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Short sale denied after approval. Can I take legal action?

Issaquah, WA |

I am a buyer of a short sale, got approval from bank after 5 months, my offer is well over listed price. 2 weeks before closing bank denied approval because of fraud investigation related to listing agent living in the house. Listing agent claims he was helping seller as caretaker of the house (seller moved to diff state) while his own house was being remodeled and gave money to the seller to help them out. What are my options? I don't have the house after waiting 5 months, housing market has changed in 5 months and now I cannot find a similar house (I have specific requirements of a house due to medical condition of people in my family).

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Attorney answers 2


The listing agent is living in the house. You may have an action against someone. However the bank documents most likely protect the bank. If the agent did commit fraud and you lost the sale you may have an action there but it will be difficult. Take all of your documents to a lawyer Monday and see where you stand.
Good Luck

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It is unlikely that you have any viable claim against the bank, since it did not own the house. A claim against the owner also would be slim, since he could legally rent the house until it was sold. Even if you were to get a judgment against the owner, the fact that this is a short sale would indicate that it is unlikely that you would collect a judgment.
You should certainly contact the listing agent's firm to register a complaint, as well as make a complaint to the Department of Licensing, Real Estate Commission, in Olympia. The agent's conduct is probably a breach of the agent's fiduciary duty to his client, but unless there is a dual agency that fiduciary duty would not extend to you. You would be wise to have a lawyer review the agreements, including the correspondence related to the short sale, to determine whether you might have a claim against the agent, the brokerage, or the seller.