May 5, 2011

Tip 18-2011: Short Sales - Closing Deadlines

(Short Sales – Closing Deadlines)  The perfect “Short Sale Buyer” needs patience and cannot usually be in a hurry to close.  This unfortunately is not always the case, especially after short sale lender approval.  Once the short sale lender has approved the short sale, the short sale lender will normally only allow thirty (30) days for the closing to occur.

In other words, we all hurry and then wait for lender approval, and then when it finally comes there is a short period of time to close.  When they finally approve the short sale, they want the Buyer to close within their approved time line.  The short sale lender rarely pays any attention to the closing date in the contract.  Once you have short sale lender approval, it can be a mistake to ask for an extension of the closing date. 

Extensions, however, can be arranged, but there is always a risk.  The seller’s financial documents may need to be updated or the lender may need to order a new BPO before they will extend the short sale approval.  Even if an extension is granted, it usually includes extra costs (Ex: a per diem interest penalty.)

The best practice is not to take the risk of requesting an extension of the short sale approval.  The Buyer needs to be prepared to close with their inspection, loan application and loan commitment already obtained.  Then the Buyer is just waiting for the short sale approval.

Please contact our firm 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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