Metro Detroit short sales Part 2

If you are selling your Metro Detroit home here are the two areas you may have liability.

1. Tax liability - currently there is no tax liability because President Bush declared there would be no tax liability for on a principal residence. It hasn't expired yet. Before President Bush did that the banks would send out a 1099. The borrowers would be liable for the tax on the deficiency. If it is a investment property you can get a 1099.

2. Deficiency liability - Difference between sales price and loan amount. The banks can come after the borrower for the deficiency. The only protection the borrower has is if you get a release of deficiency letter for them. Many real estate agents are not following up on this. Some banks are putting the release in the short sale letter others are not. Some banks require the seller to be responsible for the shortage. It just depends on the bank.

So be careful and check with an attorney and your CPA also on what your liabilities may be.