Should a broker fill in the effective date for a short-sale contract?
11/13/2015 | Author: Editorial Staff
I’m a broker with a sales contract that’s been executed by the buyer and my seller. The price is less than what the seller owes, and the sale is subject to the lender's approval. Should I fill in the effective date?
Yes. The effective date of any contract, even a short-sale contract, should always be filled in by the broker. Even though the sale is subject to the approval of the lender, there is still a contract between the buyer and the seller. The effectiveness of the contract is not subject to lender approval, so the effective date should be filled in as with all contracts.
The Short Sale Addendum (TAR 1918) should always be attached to the contract in this situation to protect both the buyer and the seller because there is a contractual agreement between the parties where each has certain performance requirements and because the seller's ability to perform under the contract is subject to the lender’s approval. The addendum makes it clear that the contract is binding upon execution by the seller and the buyer, and that the earnest money and option fee must be paid as provided in the contract.
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