What are the rules for the delivery of Short Sale offers?
QUESTION: Several weeks ago, I listed a property for sale where my client’s outstanding loan amount is higher than the list price of the home. I disclosed the potential of a short sale when I listed the property in the MLS. I just received an offer for the property. The Short Sale Addendum (Standard Form 2A14-T) was attached to the offer. Do I deliver that offer to my client or my client’s lender? Or both?
ANSWER: The North Carolina Real Estate Commission has a rule (Rule A.0106(a)) that requires every broker to deliver any written offer and contract to their client within three days of the broker’s receipt of the executed document. Offers involving “Short Sales” are no exception. This means that you must promptly deliver any Short Sale offers to your owner-client. However, since your seller’s lender is not your client, you would ordinarily have no duty to deliver that offer to that lender.
If your client decides to enter into a contract that includes the Short Sale Addendum, that contract will be contingent upon your client obtaining written approval of the Short Sale from any lienholders whose approval is needed in order for your client to close and convey good title. As the listing agent, you should offer to assist your client in obtaining those approvals.
Please note: once the first request for approval of a Short Sale has been submitted to any lienholder, the duties of the listing agent change vis-a-vis the lienholder. As noted in paragraph 6(a) of the Short Sale Addendum, and in paragraph 11 of the Short Sale Addendum to the Exclusive Right to Sell Listing Agreement (Standard Form 104), the NC Real Estate Commission requires listing agents to inform all lienholders of any additional offers that are received, as well as any contracts on the property, after a request for approval of a Short Sale has been submitted to any lienholder. There is one exception to this rule: if the Seller has hired an attorney to negotiate the terms of a Short Sale with the Seller’s lenders, the listing agent is not required to disclose the existence of additional offers to those lenders; that disclosure becomes the responsibility of the attorney.
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