Jan 25, 2011

Tip 3-2011: Short Sales: When Is Contract Considered Ratified?

There appears to be some confusion about when a Short-Sale Contract with an attached VAR Short Sale Addendum is considered to be ratified.  The Contract is legally ratified once both the Purchaser and Seller sign the same Contract, Short-Sale Addendum, all other Addendum's, and all changes initialed.
The fact that the Seller’s “Short Sale Lender” still has to approve the Short Sale does not mean that the Contract is not ratified between the Purchaser and Seller.  The required “Short Sale Lender” approval is a “contingency” that if not satisfied will result in the contract being terminated just like any other unsatisfied contingency .
The Purchaser will usually first satisfy the normal contingencies (the inspection and loan commitment) and the HOA package will be reviewed and accepted.  Then everyone will wait for the biggest contingency—the approval by the Short Sale Lender of the short sale terms.  While all these contingencies are waiting to be satisfied, the Contract has still been “ratified.”

Please contact us if you have questions or need legal advice.

Senior Partner
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia


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