Avoiding the legal pitfalls of distressed real estate

Screen potential short-sale clients, CAR attorney says

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SAN JOSE, Calif. — For real estate professionals, short sale and foreclosure transactions can be fraught with legal hazards, and it’s important to choose your clients wisely, according to Stella Ling, managing senior counsel of the California Association of Realtors who spoke at the annual California Realtor Expo Thursday.

Short sales and REOs (real estate owned properties) accounted for nearly half of all California home sales in August, according to CAR. Last month also saw a surge of default notices nationwide, with California experiencing a 55 percent month-to-month rise — a sign of more distressed property sales to come.

Handling distressed properties, especially short sales, can take an inordinate amount of time and effort, and for this reason, Ling recommended real estate professionals learn to target consumers who are most likely to lead to successful transactions. Some knowledge of distressed property laws can help in that selection process, Ling noted.

Short sales

Because short sales have a success rate of only about 50 percent, "the best thing to do is to