A short sale lawyer is a real estate attorney who assists homeowners and lenders in reaching an agreement on the terms of a short sale. Short sales occur when a lender agrees to let a homeowner sell a home for less than the outstanding mortgage balance. Short sales are most common in areas where home prices are depreciating and mortgage debts exceed current property values.
Before entering law school, a short sale lawyer must have completed college or university. To become a practicing lawyer, a prospective short sale lawyer must pass the bar exam after graduating from law school. Before specializing in short sale transactions, most short sale lawyers first focus on real estate cases. Real estate law firms employ a large number of recent law school graduates. Established real estate lawyers frequently leave large firms to form their own firms.
Lenders hire attorneys to draft short sale agreements that spell out the terms of the transaction. The laws governing real estate transactions differ from country to country, and even within a single country’s states and territories. As a result, major banks hire teams of short sale attorneys who are familiar with the laws in all of the bank’s business areas. For the consultation and document preparation required to complete a short sale, lawyers usually charge a flat fee.
Short sale lawyers are hired by homeowners to represent them during the short sale process. Before the sale, the homeowner’s lawyer ensures that all of the terms and conditions of the short sale agreement are thoroughly explained to the homeowner. The lawyers representing the homeowner and the lender try to negotiate the best terms for their clients, but short sales do not always go through because an agreement cannot be reached.
In some areas, lenders can pursue borrowers for the remaining mortgage debt after the short sale is completed, while non-recourse laws prevent lenders from pursuing borrowers for any portion of a debt that remains unpaid as a result of a short sale. Lawyers who represent borrowers in areas where non-recourse laws apply ensure that the short sale contract does not contain any clauses that give the lender the right to circumvent the non-recourse laws. Most lenders and homeowners hire a short sale lawyer before the home sale, but lawyers are sometimes hired after the home sale because of a disagreement between the parties involved.