Since the asset is still owned by the individual and not the bank it is the individual seller's signature which constitutes a binding contract. We simply look to the bank to approve the "short sale," to agree to release the note/lien for an amount less than what is owed. It is true we can not perfect a short sale without the bank's input but the bank also does not have authority to sell the asset. I think it's clean cut- if the seller signs the contract prior to April 30th and they can close in time on a short slae the buyer will qualify for their tax incentive. Now let's get my buyers to the table :-)
Thank you all for the answers, responses and insight. I am sure this question will come up a lot in the next week or so. I have 5 short sale transactions that have been in play for months. Seller has signed and we are waiting for bank approval on all of them. There are some that may have bank approval next week and they all will close before June 30th. Although I have had conflicting answers, I tend to agree with Joetta Fort. The seller's signature makes it a 'binding contract'. Wheter short sale or not there are several ways a buyer can still back out on lending, inspection, HOA, survey, etc. etc. None of these issuesdetermine wheter it is a binding contract. I have advised my buyers to also seek advice from their CPA's as I continue to research the matter. I understand that Oliver Frascona agrees that it is the seller's signature that makes it binding and the bank is not a part of the contract. Again, thanks for all of your input.
Robert McGuire ASR
Your Castle Real Estate
3900 E. Mexico Ave. #1350
Denver CO 80210
What if you are under contract and do not close for months? I would play it safe and if the Buyer has to have the Tax Credit get them a "normal" sale to save you some headaches.
check out the government website to answer this question definitively. It is my understatndin that you must be under contract (which would be with the seller, no twith the bank) The difficult part can be closing on time.
Keller Williams Realty Success
Hope this helps and best regards and good luck