FREC met last week to discuss short sale transactions and Real Estate licensees’ role in the process. They were looking at the potential impact of the loss mitigation process on Realtors.
They concluded that short sales involved legal issues that are not found in traditional sale transactions. The Commissioners agreed that “licensees should ALWAYS take preventive steps so that they don’t cross a line and get involved in the unlicensed practice of law”. Licensees “CANNOT assist a client with some aspects of a short sale transaction, such as providing a legal opinion regarding the contents of the short sale approval letter, or even whether a short sale is the right decision for a particular client”. They concluded that licensees “…need to communicate to clients that there are some aspects of a short-sale transaction that could require a lawyer.”
In conclusion, Realtors should not negotiate their own short sales, nor should they have a title company negotiate the short sale for their clients. If a licensee wants to protect him/herself from “the unlicensed practice of law”, he/she should hire an attorney to handle the short sale negotiations.
While there are title companies that offer to negotiate the short sales for FREE.. if you want to be protected, be sure that the your short sale is being negotiated by an Attorney’s office not a title company! Last time I checked, title companies were not licensed to practice law.