New Documents Clarify Terms in Residential Property Short-Sale Transactions

In yet another sign of the troubled economy, the Texas Real Estate Commission is taking steps to make certain that so-called “short sales” of homes are carried out within the confines of real estate law.

[USPRwire, Thu Jan 22 2009] In yet another sign of the troubled economy, the Texas Real Estate Commission is taking steps to make certain that so-called “short sales” of homes are carried out within the confines of real estate law.

To that end, the Commission has approved a new real estate contract addendum that brokers can begin using on a voluntary basis immediately for processing short sales. Use of the addendum becomes mandatory on March 1, 2009.

A short sale takes place when the existing owner of a property owes more than the property is worth. If the lender that holds the mortgage note on the home agrees, a short sale allows for the sale of the property at a lower price than would pay off the existing mortgage, but keeps the home from going into foreclosure. Typically, real estate agents involved in such transactions also agree to lower their fees.

With the economic downturn and slumps in housing prices and sales, individual real estate brokers have been drafting short-sale provisions into real estate contracts, but such poorly drafted provisions can create problems.

“Essentially there have been situations in which these edits and insertions by a real estate agent in contracts may lead to disputes and could be deemed to be the unauthorized practice of the law” says real estate attorney Jerome Prager, of Dallas’ Prager & Miller, who also is co-chair of the Texas Real Estate Commission Broker-Lawyer Committee and helped draft the addendum regarding short sales.

“These are obviously difficult times for the real estate industry, as well as for homeowners and prospective buyers,” says Prager. “Brokers are trying even harder to be helpful and creative in structuring a sale. But it’s also more important than ever that unambiguous closing documents are legally binding, enforceable and drafted to cover virtually any contingency.”

The Texas Real Estate Commission’s programs of education, licensing and industry regulation ensure that real estate licensees are honest, trustworthy and competent. More information is available at http://www.trec.state.tx.us/index.asp.

Prager & Miller, P.C. is a Dallas law firm that serves as general or special counsel to many real estate brokers, local Boards of REALTORS®, the regional multiple listing service for North Texas, and a myriad of privately owned entities, individuals and corporations. The firm also has an extensive practice in alcoholic beverage licensing. More information is available at http://www.prager-miller.com.

To speak with Jerome Prager about the contract addendum concerning short sales of homes, please contact Mark Annick at 214-559-4630 or mark@androvett.com.