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 Delaware Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is an important document used in real estate transactions within the state of Delaware. This addendum serves to modify the terms and conditions of the standard contract to accommodate the sale of a property through a short sale process. A short sale is a real estate sale in which the proceeds from the sale fall short of the outstanding mortgage balance on the property. This typically occurs when the homeowner is facing financial distress and is unable to meet their mortgage obligations. In such cases, the lender agrees to accept a lower payoff amount to avoid the costly foreclosure process. The Delaware Short Sale Addendum provides a framework for all parties involved — the buyer, seller, and lender – to navigate the complexities of a short sale transaction. It addresses various crucial aspects and outlines specific terms that differ from a traditional real estate sale. One type of Delaware Short Sale Addendum commonly used is the "Standard Delaware Short Sale Addendum." This addendum is designed to cover the essential aspects of a short sale such as buyer's obligations, seller's representations, lender approval, and terms for the release of the mortgage lien. Another type is the "Delaware Short Sale Counteroffer Addendum." This addendum is used when negotiations between the buyer and seller result in changes to the original terms outlined in the Standard Short Sale Addendum. It allows for modifications to price, closing costs, and other terms as negotiated between the parties. In both types of Delaware Short Sale Addendums, key terms related to the short sale process may include: 1. Short Sale Approval: The addendum outlines that the transaction is subject to the approval of the lender(s) holding the mortgage(s) on the property. Any offer made is contingent upon the lender(s) accepting the terms of the short sale. 2. Seller's Representations: The seller is required to make specific representations and warranties regarding the condition of the property, any liens or encumbrances, and their financial distress. This ensures transparency and helps protect the buyer's interests. 3. Release of Lien: The addendum typically includes provisions detailing the release of any mortgage liens upon successful completion of the short sale. It lays out the steps required for the lien release and the responsibilities of each party. 4. Closing Costs and Expenses: The addendum may address who is responsible for various closing costs and expenses associated with the short sale transaction. This may include negotiation of expenses usually paid by the seller or buyer, such as title insurance or recording fees. 5. Property Condition: The addendum might specify that the property is sold "as-is" without any warranties or guarantees from the seller. This protects the seller from potential future claims, as the buyer is expected to conduct proper due diligence before purchasing. It is essential to consult with a knowledgeable real estate professional or attorney when utilizing a Delaware Short Sale Addendum. They can guide and assist in navigating the complexities of the process, ensuring compliance with state laws, lender requirements, and protecting the interests of both the buyer and seller.The Delaware Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is an important document used in real estate transactions within the state of Delaware. This addendum serves to modify the terms and conditions of the standard contract to accommodate the sale of a property through a short sale process. A short sale is a real estate sale in which the proceeds from the sale fall short of the outstanding mortgage balance on the property. This typically occurs when the homeowner is facing financial distress and is unable to meet their mortgage obligations. In such cases, the lender agrees to accept a lower payoff amount to avoid the costly foreclosure process. The Delaware Short Sale Addendum provides a framework for all parties involved — the buyer, seller, and lender – to navigate the complexities of a short sale transaction. It addresses various crucial aspects and outlines specific terms that differ from a traditional real estate sale. One type of Delaware Short Sale Addendum commonly used is the "Standard Delaware Short Sale Addendum." This addendum is designed to cover the essential aspects of a short sale such as buyer's obligations, seller's representations, lender approval, and terms for the release of the mortgage lien. Another type is the "Delaware Short Sale Counteroffer Addendum." This addendum is used when negotiations between the buyer and seller result in changes to the original terms outlined in the Standard Short Sale Addendum. It allows for modifications to price, closing costs, and other terms as negotiated between the parties. In both types of Delaware Short Sale Addendums, key terms related to the short sale process may include: 1. Short Sale Approval: The addendum outlines that the transaction is subject to the approval of the lender(s) holding the mortgage(s) on the property. Any offer made is contingent upon the lender(s) accepting the terms of the short sale. 2. Seller's Representations: The seller is required to make specific representations and warranties regarding the condition of the property, any liens or encumbrances, and their financial distress. This ensures transparency and helps protect the buyer's interests. 3. Release of Lien: The addendum typically includes provisions detailing the release of any mortgage liens upon successful completion of the short sale. It lays out the steps required for the lien release and the responsibilities of each party. 4. Closing Costs and Expenses: The addendum may address who is responsible for various closing costs and expenses associated with the short sale transaction. This may include negotiation of expenses usually paid by the seller or buyer, such as title insurance or recording fees. 5. Property Condition: The addendum might specify that the property is sold "as-is" without any warranties or guarantees from the seller. This protects the seller from potential future claims, as the buyer is expected to conduct proper due diligence before purchasing. It is essential to consult with a knowledgeable real estate professional or attorney when utilizing a Delaware Short Sale Addendum. They can guide and assist in navigating the complexities of the process, ensuring compliance with state laws, lender requirements, and protecting the interests of both the buyer and seller.
