There is a new Short Sale Addendum for purchase agreements.  This form which serves to better define the terms of the Short Sale has some new additions and removed some items.

This is a great tool for short sales.

Here are the changes…

Section 1 – now has this language, “Seller understands and acknowledges that lender approval may be conditioned upon any or all of the following: (a) making a cash payment; (b) signing a new promissory note; (c) continuing to owe the lender the unpaid portion of the loan(s); and (d) other requirements made by lender.”

WHAT IT MEANS – Short sales, unlike any other normal sale can result in the Seller having legal liability in years to come.  This can come in the form of collections or even law suits.  This section serves to better warn the Seller.  See my blog on Seller Liability After Short Sale

Section 2 – the Lender Short Sale Approval Addendum has been incorporated into the Addendum.

WHAT IT MEANS – See my explanation of the Lender Short Sale Approval Addendum form by clicking here.

Section 3 – now has the language, “either Party may, in its sole discretion, reject the amended terms required by Lender.”

WHAT IT MEANS – If the Lender changes the terms, for example refuses to pay closing costs from proceeds, any party may cancel.

 

Section 4 – Time Frames, due diligence commencement has been changed to “(1) calendar day after the Parties’ mutual written approval of the Lender Approval”

WHAT IT MEANS – Due diligence commences upon the Parties agreeing to the terms of the Lender.  This is tricky.  If there was no change by the Lender, then this should be when the listing agent informs the selling agent of Lender approval.  If the Lender changes the terms and the Lender Short Sale Approval Addendum is used, then the due diligence commencement is the date of the final signature of the Parties, not the date it was served upon the selling agent.

 

Section 6 – The first right of refusal has been REMOVED!  All subsequent offers are now “back up offers.”

Section 9 – Legal and Tax Consequences has added, “A Short Sale May Have Serious And Adverse Legal, Tax, Credit And Economic Consequences For The Seller. Seller agrees to seek advice from an attorney, a certified public accountant or other qualified professional regarding the legal effect and meaning of a short sale and any Lender Approval.”

WHAT IT MEANS – Short sales, unlike any other normal sale can result in the Seller having legal liability in years to come.  This can come in the form of collections or even law suits.  This section serves to better warn the Seller.  See my blog on Seller Liability After Short Sale

This is part of my short sale series listed below in alphabetical order:

7 Tips for Short Sale

Addendum to Short Sale Listing

Charging for negotiating short sales/Negotiators

Deficiency Judgments Nevada

Foreclosure and the One Action Rule in Nevada

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale

Shortsale Wallet Size Answer Sheet

IRS PUBLICATIONS shortsales/foreclosures:

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Questions?  Call me Darren Welsh, Esq. 702 245 1787  or drop me a TPS by filling out this form.