In real estate, a short sale occurs when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor (i.e., the seller). Circumstances determine whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation. A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.
This form is a sample of an Addendum to a standard real estate sales contract in order to incorporate the short sales provisions. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
The California Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is a critical document used in the process of buying or selling a property in California under short sale circumstances. Short sale transactions occur when the seller owes more on their mortgage than the current market value of the property, and the lender agrees to accept less than the full amount owed as payment in order to avoid foreclosure. One type of California Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is the Standard California Short Sale Addendum. This addendum is commonly used and provides essential provisions that protect both the buyer and seller during the short sale process. It addresses important aspects such as disclosures, timelines, and cancellation rights specific to short sale transactions. By including this addendum, it ensures that all parties involved are aware of the unique circumstances and requirements associated with a short sale. Another type of California Short Sale Addendum is the Contingent on Lender Approval Addendum. This addendum highlights the inclusion of a contingency clause, which states that the buyer's offer is contingent upon the lender's approval of the short sale. It clarifies that the seller has the right to accept other offers until the lender approves the buyer's offer. This specific addendum is used when the seller is already in negotiations with the lender but hasn't received a final approval yet. The California Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is a comprehensive document that outlines crucial details involved in short sale transactions. It covers various elements, including: 1. Price and terms: The addendum specifies the agreed-upon purchase price, terms of payment, and any applicable contingencies. 2. Disclosures: It details the seller's obligation to provide all necessary disclosures related to the property's condition, potential defects, or other material facts that might affect the buyer's decision. 3. Timeframes: The addendum establishes specific deadlines for submitting offers, lender approvals, and closing the transaction. It acknowledges that the short sale approval process may require additional time compared to traditional real estate transactions. 4. Cancellation rights: It outlines the buyer and seller's rights to cancel the contract if the lender rejects the short sale request or if the lender fails to approve the buyer's offer within a specific timeframe. 5. Allocation of costs: The addendum addresses the allocation of costs related to the short sale process, such as escrow fees, title insurance, and any potential liens or unpaid taxes on the property. The California Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate serves as a crucial legal document that protects both buyers and sellers involved in short sale transactions.
