You Don’t Have to Lose Your Shirt on a Short Sale

Yeah, it's been awful. When my $300K 5-yr Adjustable Rate Mortgage came due in 2010, I was under water so much I couldn't refinance.

You didn't qualify for Obama's 

Dog House Reinvestment Act?

Please. Don't get me started.

The bank rejected the contract you had last spring, right?
What changed?

I stopped paying them.

Huh?

It's crazy, I know. When I gave them that $250K offer, I was completely current. They wouldn't even look at my Personal Financial Statement (PFS), much less talk about a short sale. The bank representative actually told me that I had to be 90 days behind in order for them to even consider a short sale.

That screw up your credit score though, right?

Small price to pay. In any event, six months later, after not making the monthly payment, socking away the extra bones, I got another buyer, this time for $175K.

And they accepted that?

Sure did. After they saw I don't even have a tree to whiz in, based on my PFS.

Won't you now get a hefty 1099 from the bank for the debt forgiveness of $125K? And pay income tax on that shortfall?

Nope. That's the milk-bone on top. This was a rental property that I put in the name of my company; I only guaranteed the debt.

I don't get it.

IRS Form 1099-C for debt cancellation only goes to the borrower – in this case Bruno'z Propertiez, LLC

But that will still flow through to you, as a single member LLC, won't it?

Nope. Tax wise for the LLC, I lose the entire asset ($300K basis), which more than offsets the income ($125K).

And that’s it?

I’ll just file a final return at year end, with no residual income to me personally.

Nice job, little man.

Of course, this information is intended for general information purposes only, and is not legal advice. Legal advice depends on the specific facts and circumstances of each individual's situation. Those seeking specific legal advice or assistance should contact a qualified attorney regarding the subject matter. 

Kardashian’s keeping the ring!?! Can I get mine back?

http://www.forbes.com/sites/jennagoudreau/2011/11/02/should-kim-kardashian-return-her-2-million-engagement-ring/


What's the matter, little man?

Oh, big guy.  My fiancée called off the wedding.

You’re kidding me!  What happened?

I have no idea.  She said she felt like she was being “rushed” into it too soon.

So is it just postponed?

No.  She said it’s over.  But that’s not the worst part.

What’s that?

The bitch won’t give me back the ring.  I spent 500 bones on that thing!

I think you can get that back.

Really?  How so?

In Georgia, gifts made in contemplation of marriage are subject to an implied condition that they are to be returned if the recipient breaks the engagement.  Guffin v. Kelly, 191 Ga. 880 (1941). 
That is, the acceptance of engagement gift (Q: Will you marry me? A: Yes) carries with it a condition precedent (marriage) that must be performed before the contract becomes absolute
and obligatory on the other party.  O.C.G.A. § 13-3-4.

Fantastic!  I guess I won’t go shake down her husband for the bones I spent!

Wait, what do you mean?

Well, she was going to leave her husband and get a divorce in order to marry me.

Well, if that’s the case, then you will likely not be able to recover anything?

Huh?

Entering into an agreement to marry someone at a time when she could not lawfully marry, and giving a ring to further such an unlawful engagement is a defiance of Georgia public policy and

constitutes “unclean hands” so as to bar you from any recovery.  Morgan v. Wright, 219 Ga. 385 (1963).

What if I told you she accepted the engagement ring at Times Square when we were in New York?

Ohhhh brother……


Of course, this information is intended for general information purposes only, and is not legal advice. Legal advice depends on the specific facts and circumstances of each individual's situation. Those seeking specific legal advice or assistance should contact a qualified attorney regarding the subject matter.