One form of short sale addendum used in Florida is the AShort Sale Approval Contingency@ which is provided by the Florida Realtors and The Florida Bar as part of the Comprehensive Rider to the Residential Contract for Sale and Purchase CR-1, Rev. 6/10. This short sale addendum generally states that the contract for sale and purchase is contingent upon the Aseller=s lender@ (such as the lender holding a mortgage on the property and all other lien holders) approving the purchase price, the contract terms and the HUD-1, and that the seller=s lenders accept a payoff of their lien of less than what is owed, and that the mortgage and liens be released from the property so the seller can convey a clear title. 

The addendum states that a short sale approval by a seller=s lender must provide for a waiver and release of any deficiency claim under due under a mortgage which is paid off for less than the amount owing, unless the borrower agrees otherwise; also, the seller=s lender cannot require a change in terms of the purchase contract unless agreed to by the buyer and seller.

The addendum includes deadlines for a seller to apply to the seller=s lender or lenders for a short sale approval, and a deadline for the approval to be received by the seller and for the buyer to be notified. There are also provisions to set the closing date based on when the short sale approval is obtained, for use of a back-up contract, and for termination of the contract in the event there is no short sale approval or if the property is sold at a foreclosure sale.

The above description of the addendum is summary in nature and anyone who is signing a sale and purchase contract should review and understand all of the terms of the addendum. Seeking the advice of an attorney may be useful to a buyer or a seller with regard to such issues as understanding how the terms of the addendum, as applied to a particular sale, affects the other contract terms, in a situation where there is more than one mortgage or lien on the property, and in reviewing any documentation provided by a lender or lien holder regarding a release of personal liability. The form short sale approval contingency is useful but very general, so understanding how it will affect a particular transaction will allow a buyer or seller to better analyze to advantages and disadvantages of a short sale offer.

The foregoing discussion is in summary form, and does not, and is not intended to, discuss all of the statutes, regulations and court opinions which affect matters included in the article. It is not intended as legal advice.