By AAR General Counsel Michelle Lind
Q: The parties signed the Contract and incorporated the AAR Short Sale Addendum. When is the Contract “fully” executed — when it is signed by the parties or when the lender approves the short sale?
A: When all parties sign the Contract and the Short Sale Addendum the Contract is “fully” executed. By incorporating the Short Sale Addendum they are agreeing that the Contract will be contingent on an acceptable short sale agreement between the seller and the lender. This contingency is similar to the buyer’s financing contingency. The Addendum also obligates the seller to diligently work to obtain short sale approval (again, similar to the buyer’s obligation to diligently work to obtain loan approval) and promptly provide the lender with all additional documentation, including an appraisal at the seller’s expense, if required.
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