If the owner does not sign the contract how will you enforce it?

We are encountering houses for sale in our area where the listing agent informs us that the owner of the house has entered into an agreement to sell their home to a third party and it is this third party that has now listed the home and will be negotiating the transaction with our buyer. As you might have already guessed, these listings have short sale contingencies.

Here is how the conversation goes once the listing agent makes their disclosure to us.

Me: So the actual owner will not be signing the contract to purchase?
Them: No. The person(s) that have the option to buy the home will be signing the contract.
Me: How can the person who only has an option legally sign the contract?
Them: We do this all the time. The owner of record has agreed to sell the house to the person with the option and the person with the option will sell the house to your buyer. It will all be closed at the same time.
Me: Is this legal?
Them: Call our title company. The title representative will tell you “we do this all the time” and everything is legal.
Me: Does the owner’s lender know what is happening?
Them: The bank does not care; as long as they get the short sale price they agreed too, they are happy.
Me: So then we have it in writing that the owner’s bank knows what is happening?
Them: Call the title company; we do this all the time.
Me: If it is legit, why can’t we get the owner of record’s signature?
Them: That is not how we do these types of transaction.

I am not an attorney so I will leave it to those that are to determine the legality of transactions like this. In my opinion it just seems wrong not having the actual owner sign. Also, if it is legit, why doesn’t the owner’s bank know? We strongly suggest any buyer that may decide to enter into a contract to purchase a home with someone other than the person on the deed seek the counsel of an attorney. Since the owner of record is not signing the contract to sale, one of the questions I have is how would the buyer enforce it and against who?

Whenever I hear the phrase “we do it all the time” as the main answer to my questions and concerns, I get nervous. So should you.

Who is responsible for turning on utilities for inspections during a short sale transaction?

There are times when a seller lists their home for sale subject to a short sale that the seller has moved out of the home and the utilities have been turned off. So what happens when a buyer makes an offer and the seller accepts the offer? Who is responsible for turning on the utilities in order for the buyer to have their inspections?

Unless the buyer and seller have addressed this issue during negotiations the 3 of the common real estate contracts used in Central Florida provide the answer.

• FAR BAR AS Is: “utilities service shall be made available by the seller” line 101-102
• FAR BAR: “Seller shall...provide utilities service and access to the property for appraisal and inspections” line 264
• FAR: “Seller will provide access and utilities for buyer’s inspection” line 148-149

Unfortunately I am finding that agents are failing to address this issue with the buyer or seller during the negotiation period. This adds confusion to an already complex and time consuming short sale transaction. In some cases agents are being asked to take on the responsibility of turning on the utilities themselves which is not something I would recommend.

Make sure when purchasing or selling a home where the utilities are off you know going in who is responsible for turning them back on.

Related Florida real estate blog posts on short sales

The bank does not own the home.

It frustrates me to see some of the offers coming in on homes that are subject to a short sale contingency.

Today an agent, not within our office, attached their own addendum to an offer that stated the offer was subject to the bank signing the offer and the bank agreeing to pay the buyer's closing costs.

The bank does not own the home.


Related Florida real estate views:

Foreclosures for sale: Million dollar houses

Lender says no to deed in lieu

Real estate agents would be wise to pick short sales over long sales.


- Greg Staker Watson Realty Corp. 407-304-0255