Handling Squatters Jim Hastings, Broker/Owner at Hastings Brokerage and Vice Chairperson of the FORCE Advisory Council
What are the initial signs an occupant is a squatter?
When you receive a new property, you need to check for occupancy. When you do this, you also need to check the legitimacy of the occupant. If you approach a property and the gas meter, water meter, or power meter are missing, you need to investigate why it’s missing. In the instance any of these meters are missing, the occupant is most likely a squatter living in the home without any utilities.
If a squatter moves into a vacant home, the first thing you need to do is contact the seller and then try to contact the occupant if the seller approves. Ask the occupant why they are there, and let them know the property is supposed to be vacant. In almost all squatter cases, the occupant states they rented the home from someone through a third-party website like Craigslist.
Ask the occupant for a copy of their lease and ask them why a certain utility is not turned on. Usually an occupant living in these circumstances will not have a valid lease or will have an invalid lease that they drew up themselves. The terms on the lease (i.e. name, property address, former owner, etc.) will usually be hand-written, and the former owner that they have listed is usually not the real owner.
If you suspect that the occupant is a squatter after gathering all necessary information, report your findings to the seller and let them know you suspect the occupant is a squatter. You should not accuse the occupant of being a squatter, as they may turn hostile. This will also help you protect yourself in cases when the occupant turns out to be a legitimate tenant.
How do you suggest dealing with squatters?
With possible squatters, you will need to advise the seller that you recommend they should not proceed with relocation assistance and should just proceed with eviction. Let the seller know that offering cash for keys to a squatter will only encourage the squatters to break into another home in order to get more money. You can also inform the seller that the police often advise against offering cash-for-keys to squatters, as this will only contribute to their behavior. Ultimately, it is the seller’s choice whether they want to proceed with cash for keys or not.
Ask the occupants for a copy of the lease, and evaluate whether any lease provided is valid or fraudulent. Gather all the information you can, and present it to the seller. With the seller’s approval, compile all relevant documents including what was provided by the seller (i.e. assignment, listing agreement, trustees, and/or sheriff’s deed, etc.) and proceed with trying to remove the squatter.
How do you remove a squatter?
If the police will not remove the squatter, then the seller will have to proceed with the eviction. If you can’t successfully remove the squatter, ask the seller and/or their attorney if it is okay to turn off all the home’s utilities, assuming they are still under the seller’s or your name. Often, utility companies can help by blocking any further requests to turn on service until the property is back in your possession. Also, cities will often deem homes without utilities as “unlivable,” and this may help you get the occupant out.
Once the squatters have been removed via eviction, lockout, police removal, etc., you must rekey the home again to take possession. The squatters will most likely leave personal property behind. You will need to take photos of all personal property, itemize it, and give a garage sale value to each item. You will then report that information back to the seller or eviction attorney. You will need to follow local rules regarding the removal of personal property. Some states have faster timelines for squatter personal property removal.
Short Sale Basics Steve Pagano, Broker/Owner, Pagano Properties
How do you determine if a listing is a short sale?
A short sale has an important distinction that separates it from an REO transaction. In an REO, or bank-owned transaction, the bank or other entity has the sole right to sell. A short sale differs in that the owner is still on title on the property, and the bank that is holding a securitized interest in the property must agree to accept less than the amount owed on the mortgage.
As such, in addition to being a real estate transaction, a short sale is also a banking transaction. It is the responsibility of the real estate agent to represent their clients to the best of their ability. In a short sale, the agent has a responsibility to both the owner and the bank to get the best price and terms for their client.
Prior to taking a listing for real property, it is the responsibility of the agent to perform due diligence as to the correct owners on title to a property, as well as who the lien holders are, if any. There may be more than one bank, as well, such as in the case of the owner taking a second mortgage or a home equity line of credit. The agent must determine whether the proceeds from the sale of the house will be sufficient to cover the amounts due the lender, in addition to anticipated closing costs. In the event the house is unable to sell for the amount due the lender, this will then trigger a short sale.
If it is evident that the proceeds from the sale will not cover the loan amount, the loan is deemed to be “short”. The agent should request the most recent copy of the mortgage statement from the client. The agent should also request the seller to sign a borrower’s authorization, which permits the agent to speak to the bank on the seller’s behalf. Oftentimes, the bank will also want to confirm this request through the seller directly. In certain instances, such as estate sales and other matters, the seller may have an attorney who is directed to perform or participate in the short sale process. This varies on a case by case basis.
Are there any other considerations?
There are some other aspects to the transaction that an agent should pay attention to, in order to ensure a smooth transition of title. Some states differ in these requirements, and who is normally charged with responsibility for handling them. In some states, an attorney is required to complete the closing process, so in those cases you will want to discuss who will be handling which parts of the transaction. In addition to checking to see if there are any chain of title issues, the knowledgeable agent will also check to make sure that all Certificates of Occupancy are in order.
In many cases, when a homeowner is in a short sale position, there are also other factors to consider. For instance, if the homeowner is delinquent in their mortgage payments, there may be issues regarding maintenance of the house that may need attention, or will need to be disclosed to potential purchasers, such as mold, electrical or plumbing issues, and other possible latent or patent defects.
How do you list short sale properties?
There are several important features of a short sale that differ from an arm’s length transaction. It is important to familiarize yourself with the varied aspects and the differences in these transactions, in order to reduce your liability and best represent your clients’ interests.
As we discussed, in a short sale, the lender is agreeing to accept less than the amount owed. The seller and the lender will agree to accept the best offer on the subject property. Agents should be sure to present any and all offers to both seller and lender. A best practice is to make sure these offers are submitted within 24 hours of receiving them, or as soon as practical after received by the broker.
The agent has a responsibility to remain ethical and transparent at all times during the transaction. The objective of the agent is not to make sure that he sells the property personally and suppress other offers. It is also unwise for the agent to accept artificially low offers which may not be in the seller’s best interest. The sale of the property will be subject to an appraisal or BPO from the lender, and in all cases, it is the agent’s ethical responsibility to achieve the highest price and best terms for their clients, which include both the bank and seller. The agent should be sure to present any and all offers up to and including the day of closing, unless otherwise directed by the servicing bank (not the seller).
In a short sale, the seller does not have an equity position in the transaction. This means that any proceeds from the sale of the house will go to the lender, as there is no equity for the seller to receive. However, in some instances, the lender may offer the seller relocation assistance, in order to assist the seller with the expense of vacating the property and moving to new premises.