If you’re short selling, you may wonder what is going to happen with big-ticket expenses like property tax and insurance. I wish I could say that there’s a simple, one-size-fits-all rule for this but there isn’t. It all depends on the loan documentation that you initially signed at the time of purchase. Yes, it means you’ll have to dig through those binders and folders, but if you’re going through foreclosure or thinking about a short sale, hopefully you have those handy.
In general, the key term to search for is “impound account.” If the loan documents state that an impound account exists for taxes and insurance, then you’re out of luck and you must pay both. The agreement to eliminate the property tax and the insurance payment must be mutual from both parties. If you’re not sure, the best thing to do is to contact your bank.
We live in a time where laws seem to be constantly shifting in regards to distressed properties. Because of that, what is applicable today may not be a week from now, particularly in a murky gray area such as this. Keep checking back on this blog to see if the anything in the latest news affects you — and remember, the best way to get the final word is to ask your lender, but make sure you research it first so you can ask educated questions.
The views published here are the opinions of the writer and are not a substitute for legal counsel.
Israel Gonzalez
Real Estate Broker-Hollister CA
831-636-8858
Click here to contact me by email
