Short Sale Addendum to Contract for the Purchase and Sale of Real Estate
What is this form?
The Short Sale Addendum to Contract for the Purchase and Sale of Real Estate is a legal document used in real estate transactions to detail the agreement between a buyer and a seller when the seller is facing economic hardship. This form allows the seller to sell their property for less than the amount owed on the mortgage, contingent upon approval from the lender or third parties. Unlike standard purchase contracts, this addendum acknowledges the need for lender consent to proceed with the sale, highlighting the unique circumstances surrounding a short sale.
What’s included in this form
- Acknowledgment of the short sale status and the agreed purchase price.
- Terms regarding third-party approval of the short sale.
- Clarification that no binding contract exists until all parties reach written agreement.
- Conditions under which the seller can accept additional offers before finalizing the sale.
- Provisions for the buyer's right to cancel the proposal prior to agreement.
- Deadlines for reaching agreements and consequences of failing to do so.
Situations where this form applies
This form is necessary when a property owner is attempting a short sale due to financial difficulties that make it impossible to sell the property for the amount owed on their mortgage. It should be used when both a buyer and a seller are willing to negotiate sale terms that include lender approval. This addendum helps facilitate the sale while protecting the interests of all parties involved, especially when financial institutions may need to be involved in approving the final sale price.
Intended users of this form
- Home sellers facing economic hardship who need to sell their property for less than their mortgage balance.
- Buyers interested in purchasing a property involved in a short sale.
- Real estate agents facilitating a sale between buyers and sellers under short sale conditions.
- Lenders or third parties that need to approve the short sale agreement.
Completing this form step by step
- Identify the buyer and seller by entering their full names at the beginning of the form.
- Specify the property details, including the address and any relevant legal descriptions.
- Enter the agreed-upon purchase price that differs from the remaining mortgage balance.
- Include dates for submission of the proposed contract to the third parties and approval deadlines.
- Have all parties sign and date the form to acknowledge their agreement to the terms outlined.
Notarization guidance
Notarization is required for this form to take effect. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session, available 24/7.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Common mistakes to avoid
- Not obtaining lender approval before signing the addendum, which could render the agreement invalid.
- Failing to include all necessary property details or missing signatures, leading to incomplete documentation.
- Overlooking important deadlines for submitting the proposed contract for approval.
- Assuming a binding agreement exists without written consent from the third parties involved.
Advantages of online completion
- Convenience of accessing, filling out, and downloading the form from any location.
- Editability to make necessary adjustments without needing to start from scratch.
- Reliability as the forms are drafted by licensed attorneys, ensuring legal compliance.
- Time-saving features that allow users to complete the form at their pace and submit it quickly.
Legal use & context
- This form provides a legal framework for short sales, ensuring that all parties understand their rights and obligations.
- It protects the interests of buyers and sellers by making it clear that third-party approval is necessary.
- Understanding the terms outlined in this addendum is crucial to avoid potential disputes and complications.
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FAQ
A short sale addendum is added to a purchase agreement when a property's selling price won't pay off the seller's outstanding mortgage balance. The form creates a special condition that requires the seller's mortgage lender to approve the transaction before the sale can be completed.
As used in this Addendum, ?Seller's net proceeds? means the Sales Price less Seller's Expenses under Paragraph 12 of the contract and Seller's obligation to pay any brokerage fees.
Description: This Addendum is used if the Buyers will be unable to buy the new property unless their existing property is sold and closed.
A standard short sale addendum generally addresses a number of items that are specific and unique to the agreement of sale. These may include: An acknowledgement that the transaction is a short sale, and that as such there are additional third parties that have an interest in the property being sold.
If there is more than one lienholder or loan secured by the Property, this Addendum applies to each lienholder. The form of this addendum has been approved by the Texas Real Estate Commission for use only with similarly approved or promulgated forms of contracts.
What's the purpose of the TREC-approved Short Sale Addendum? To create provisions related to the lienholder's consent to the sale.
How to Write The Parties. The addendum should mention the names of the parties (buyer and seller) in the existing agreement.Original Purchase Agreement. To connect the addendum to the original agreement, the date of the existing contract and the property address must be included.Additional Terms or Amendments.Execution.
