Legal Question in Real Estate Law in Nevada

In Nevada, after a short sale, are there any liabilities I should be concerned about...taxes, deficiencies?

Asked on 7/13/12, 2:09 pm

1 Answer from Attorneys

Rick Williams Law Offices of Frederick D. (Rick) Williams, Chtd.

You must recognize that by selling the property for less than you owe, you are breaching the contract you entered with the lender when you borrowed the money to buy the property. If the bank consents to you selling it at a loss to them, they have the legal right to sue you for the deficiency on the theory of breach of contract. They may waive that right in negotiations, if you have a good and hard-working Realtor to represent you in the sale. Depending on your financial condition, the bank may ask for some additional money from you to "share the pain" of the economic loss. If the deficiency is not too bad, they may choose to write it off as uncollectible debt. Even then, though, you may receive a 1099 form from them and have to declare the forgiven amount as income for the year in which you sell the property. That could lead to rather severe tax consequences. You really need to consult with a competent real estate attorney who can work in conjunction with your real estate sales professional to do their best to protect you throughout the process.

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Answered on 7/15/12, 1:29 am

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