Colorado Short Sale Addendum Form – Fill Out and Use This PDF

1The printed portions of this form, except differentiated additions, have been approved by the

2Colorado Real Estate Commission. (SSA38-1-08) (Mandatory 3-08)

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5THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES

6SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.

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131. ADDENDUM TO CONTRACT.

14This Short Sale Addendum (Addendum) is made a part of the following contract that is

15checked:

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17□ Listing Contract (Listing Contract) for the Property dated

18, for purposes of disclosing to Seller certain matters of a Short Sale, or;

19			Contract to Buy and Sell Real Estate
20	□
21	between Seller and Buyer (Contract), dated				, relating to the sale of the
22	real estate
23	known as					(Property).
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25			Street Address	City	State	Zip
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27This Addendum shall control in the event of any conflict with the Contract. Except as

28modified, all other terms and provisions of the Contract shall remain the same.

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302. PURPOSE AND DEFINITIONS.

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322.1 Purpose of Addendum. Seller has debts secured by one or more liens on the

33Property. The Purchase Price may not be enough to cover payment for all the liens and

34costs of sale. If so, for the Closing to occur, the affected Lien Holders (§2.2 below) must

35agree to a Short Sale, (§ 2.3 below).

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372.2. Lien; Lien Holder. A Lien is a recorded claim or lien against the Property,

38such as a mortgage, deed of trust, mechanics lien or tax lien (Lien). A title insurance

39commitment may be used to show the Liens against the Property. A Lien Holder (Lien

40Holder) is a creditor who has a Lien and who agrees to (a) release its Lien against the

41Property and either (b) accept an amount less than the full amount Lien Holder claims is

42owed or (c) treat the debt secured by the Lien differently than as originally provided for in

43the evidence of debt (such as promissory note) (Lien Holder). (§3.3 below.)

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452.3. Short Sale. A Short Sale is a transaction in which any Lien Holder releases

46its lien against the Property and accepts an amount less than the full amount Lien Holder

47claims is owed or treats the debt secured by the Lien differently than as originally provided

48for in the evidence of debt (such as promissory note) (Short Sale). (See § 3.3 below.) Before

49a Short Sale can occur, the Buyer, Seller and each Lien Holder (except those creditors that

SSA38-1-08. SHORT SALE ADDENDUM TO CONTRACT TO BUY AND SELL REAL ESTATE

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50are to be paid in the full amount claimed) must consent to the terms of the sale. Sometimes,

51the Liens are released but the Lien Holder does not agree to release Seller from liability or

52reduce the unpaid portion of the debt, and the Seller and any guarantors will remain liable

53after Closing for that unpaid portion, despite the release of the Lien against the Property at

54Closing (§ 3.3 below).

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563. MANDATORY DISCLOSURES TO SELLER AND BUYER.

57	3.1 SELLER IS ADVISED TO CONTACT THE COLORADO
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59	FORECLOSURE PREVENTION HOTLINE OPERATED IN
60	COOPERATION WITH THE COLORADO DIVISION OF HOUSING AT 1-
61	877-601-4673 OR THE HUD HOUSING COUNSELING AND REFERRAL
62	LINE AT 1-800-569-4287.
63	3.2. Seller acknowledges there are alternatives to a Short Sale that may be better
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65	for Seller. Seller acknowledges that a Short Sale transaction may result in continued
66	liability of Seller or other persons liable for the debt that could be extinguished through
67	foreclosure, bankruptcy or other loss mitigation options, including but not limited to a
68	negotiated loan modification with Lien Holder. Seller acknowledges that it is the
69	responsibility of Seller to investigate these alternative methods of resolution with Seller's
70	legal, accounting or financial advisors and with Lien Holder and it is not the
71	responsibility of any real estate broker to undertake any investigation of other options
72	that may be available to Seller.
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743.3. Short Sales may have serious adverse legal, tax and economic

75consequences for sellers and any guarantors. Seller is advised to seek legal

76and tax counsel to advise Seller of the legal effect and meaning of any Short

77Sale Acceptance from Lien Holder.

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793.4. Lien Holder is not required to agree to a Short Sale. Even if a Lien

80Holder agrees to a Short Sale, a Lien Holder is not required to forgive repayment of the

81debt secured by the Lien, or release Seller and any guarantors from liability unless Lien

82Holder’s claim is paid in full. Seller acknowledges that Lien Holder may or may not agree

83to release Seller or any guarantors from liability to Lien Holder. If not released, Seller

84and any guarantors will remain liable to Lien Holder for any amount that

85remains unpaid after the Short Sale. Any release of liability by Lien Holder, to be

86binding, must be in writing, executed by Lien Holder and provide that Seller and any

87guarantor is released from liability.

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893.5. Lien Holder, if it agrees to a Short Sale, may condition its agreement on

90Seller doing any or all of the following to obtain a Short Sale Acceptance: (a) make a cash

91payment, (b) sign a new promissory note, (c) continue to owe the Lien Holder the unpaid

92portion of the debt, (d) agree to other requirements made by Lien Holder.

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943.6. If the Lien Holder accepts less than full payment, Seller understands that

95Seller may incur federal and state tax liability due to a Short Sale and understands that

96Lien Holder is required to file all required 1099 Forms with the Internal Revenue Service

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97with respect to this transaction. Seller is strongly advised to seek tax advice of the

98potential adverse tax consequences of a Short Sale to Seller.

