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 Connecticut Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is a crucial document that complements the main purchase and sale contract in a real estate transaction. This addendum is specifically tailored for short sale situations, where the homeowner is seeking to sell their property for less than the outstanding mortgage balance. The addendum outlines the terms and conditions unique to short sales, providing protection and clarity to both the buyer and seller involved. Within the Connecticut Short Sale Addendum to Contract, multiple types may exist depending on the specifics of the transaction. These variations include: 1. Residential Short Sale Addendum: This addendum is used when the property being sold is a residential property, such as a single-family home, townhouse, or condominium. 2. Commercial Short Sale Addendum: If the property being sold is of a commercial nature, such as an office building, retail space, or industrial property, the Commercial Short Sale Addendum will be utilized. 3. Multi-Family Short Sale Addendum: When the property being sold contains multiple residential units, such as a duplex, triplex, or apartment building, the Multi-Family Short Sale Addendum is employed to address the unique aspects of such transactions. The Connecticut Short Sale Addendum covers various critical aspects related to short sales, including but not limited to: 1. Short Sale Approval: This section stipulates that the sale is contingent upon the lender's approval of the short sale. It outlines the responsibilities of the seller regarding obtaining necessary approval and providing all requested documentation to the lender. 2. Short Sale Process: The addendum may outline the specific steps involved in the short sale process, including the submission of offers, negotiation with the lender, and timeline for resolution. 3. Management of Liens and Encumbrances: This section addresses any liens or encumbrances on the property, specifying how they will be handled and settled during the short sale process. 4. Purchase Price and Financing: The addendum clarifies the purchase price agreed upon by the buyer and seller, as well as the financing terms, if applicable. It may also specify that the seller will not receive any proceeds from the sale. 5. Property Condition: This portion may outline the condition of the property being sold, clarifying that the property is being sold in "as-is" condition, without any warranties or representations from the seller. 6. Contingencies and Earnest Money Deposit: The addendum may specify any additional contingencies or conditions unique to the short sale process, such as obtaining lender-approved repairs or the buyer's ability to secure financing. It also addresses the amount and handling of the earnest money deposit. 7. Closing and Possession: This section covers the timeline for closing the transaction and when possession of the property will be transferred to the buyer. The Connecticut Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is a comprehensive document that protects the interests of all parties involved in a short sale transaction. It ensures transparency, compliance with lender requirements, and provides a framework for a smooth and successful real estate transaction.
