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posted: 5/20/2012 5:00 AM

Law talk: Despite precautions, buyers of short sales take a risk

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Q. My husband and I are involved in kind of a mess involving our purchase of a house and I'd like to have your opinion on this.

We were scheduled to close one day last week at 10 a.m. We went to the house to do our walk-through at about 9 a.m. and it appeared the seller was just starting to move. He had his two sons over and a truck that didn't look like it would hold everything. It was impossible to do the walk-through as there was stuff everywhere. It was also obvious the seller would not be done by the end of the closing.

At the closing, our attorney asked that $3,000 be held in escrow to guaranty that nothing was damaged during the move and to guaranty seller would be out by the end of the day. We were not planning on moving that day anyway and we felt we were being nice in giving the seller the whole day to move out.

This was a short sale so there were no sales proceeds and seller said he didn't have $3,000 to put into an escrow account. Our choices were either to close or delay the closing until we could conduct a proper walk-through. We elected to close as our financing commitment was up that day and we were going to be charged $850 to extend the commitment.

You can probably guess the rest. The house was left in horrible shape, there was all kinds of damage we had not seen before due to strategic placement of rugs and furniture and they damaged both doors and a railing moving out.

Our attorney wrote seller's attorney requesting reimbursement for the damage but as you would expect, he responded saying the seller had no money. We have probably $4,000 in damages.

Any ideas on where we can go from here?

A. Yep, find $4,000 and repair the damage. I can almost guarantee it will be fruitless to chase the seller for your loss. Folks in the seller's situation generally don't have much cash lying around to pay judgments. And you would need to pay an attorney to file the lawsuit unless you felt you could handle it yourself.

If it's any consolation, even if you were able to conduct a proper walk-through and discovered the damage, probably your only option would have been not to close. As there was no money going to the seller, the only source to pay for the damage was from the seller's lender, who probably would not have agreed to pay you anything and certainly would not have resolved anything that day. I presume you got a pretty good deal on the house. Try to look at it from the perspective that you still got a pretty good deal, just $4,000 less of a good deal.

Q. I am trying to buy a short sale house. I don't have an attorney and there are a couple things I am confused about.

I am told after the seller and I sign the contract, the seller's mortgage company than takes some time to decide whether or not they will approve the deal. I am further told this can take up to three months.

The contract gives me five business days to do an inspection and 30 days to get a loan. I am concerned that I will spend a lot of money on an inspector and an appraisal without even knowing whether or not the seller's mortgage company will approve the deal. Is there a way to protect myself here or is this just one of those things you have to deal with on these kinds of transactions?

A. Virtually all contracts allow proposed modifications to the contract within five business days after seller's acceptance of the offer. In my attorney review letter on short sales, I generally propose that the home inspection and financing contingencies do not start running until written notice, informing the buyer that a seller's lender has approved the contract, is received by purchaser or his or her attorney.

Presuming the provision is accepted by the seller, you would then have five business days from notice of seller's lender's approval to conduct the inspection and notify seller of any inspection issues. You would also have 30 to 45 days to obtain your loan after seller's lender approval.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to or call (847) 359-8983.

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