Southwest Florida Title Insurance & Real Estate Blog -

For your education and entertainment, here is a Winged Foot Title scary but true story…

This is the 12th step in our series: “12 Things You Should Know to Survive a Short Sale.”

…that you should always keep in mind while dealing with a short sale:

Winged Foot Title received a request to perform the title work and settlement for the purchase and sale of a condominium in Bonita Springs, Florida.

The subject property was purchased as an investment in late 2005, at the height of the market, by two couples nearing retirement age.

Because of market forces and because of substantial losses in income, the couples decided to list the property for sale.

Scared yet?

Neither the listing agent nor the Title Company bothered to address the issue of domicile (don’t know what this is? Read Tip 11) in August.

Excited by the success of their work, they forwarded the lender’s approval letter to the sellers for their review and approval.

Bank of America’s short sale approval letter had no blanket release or waiver of the lender’s rights to pursue the sellers for any deficiency resulting from the sale. Rightfully concerned about their potential liability, both couples vetted the letters with independent legal counsel.

The first couple, let’s call them the Smiths, were domiciled in Florida. The other couple, let’s call them the Joneses, were domiciled in Ohio and therefore had the approval letter and documents reviewed by an Ohio attorney.

The Smiths’ Florida attorney did not oppose or advise against the Smiths’ agreeing to the terms of approval. Although the attorney would have liked to have found a full release of the Smiths and waiver of the lender’s rights to pursue the Smiths for the deficiency, she determined that in their case the terms of the foreclosure would not be different than the results of letting the foreclosure proceed to completion.

On the other hand, the Joneses’ attorney had major concerns about their agreement to the terms of the letter. Apparently, Ohio law does not provide for the same robust level of debtor protection that Florida law does. Their Ohio attorney advised that it would be in their best interest to engage the lender and lender’s counsel to work toward a settlement and full release of future liability.

Because the Joneses were required to sign off on the transfer of the property, this advice was the death knell of the short sale. Understandably and on advice of counsel, the Joneses could not continue. All of their work was for naught.

The moral of this story is that, even if it hasn’t, domicile will have an impact on your short sales; and you can save yourself a considerable amount of pain and frustration by asking your sellers up front:

  1. Where they are domiciled.
  2. If they have consulted with local (i.e., where they are domiciled) counsel.
  3. If, based on their domicile and their attorney’s advice, they would be willing to agree on not providing a full release from future liability.

That story always gives us bad dreams at night.

12 Things You Should Know to Survive a Short Sale” is a FREE eBook that is available for immediate download at

If you have any real estate or short sales questions – please don’t hesitate to contact us, or call us at (239) 985-4142. We service all of Southwest Florida including: Fort Myers Estero, Bonita Springs, Naples, Cape Coral, Pine Island, Punta Gorda, and Port Charlotte.

– Chris

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NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

Winged Foot Tite, LLC is not associated with the government, and our [short sale orchestration] service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.