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1003.7. Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not

101necessarily repair or rehabilitate Seller’s credit rating and Lien Holder has no obligation

102other than to fairly report this transaction to any credit rating agency.

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1043.8. The Contract may be terminated by Seller, if Lien Holder does not approve

105this Contract, or if the terms and conditions from Lien Holder, to obtain a release of the

106Lien, are not acceptable to Seller, in Seller's sole discretion, on or before the Short Sale

107Acceptance Deadline (§ 8.1 below).

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1093.9. The Contract, although accepted by Buyer, may be terminated by Buyer as

110otherwise provided herein, or if Lien Holder does not approve this Contract or if the

111terms and conditions of any Agreement to Amend/Extend the Contract are not acceptable

112to Buyer, in Buyer's sole discretion.

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1143.10. Release of the lien against the Property does not by itself release Seller and

115any guarantors from liability for the debt.

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1173.11. Buyer acknowledges that the Short Sale Conditions (§ 4 below)

118may lead to termination of the Contract. The Short Sale process may result

119in delays in the Closing. Buyer is advised to consult with legal counsel about

120this Addendum and its legal effect.

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122 3.12. Buyer and Seller both acknowledge and agree that any Short Sale

123Acceptance by Lien Holder is made on the condition that none of the terms of the sale

124shall differ in any material respect from the terms submitted to the Lien Holder on which

125the Short Sale Acceptance was based. For purposes of the Contract, any change in the

126date of Closing, Purchase Price, real estate brokerage commissions, concessions or net

127proceeds to be paid to, or other remuneration to be received by Seller in connection with

128the proposed Short Sale shall be deemed a material change. Any material change will

129require that the Short Sale Proposal be re-submitted to the Lien Holder for approval,

130which could result in delays for approval or even denial of the Short Sale.

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1323.13. This Addendum should be signed at time of contracting by both Buyer and

133Seller, as most Lien Holders will not consider a Short Sale until a signed contract is

134received for their review.

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1374. SHORT SALE CONDITIONS. Notwithstanding anything to the contrary in this

138Addendum, the Contract between Seller and Buyer, for the benefit of both Seller and

139Buyer, is conditional upon all of the following occurring:

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1414.1. A written statement signed by each Lien Holder of a payoff amount less than

142the full amount Lien Holder claims is owed.

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1444.2. A written statement signed by each Lien Holder that it agrees to release its

145lien against the Property upon payment of the agreed upon payoff amount.

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1474.3. A written statement signed by each Lien Holder and acceptable to

148Seller (Short Sale Acceptance) that specifies the terms and conditions of the Short

149Sale.

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1514.4. Agreement to Amend/Extend Contract signed by Buyer and Seller, so long

152as both parties agree, in their sole discretion, to the changes to the Contract required by

153the Short Sale Acceptance.

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1555. SELLER DEADLINE FOR SUBMISSION TO LIEN HOLDER. Seller agrees to

156submit to each Lien Holder a request for a Short Sale and all documents and information

157requested by Lien Holder, including a copy of the Contract, any Counter Proposal, this

158Addendum and amendments. The initial submission by Seller to each Lien Holder shall be

159on or before Initial Submission Deadline (§ 5.1 below). Any additional information or

160documentation requested of Seller by such Lien Holder shall be submitted within 5

161calendar days of such request or Buyer may terminate the Contract pursuant to § 8.2

162below.

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1645.1. Seller Submission Deadline. The following deadline shall be the calendar

165days set forth below.

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Event	Deadline	From
Initial Submission		MEC (§ 2.4 of Contract)

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1685.2. Seller Consents to Lien Holder’s Release of Information. Seller consents

169that Lien Holder and its representatives may supply and communicate any loan, financial

170or other information of Seller, confidential or otherwise, with any of the following

171 involved in the transaction: Seller’s attorney, Broker or Brokerage Firm and its

172representatives working with Seller, transaction coordinator, title insurance company, its

173representatives, Closing Company or its representatives; and the following as checked:

174□ Broker or Brokerage Firm and its representatives working with Buyer □ Buyer □

175Buyers attorney.

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1776. DATES AND DEADLINES.

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179 6.1. Revised Dates and Deadlines and Other Terms. Buyer and Seller

180acknowledge that an Agreement to Amend/Extend Contract ("Amend/Extend") is

181required to revise the Dates and Deadlines (§ 2.3 Contract) or other terms based on

182changes required by the Short Sale Acceptance. If both Buyer and Seller, in their sole

183discretion, do not agree to the terms of the Amend/Extend, as evidenced by their signatures

184on the Amend/Extend and the offering party to such document receives notice of such

185acceptance on or before 7 calendar days after the earlier of (a) the receipt by both Buyer

186and Seller of the Short Sale Acceptance or (b) the Short Sale Acceptance Deadline (§ 8.1

187below), then the Contract shall terminate.

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1897. UNCERTAINTY OF SHORT SALE. Buyer and Seller acknowledge:

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1917.1. There are no promises or representations regarding (a) whether Lien Holder

192will agree to a Short Sale, (b) the terms of any Short Sale Acceptance, and (c) when the

193Lien Holder will advise of its decision to agree to a Short Sale or provide the written terms

194and conditions of the Short Sale Acceptance.

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