June 12th, 2012 at 7:02 pm
Upon hearing this scenario, my initial reaction was that the deal was cancelled. After all, as the SSA makes clear, the seller “is not obligated to change the terms of their Agreement to satisfy Short Sale Lenders’ consent or term sheet.” (SSA, paragraph 1E.) On the other hand, however, the buyer’s agent then pointed me to paragraph 1C of the SSA and my opinion quickly changed. Paragraph 1C(ii) of the SSA reads as follows: “Seller’s presentation to Buyer of Short Sale Lender’s Consent satisfying 1B removes the contingency in 1A.” (Emphasis added.) In other words, by delivering the bank’s approval letter to the buyer, the seller is removing the contingency in the SSA and therefore their right to cancel the deal based on the SSA. So, in the case above, since the consent had already been delivered to the buyer, the seller could no longer cancel.
What does all this mean for us? It means that, as the seller’s agent, we need to carefully review the lender’s approval letter before sending it to the buyer. The SSA gives the seller 3 days to deliver the consent to the buyer, and we need to use that period to make sure that all the conditions are acceptable to our seller. Only then can we safely deliver the letter to the buyer. So, when an approval is received, immediately set an appointment with your seller so the letter can be reviewed and delivered to the buyer. By getting the approval reviewed and delivered, we not only confirm that lender conditions are acceptable, we also eliminate the buyer’s right to cancel per paragraph 1A and D. So move quickly, but carefully. That way you protect both your seller and yourself.
As always, let us know if you have any questions
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