Some questions have come up regarding how to write the purchase contract to ensure the short sale seller does not end of having to pay for required repairs such as those required by the appraiser or to obtain the termite and moisture clearance letter.
1) One agent completely strikes out the 1% cap section which requires seller to pay up to the cap of the required repairs. She stated that if the lien holder does not fund those repairs, the seller is held responsible unless the section is stricken. Is that true? That creates an issue as most buyers are not willing to pay for a property prior to owning it. What do you do? Once I struck through "seller" and put "lien holder".
2) Should we strike out all places in the contract that state the seller will pay, ie... in closing costs and insert lien holder?
3) If the seller approves an offer without clarifying that the lien holder is to pay, is the seller responsible for anything the lien holder does not agree to pay?
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Hi Linda. The lien holder is not a party to the contract so adding them will achieve nothing. Plus lenders will not pay for repairs. They may allow a credit if there is something major but I would avoid this situation if at all possible.
Don't you guys have an "As Is" contract or addendum? This is really all you need. Then just add a clause stating that the buyer will be responsible for any lender required repairs.
If you know repairs are going to be an issue then negotiate a cash deal and just price based on the as is condition of the property.
Your broker should be able to assist you with this.