and getting more money from the sale.
Q: A buyer recently put my house under contract. It was to be a cash sale. The problem: The buyer defaulted on his deposit when the check bounced. We took the property off the market because of the deal, so can I go after the buyer for the deposit and/or damages? — Joe
A: Probably. In contract matters, it’s the terms of the contract that prevail. Most, if not all, of the standard form real estate sales contracts will call for the seller being able to recover money in a situation such as the one that you describe. Typically, these damages are set forth in the contract as “liquidated damages.” This means that the amount you can recover will be set forth in advance, such as the amount of the deposit, and will not be affected by the actual harm you suffered. This type is popular because it is often difficult to determine what the actual harm was. And by having a liquidated damages provision in the contract, this dispute and any associated lawsuit are avoided. In some contracts, you may be entitled to be compensated for the actual harm that you suffered because of the other person’s bad actions. This is referred to as “actual damages.” Also, if you as the seller don’t live up to your agreements, the buyer may be entitled to something. Their remedies may be the payment of money from the seller or even “specific performance,” which is when the court forces the seller to go forward with the sale. So it is important to read your contract carefully and make sure you understand it before you sign it.
Q: My landlord locked me out when I did not pay my rent. Can he do this? – Anonymous
A: No. This is called a “self-help” eviction and it is a major league no-no. In order for your landlord to evict you from your rented home, he must follow specific statutory guidelines. First, the landlord must give you notice of what you did wrong, such as not paying the rent, with a time frame allowing you to fix the problem. If you do not fix the problem, the notice will end your lease agreement and ability to stay in the property. But the landlord will need to file a lawsuit against you in order to retake legal possession of the house.
Q: How long do you have to be behind before your house goes into foreclosure? — Anonymous
A: Technically, you have to be only one day behind. According to the common law, if you are behind on payments for your mortgage loan, your lender can foreclose. However, most mortgages have specific time frames and guidelines of what must be done before your lender can file the foreclosure lawsuit against you. In the typical Fannie Mae/Freddie Mac mortgage loan, your lender will need to provide you with a notice giving you 30 days to catch up on your payments before it can start the lawsuit, and this letter can be sent only after the typical 15-day grace period to receive your payment has run. So under the typical big lender mortgage loan, you have at least 45 days. Usually it takes about four months before the average foreclosure lawsuit is filed. It is good to watch out for that “30 day letter,” as this is a good indication that the lender is moving your property along toward foreclosure.
Paul Owers, sun-sentinel.com “Read Full Story”
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