What is a "Short Sale?"

What is a short sale of real estate?

In a short sale, the seller attempts to sell his property for less than the amount owed on the mortgage or mortgages.  The lender agrees to accept less than the amount owed and discharges the lien allowing the buyer to obtain clear title.

Will a short sale satisfy my lender in full or will I still owe them the balance?

It depends, it depends, it depends!  This is a matter of negotiating the best deal with your lender.  In some cases, the lender can be pursuaded that accepting the short sale amount is better than seeking foreclosure or a deficiency judgment against you. 

Do I have to prove a "hardship" before a short sale will be approved?

Yes, in most cases.  A lender will be more likely to agree to discount the debt if the chances of recovery of the full amount is low.  Preparing a hardship letter with supporting documentation is very important to the chances of a successful short sale.

Do I need an attorney even though a real estate broker is listing the property?

Absolutely.  A licensed real estate broker or agent will help market the property to potential purchasers.  However, drafting the purchase agreement is best left to an attorney knowledgeable about this area of the law. A Buyer and a Seller have competing legal interests that must be addressed in the contract.   A purchaser will want clear time limits and the right to withdraw.  On the other hand, a seller may want a condition that the lender must waive the full deficiency. Our legal fees are very reasonable and in many cases, do not require a substantial committment.  Please call today for an appointment.

Am I liable for income taxes on debt forgiven in a short sale?

When a lender waives a portion of the mortgage debt, the lender will issue a 1099-C, Cancellation of Debt.  Under current law, a homeowner's debt forgiven between 2007 through 2012 may be excluded from federal gross income for principal residence.  This exclusion may extend to non-principal residence property under certain circumstances. Knowing the answer to this question is critical when deciding to do a short sale rather than a mortgage foreclosure.  Get good legal and tax advice before proceeding.


Neil DeBlois


21905 Garrison St.
Dearborn, MI 48124

(313) 914-7389

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Landlord-Tenant Law Update: Eviction by Email!

Evicting a tenant (or getting evicted) has recently been moved into the 21st century in Michigan. Effective August 19, 2015, a landlord may serve a Demand for Possession by email or other electronic means. The tenant must have consented to electronic service in advance in writing and have provided a confirmed email address.


The amended statute is MCL 600.5718(1)(d). Landlords would be wise to update their lease language to permit this option. Tenants would be wise to keep an eye on their spam folder!

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