ask george & chuck
Dec. 3, 2007

Short sales, trespassing neighbors ...
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: What is a short sale?

Answer: A short sale is when a property is sold and the lender accepts less than the seller owes on the lender's lien, releasing the lien that attaches to the property. There are some potential pitfalls for buyers and sellers with this type of sale. For example, just because a lender accepts a discounted payoff doesn't mean that the lender is not going to file a deficiency judgment against a seller. Or, even if part of the debt is forgiven, the seller may get a 1099 form reporting the portion of debt that was forgiven as income.

Since lenders are behind the decision to list most short-sale properties, they have final say when it comes to accepting an offer—even if a seller has already accepted a buyer's offer. Additionally, most short-sale properties must close within 30 days, giving a buyer less time than usual to complete the purchase. The bottom line for buyers and sellers engaged in a short sale is to use a real estate licensee who is experienced in such transactions.

Dear George: My fiancée and I attempted to purchase a home through a REALTOR®. We were represented by our own REALTOR® and had been pre-approved by a mortgage company. The seller was an institution that had foreclosed on the home and listed it with the real estate brokerage. We made an offer through our REALTOR®, but were notified that the seller required only conventional financing that consisted of a 20% downpayment and 80% financing. We were approved for 10% down and 90% financing. Neither my REALTOR® nor my mortgage person had ever heard of any seller dictating such terms in order to sell the property. My mortgage broker was unable to come to terms with the seller and was treated rudely by the listing agent. Can sellers dictate the financing? And does a REALTOR®, in this case the seller's agent, have a certain ethical code dictating that she be more open and helpful in securing a buyer for her property?

Answer: Any seller can set the terms upon which they are willing to sell, from the price to the financing used. According to your statements, there doesn't apear to be a breach of any ethical code (i.e., the Code of Ethics of the National Association of REALTORS®) by the listing REALTOR® or any breach of the rules of the Texas Real Estate Commission. There is no justification for an agent to be rude, however.

Dear George: My neighbor's three drainage ditches empty into my back yard. I built a drain and routed it to a storm sewer that is managed by my local water district. A representative from the water district tells me that the neighbor is encroaching on my property. I just moved in and am not sure what the previous owner allowed. I intend to meet with the neighbor and to ask him to reroute his drainage ditches. What can I do if he is unwilling to cooperate?

Answer: Your neighbor is trespassing. There may be an implied easement, however, as the prior use may have been "open and obvious." Check to make sure the former owner of your property didn't file a recorded easement or provide the neighbor some other kind of permission to drain through your property. If there is a recorded easement, it should show up on your survey. If you can't find an easement and your neighbor is unwilling to reroute his drainage ditches, file an injunction to stop the neighbor from utilizing your drain. Hire an attorney who is experienced with these types of encroachment issues.