Monday, December 29, 2008

Florida Short Sale Contracts Are "Contracts"



When I wrote "When is a Contract NOT a Contract?" it stirred up over 40 comments and some controversy. The crux of the matter is that many Destin Florida listing agents are accepting more than one "primary" contract on a Short Sale listing. There is a prevalent belief in the Emerald Coast real estate market and others, that a contract is "not" a contract despite being signed by both buyer and seller, until the bank approves the price and short sale. Thus, the thinking goes, the Short Sale seller is not truly obligated to the buyer who wrote the offer, and can simply sign multiple contracts with parity. Because of this misconception, many buyer's agents also think release and cancellations are not needed when buyers "walk" prior to bank approval. Also, the practice of accepting more than one "primary" offer is likely a disservice to sincere buyers who are subjected to auction-type handling of their offers. There may be legal ramifications, as well.

I have since tracked down a definitive answer from the Florida Association of Realtors staff attorneys, as written in Florida Realtor Magazine, September 2008. The following is from the Legal Q&A that appeared on page 9 of the magazine. It clearly reinforces the fact that a Short Sale contract is a "contract" and that the seller should only sign another contract with a "Back-Up" clause attached.

Legal Hotline
Contracts
Q I have a fully executed FAR9 Residential Sale and Purchase Contract along with the FAR SSA-2 Short Sale Addendum to Purchase and Sale Contract. We are still within the time period in which the seller may obtain the lender's approval of the short sale, and now another buyer has made what is arguably a better offer. May the seller sign the second contract?
A The seller may sign a second contract but should do so only as a backup contract with the appropriate backup contract addendum attached. If using a FAR contract, use addendum P(1) from the FARA-9 Comprehensive Addendum. Of course, the FAR SSA-2 Short Sale Addendum should also be used.

Here is the link http://www.floridarealtors.org/FLRealtorMagazine/2008/September/0908LegalHotline.cfm

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com

Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for almost 20 years. She has won numerous awards, including the coveted ADDY for advertising design. An expert marketer of real estate listings, she also negotiates successfully to her buyers' and sellers' advantage. She is supported by a team of top buyer specialists. Wendy lists and sells homes, condos and townhomes in Destin Fl and the surrounding areas. She was ranked in the top ½ percent of all Realtors on the Emerald Coast of Florida in 2008 for resale listings sold.

All Rights Reserved. "FLORIDA SHORT SALE CONTRACTS ARE "CONTRACTS" Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2008 by Wendy Rulnick.This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.

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4 Comments:

Blogger artsyfartsyfooladi said...

Interesting Wendy. Great blog. I'm researching short sales as my buyer is submitting an offer on one tomorrow. Of course, your blog came up. Great SEO and information.

Best,
Amy Lee

February 3, 2009 at 7:58:00 PM CST  
Blogger Wendy Rulnick said...

Thanks, Amy. Good luck with your offer!

February 4, 2009 at 7:57:00 AM CST  
Blogger Beauty Morgan said...

Thank you for educating people Wendy. I have a short sale I'm doing now that other Realtors® are insisting that I have to submit all offers to the bank. When told the seller is signing ONE contract and theirs can be considered a back up with the proper addendum they are giving me all kinds of grief. It's good to see I'm doing it correctly. Thank you. :)

February 22, 2009 at 11:49:00 AM CST  
Blogger Wendy Rulnick said...

Beauty - There is a LOT of misinformation out there. Glad you stand firm!

February 22, 2009 at 12:00:00 PM CST  

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