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You should consult an attorney for advice regarding your individual situation.
Contacting an attorney does not create an attorney-client relationship. Do not send,
e-mail, or provide confidential information or information you do not wish to be
publicly disseminated until such time as an attorney-client relationship has been
established and requested to do so by an attorney.
Copyright 2009 Law Office of Craig W. Little, P.A. All rights reserved. You may
reproduce portions of this site or materials available at this site for personal and
non-commercial use. All copies of portions of this site or materials available at this
site must include this copyright statement.
Web Articles
Analysis of Short Sales of
Residential or Commercial Property
Seller's Considerations
Additional Items to be Negotiated with Lenders
While the following items probably should not be raised with the
lender until the lender has approved the offer, so as not to taint
the offer for the short sale and skew the review process against
the offer, the seller should try, before closing, to negotiate with
the lender and get them to agree not to seek a deficiency
judgment against the seller or report the short sale to the credit
reporting agencies. A deficiency judgment is a court ordered
judgment against a debtor who has had debt forgiven. The
deficiency judgment allows the lender to seek, by legal action,
all or a portion of the difference between the amount of the
outstanding loans that were released and the amount of the pay
down generated by the short sale. The seller should also
request that the lender not report the short sale to credit
agencies or do so in such a manner as to limit the damage to
the seller’s credit. Neither of these items may be negotiable for
the seller’s lender, but there is no harm in making the request
and if the lender does agree to one or both then this could save
the seller some complications later.
In addition to the payoff that is generated by the short sale, the
lender may seek additional money from the seller to offset all or
a portion of the loan principle that the lender is forgiving. This
additional sum that may be demanded from the seller is called a
seller contribution. The lender may demand a contribution if the
seller has other assets that can be tapped or if the lender feels
that the seller pulled equity out of the property. Contributions
can be simple cash payouts to the lender. But some lenders will
also accept unsecured promissory notes by which the seller
agrees to make payments to the lender over time. The terms of
any seller contribution should be finalized in advance of the
closing and they are often heavily negotiated. The seller or the
seller’s agent and/or attorney should try to get the requirement
for a contribution removed or get the amount of the contribution
reduced to the lowest amount possible. If the contribution will
be a promissory note then the interest rate should be
negotiated to as low as possible, interest free if possible, and
the repayment term on the note should be extended as far out
as possible.
Return to Seller's Short Sale Considerations
Residential or Commercial Property
Seller's Considerations
Additional Items to be Negotiated with Lenders
While the following items probably should not be raised with the
lender until the lender has approved the offer, so as not to taint
the offer for the short sale and skew the review process against
the offer, the seller should try, before closing, to negotiate with
the lender and get them to agree not to seek a deficiency
judgment against the seller or report the short sale to the credit
reporting agencies. A deficiency judgment is a court ordered
judgment against a debtor who has had debt forgiven. The
deficiency judgment allows the lender to seek, by legal action,
all or a portion of the difference between the amount of the
outstanding loans that were released and the amount of the pay
down generated by the short sale. The seller should also
request that the lender not report the short sale to credit
agencies or do so in such a manner as to limit the damage to
the seller’s credit. Neither of these items may be negotiable for
the seller’s lender, but there is no harm in making the request
and if the lender does agree to one or both then this could save
the seller some complications later.
In addition to the payoff that is generated by the short sale, the
lender may seek additional money from the seller to offset all or
a portion of the loan principle that the lender is forgiving. This
additional sum that may be demanded from the seller is called a
seller contribution. The lender may demand a contribution if the
seller has other assets that can be tapped or if the lender feels
that the seller pulled equity out of the property. Contributions
can be simple cash payouts to the lender. But some lenders will
also accept unsecured promissory notes by which the seller
agrees to make payments to the lender over time. The terms of
any seller contribution should be finalized in advance of the
closing and they are often heavily negotiated. The seller or the
seller’s agent and/or attorney should try to get the requirement
for a contribution removed or get the amount of the contribution
reduced to the lowest amount possible. If the contribution will
be a promissory note then the interest rate should be
negotiated to as low as possible, interest free if possible, and
the repayment term on the note should be extended as far out
as possible.
Return to Seller's Short Sale Considerations
Law Office of
Craig W. Little, P.A.