Who pays for outstanding fees regarding a short sale?

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Who pays for outstanding fees regarding a short sale?

We put an offer on a house through a short sale and the lenders came back and approved it, however they won’t pay for the $15k in attorneys fees and $1000 in HOA fees. We didn’t hire the attorney. Do we sign the papers and proceed with the sale or can the attorney put a lien on the house we are buying? Who is responsible to pay for these fees? The lender says they will only pay for what is stated in the approved short sale agreement.

Asked on March 12, 2011 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) The HOA fees--the legal liability is with whomever owned the home when the fees were incurred. However, be careful, because if you buy the house with the fees unpaid, the HOA may have the right to put a lien on the home, in which case you'd have to pay in order to get the lien released. Many HOA agreements allow liens to be imposed when fees are outstanding on a property, regardless of who failed to pay.

2) Attorney fees--in the absence of a court order that a party pay for an attorney, it's the party who hires a lawyer who is responsible for his or her payment. Whomever hired the lawyer should pay, and the lawyer may sue that person for payment. If you didn't hire the lawyer, the lawyer should not be able to take legal action against you, including putting a lien on the home; though the lawyer can put a lien against the home before you purchase it, again, that lien would have to be satisfied before a transfer of ownership. So, for example, if the sellers hired the lawyer and don't pay, the lawyer may try to bring legal action prior to the sale of the home.

In short--make sure you get these matters cleared up and know who is paying before you buy... or else put aside the money to pay off liens if you need to, and if you think that even with doing so, the house is a good deal


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