Well f*** me sideways with a thousand pinecones…Update on this BS, for anyone who is interested/cares…followed by a question:
Friend of mine is insisting on gettin the place and told me he wanted me to file for specific performance. I toldim we had an ok shot, at it (I’d explain why, but it turns out to be a moot point anyway imho) but the fact the looming trustee sale would moot the whole thing long before the action got heard would complicate matters because we’d need an order shortening time, and/or some sort of order to stay the sale (which i dont think would work)… I dno, basically a total mess.
He told me to go ahead and do it if i wanted a nice retainer… So i said what the hell. Ive known him since high school-- I shipped off to college, ****brick becomes a truck driver, 10yrs later Im $9219821 in debt, and my law career is just barely getting off the ground, and ****brick owns his own trucking company and is pullin 1/2 a mil i bet. So i figure if he wants to throw money at this thing just to make a point or to stay in the good graces of the ole battleaxe or something (future old battleaxe, right now sorta a young n hot, but battleaxe all the same), then 'll go along.
So action gets filed, lis pendens gets recorded, blah blah. I figure ok, ill just talk to this guy and he’ll cave in after gettin papers served on him, etc…INstead sellers really evasive with me (standard, since im the opposing atty and he’s not a lawyer). I tell him to get counsel, he says he’s repping himself, etc. etc. So i call the banks legal and loss mitigation dept, and they basically tell me seller’s gotta sign off. Basically got nowhere, and wasted a few hours in the process.
So im now wondering wtf the guys problem is, and trying to figure why he wont sign. I know its not because theres a better deal out there, because the lis pendens now makes any conveyance impossible. Then i remembered something i read here about tax consequences of short sales so i looked it up and BOOOM there it was. He’s like 400k underwater, All that taxed like normal income, which = short sale costs him like 160-180k. In the event of foreclosure, he only pays capital gains tax on his debt forgiveness (about 300kish) is only like 20%, or 60k. Ok, now i get it, he signs that SS agreement, he signs his own death warrant.
I immediately call my client and tellim to call the seller (It looks bad when an attorney deals directly with a defendant, especially one whose [presumably] in as dire of straits as this guys in) and askim if tax consequences are the reason he backed out, and etc.
So client calls me back a bit later, and relays to me the guys long sob story about how he got approached by a smooth talkin broker and his agent, who convinced him that an SS would get his life right outta the gutter and back on track, and made short shrift of any sort of tax consequences, assuring him that everything would be fine, etc. So the guy signs, then later he figures out that he’s about to be brutally and unrepetentedly sodomized in more ways than he ever presumed possible, so then refuses to sign the final paperwork.
This means a few things:
First, it means that even if i’m right about why the guy has to sign off, he’s got a pretty damn good defense to the formation of the contract in the first place, namely that he was the victim of fraud and misrepresentation.
Secondly, it means that unlike what we thought in the first place, a suit and a couple of motions are not gonna muscle this guy into signing. This guy will die before he agrees to the SS, and i dont blame him.
Thirdly, even if i can proceed against him and manage to win, it makes me a real peice O crap imho. I mean, the guys got kids. I dunno.
SO AT LONG LAST, A FEW QUESTIONS:
I am for now giving up on trying to negotiate/muscle a short sale. However clients spoiled thorn-in-the-balls of a wife really wants the property still, and consequently, client himself still wants it (obv).
I wanted to get him to bid at the trustee sale, but the trustee says that the guy has to bring cash or cashiers checks in the full amount of the offer in order to make any bids at the sale, and as well as ****brick has done for himself, he cannot come up with the $ in cash, at least not feasibly. Hes already got financing in place though, all ready to go from the initial agreement.
ALso, I know that the bank tends to bid the house out at the amount of the outstanding loans (1.1mil onna house worth 700ish at least), and there is obv no way anyones gonna outbid the bank there, cash or otherwise.
So my basic question is what should i do?
I have heard murmers of a ‘closed trustee sale’ where they arrange to take a bid from one person and one person only @ the sale (basically, a short sale without tax issues or brokerage fees, lol). Or hell, just not bidding the thing out at 1.1mil and letting ****brick go and make his bid with say, $300k and a loan commitment for the rest in hand rather than cash.
So basically, I am wondering what the best approach to take with the bank on these matters are, and if theres anything special a noob like myself who knows…well, not that much about this stuff (to put it charitably) ought to do in order to not blow this.
It seems to me that an offer like this is one the bank cant really refuse, i mean its almost market, and it saves them the huge pain in the ass of takin the place, gettin the tenants out (they moved back in), cleanin the place up (place in disrepair now) and then spending money/effort to market it later, when the things probably decreasing in value every second it continues to exist. All that taken into consideration though, i have read/heard 100000 stories of banks rejecting offers that seem like no brainers to me…
Last Question, do brokers agents really do this?? And if so, do they get away with it? This seems like pretty clear cut fraud to me, and its really hard to beleive that people can pull these sorts of shenanigans and get away withem, unless there is applicable law that i dont know…I mean yeah, the whole ‘consult a tax professional’ is in like 912012 different places on the SS agreement, but a misrep by a broker/agent will outweigh that by a mile…
Anyway, any help re: the do’s and don’ts of this is greatly appreciated…
EDIT: Edited a little cause ynever know who reads stuff on the interwebs…