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 Iowa Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate is a legal document that is commonly used in real estate transactions in Iowa when there is a short sale involved. A short sale occurs when a homeowner is in financial distress and sells their property for less than the amount owed on the mortgage. This addendum is designed to be attached to the standard contract for the purchase and sale of real estate in Iowa and includes specific provisions related to the short sale process. It is crucial for both buyers and sellers to understand and agree upon the terms outlined in this addendum in order to proceed with the transaction smoothly. The Iowa Short Sale Addendum includes several key components. Firstly, it outlines the agreed-upon purchase price of the property, which is typically less than the outstanding mortgage balance. Additionally, it establishes the buyer's acknowledgement and acceptance that the sale is subject to the approval of the seller's lender or lenders. The addendum also clarifies that the seller is responsible for obtaining the necessary approvals from their lenders to proceed with the short sale. It may specify a timeline for the seller to provide documentation or communicate with the lender regarding the sale. The addendum emphasizes that the buyer's offer is contingent upon the seller's receipt of short sale approval from the lender(s). In some cases, there may be multiple short sale lenders involved, particularly if there is more than one mortgage on the property. The addendum addresses this possibility and allows the seller to continue seeking approval from additional lenders until all liens are satisfactorily released. Another important aspect covered in the Iowa Short Sale Addendum is the acknowledgement that the buyer may need to pay certain costs associated with the short sale, such as lien release fees or unpaid homeowner association dues. The addendum specifies that these costs are in addition to the purchase price and may be negotiated between the buyer and seller. It is essential for both parties to review and sign the Iowa Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate to ensure their understanding and acceptance of the unique terms and conditions surrounding a short sale transaction. This addendum is crucial in facilitating a successful short sale process while protecting the interests of both the buyer and the seller. In conclusion, the Iowa Short Sale Addendum to Contract for the Price, Purchase and Sale of Real Estate provides a framework for buyers and sellers to navigate the complexities of a short sale transaction in Iowa. By addressing essential elements such as purchase price, lender approval, and additional costs, this addendum helps streamline the process and protect the interests of all parties involved.
