We’ve seen some interesting changes lately when it comes to “flipping”; which simply means the buyer intends to sell the property quickly for a profit.
Savvy Investor groups and individual buyers have taken advantage of the short sale opportunities the current market has provided. Buy low sell high has been around forever, patch some holes, slap a coat of paint on and plant some flowers, then sell the home for a hefty profit. Hold on…Ticor Title says the buyer should be extremely cognitive of what the major lenders are now putting in their closing instructions and Short Sale Approval Letters.
First, all parties to the transaction, seller, buyer, listing agent, buyers agent and settlement agent must sign an “Arms Length Affidavit” which states in part, there are no agreements/arrangements between the parties that have not been disclosed to the Lender. No rent backs; no one is lying or deceiving the Lender. Mr. Seller is not selling to his uncle, best friend or neighbor with a strategic plan to undermine the current lender. The Affidavit should be read very carefully before signing.
Many of the major lenders are including in the Affidavit and Short Sale Agreement, Restrictions on when and how much you may sell the property for. Example verbiage: Grantee (buyer) herein is prohibited from conveying captioned property for any sales price for a period of 30 days from the date of this deed. After this 30 day period, Grantee is further prohibited from conveying the property for a sales price greater than $ (120% of short sale price) until 90 days from the date of this deed. These restrictions shall run with the land and are not personal to the Grantee.
Ticor suggests making sure all parties are aware of these possible pitfalls and discuss the documentation with your Realtor, Short Sale Negotiator, Escrow Officer, Title Officer and Real Estate Attorney.
Ticor Title Company is a premier provider of Title and Escrow services and is a member of the Fidelity National Title Group (FNTG). FNTG is a collection of the nation’s largest and most respected title insurance and escrow services companies with nearly 2 billion in claims loss reserve.