Under the existing FAR BAR Residential Real Estate Contract and its companion Short Sale Addendum, a contract may be formed between the buyer and seller that requires the buyer to close even if the lenders do not explicity and clearly waive all claims to pursue a deficiency judgment against a homeowner who is obligated under the mortgages.
Although language does exist in the Short Sale Addendum that addresses the lender waiving its right to collect any proceeds beyond what are received as part of the sale, the exisiting language may not go far enough to protect the seller from efforts by a purchaser to force a short sale closing even when all necessary releases from liabilty have not been obtained from the lender. This situtuation poses risks for the homeowner–and the realtor who represented the homeowner in the transaction–if the lender tries to pursue the homeowner at any point during the five years after the transaction is consummated. In most instances, homeowners will believe their liability has concluded after the transction has closed and they will be surprised to learn they may still be on the hook for a considerable liability–whether they signed a promissory note or not. The first person the borrower will come looking for to redress their perceived wrong will be the professsional who advised them (or who did not advise them) of the potential liability of the transaction. For this, and many other reasons, realtors are encouarged to advise all their clients to retain legal counsel who understands this process and the long term implications of a short sale.
For more information on the new FAR BAR Short Sale Addendum visit http://www.floridarealtors.org/LegalCenter/HotTopics/upload/1Short%20Sale%20FAQ%20plus.pdf for assistance with your short sale transaction or for more information, visit my website at www.mattweidnerlaw.com