In California, for example, we have a four-year statute, which will expire in 2011 for short sales completed between 2006 and 2007. Just because the bank hasn't called a short sale seller yet, asking how the seller plans to repay that forgiven debt, doesn't mean the seller is free from liability. Agents who assured their sellers that there was nothing to worry about will find their butts in court, too.
Real estate agents are not supposed to give legal and tax advice. So, if they can't be sued for non-disclosure, maybe they will be sued for impersonating a lawyer or an accountant. Or perhaps they'll get sued for incompetence. Lots of real estate agents suddenly became a short sale expert overnight in such hard-hit states as California, Arizona, Nevada and Florida. Those states are probably where the first lawsuits will be filed.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
