The Florida Housing Crisis & Homeowner Risks

The Florida housing crisis has created the potential for a great deal of homeowner risk.

Real Estate agents cannot provide legal advice and a title company does not and cannot represent any party on any legal issues that may arise throughout the closing process. The bottom line is that without an attorney, there is no one representing the legal interests of the buyer or seller. The reality is that laws change. All banks have experienced attorneys representing their interests. Homeowners and investors need to protect their personal interests. Here are some important reasons why a seller or buyer should hire an experienced real estate attorney to negotiate their purchase or sale of property:

Release of Personal Liability:

Although a bank may forgive the difference between the mortgage balance and the final sales price, the bank may not release the seller from personal liability. This means the bank may legally garnish a seller’s future wages, attach bank accounts or otherwise pursue the seller for that money. It’s called a deficiency judgment. The short sale approval letter may or may not contain language that spells out the bank’s specific rights, but just because the language is not there does not guarantee the bank has released a seller from liability. Banks can reserve the right to collect or agree to waive any deficiency.

Asset Protection:

Banks scrutinize a seller’s financial statement. Banks examine a seller’s bank accounts, tax returns and credit report. If the bank is taking a loss on the sale, obviously the bank would like to recoup part of that loss. That’s why the bank looks at the seller’s assets and disposable income. If the seller is attempting a short sale without hardship, the bank may ask for a seller contribution. Even if the seller qualifies for a short sale through a financial hardship, the bank could still require the seller to bring money to the closing. The bank could ask the seller to liquidate a stock account or even tap into retirement funds. A seller’s financial statement should be carefully reviewed before it is released to the bank. Many homeowners do not understand how to fill one out properly and this could work against them.

Foreclosure During the Short Sale Process:

Short sales can take months to negotiate and even though a homeowner may be talking to the bank about a short sale or loan modification – the bank can still file a foreclosure lawsuit. If the short sale doesn’t happen and the homeowner hasn’t responded to the lawsuit, they may have lost the ability to raise certain defenses to the lawsuit. Homes can also be sold at a foreclosure auction even though the homeowner is engaged in the short sale process. Many foreclosure issues involve complexities that experienced real estate, foreclosure defense attorneys are best equipped to handle. Recently a local newspaper reported that South Florida leads the nation in distressed home mortgages, signaling a lengthy recovery. Buying or selling a home has become more complex than ever because so many properties are in foreclosure, owned by the banks or in a short sale situation. All circumstances require careful scrutiny whether you are buying or selling. Remember, banks have an experienced legal team to represent them. Be sure you have an experienced legal team to represent you!

Carlos J. Reyes  is the Principal of Reyes Law Group. He has been a member of the Florida Bar since 1988 and practices state-wide.  Carlos has been awarded a rating of “AV Preeminent” which is the highest possible rating in both legal ability and ethical standards by Martindale-Hubbell – a well-recognized legal resource. The RLG Legal Team also include attorneys Stephan LopezMelissa J. UlloaPhillip A. Ortiz and the RLG Legal Support Team to bring you a dedicated, experienced and dynamic legal team to handle your legal needs.

We also assist clients in the areas of: Civil LitigationReal Estate LitigationResidential Purchase & SalesCommercial Acquisitions & SalesResidential Landlord-Tenant LitigationCommercial Landlord-Tenant LitigationShort Sales NegotiationsLoan ModificationsCriminal DefenseCivil Rights ClaimsFamily LawCorporate Work, and Labor & Employment Law.

Call us for a FREE consultation at (954) 369-1993  Se Habla Español.

Visit our firm website and review our credentials.

We are located at 150 S Pine Island Rd #210, Plantation, FL 33324


The Reyes Law Group BLOG is intended to provide information to firm clients, friends and potential clients about various legal related topics. Nothing in this BLOG should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this BLOG without seeking the advice of legal counsel.

The hiring of a lawyer is an important decision that should not be based solely upon advertisement.  Before you decide, ask us to send you free information about our qualifications.


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Reyes Law Group

Reyes Law Group represents clients in a multi-disciplinary legal practice involving real estate transactions and litigation with a “footprint” that covers the State of Florida. Over the firm’s first 10 years, Reyes Law Group has closed over $100M in commercial closings, representing buyers and sellers in contract negotiations, due diligence, and the related title review and policy issuance related to closings. In litigation, the firm has commercial litigation experience focused on prosecuting or defending claims such as breach of contracts, partition actions, trade secret violations, and breach of non-competes. However, our firm’s MAIN FOCUS is assisting asset and loan portfolio managers, investors and private lenders with a “ 4-PILLAR APPROACH” to the legal challenges they face with non-performing assets: 1) LOAN WORKOUTS; 2) COMMERCIAL FORECLOSURES (across the State of Florida); 3) COMMERCIAL EVICTIONS; and 4) REO COMMERCIAL CLOSINGS.30+ years’ legal experience means - WE CAN HELP!

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