Hope this helps.
Short sales can be a very time consuming process and sometimes after all the work there are no positive results for either party. The reason you need to sign the release is because someone is holding your money in escrow. The holder of that escrow account can only disburse those funds with specific events or instructions. The first event would be at closing according to the contract. The second would be after receiving a written release signed by the seller and buyer giving instructions on how to release the funds. Without the release the funds cannot be disburse unless it was so ordered by a court.
When you signed the contract, you may have sign a short sale addendum or something stating that the sale of the property was contingent upon a third party approval. In this case GMAC and Sun Trust. Unfortunately, both lenders must approve of the sale in order for the contract to be binding. Assuming you signed such a document. If the lenders did not agree to the short sale amount other than increasing your offer you maybe better off moving on. One of the reasons the seller can get a short sale approval is because of their current financial picture, which they must submit to the lien holders showing that they are unable to afford to pay the additional $90K to clear the liens. Since the seller cannot pay the full amount owed the lenders must agree the take less than what is needed to stratify the outstanding debt.
Without the banksâ€™ approval you would not be able to get a loan on this property, because it cannot be transferred free, clear, and in marketable condition.
You certainly would not want to pay cash for it either. So without the lendersâ€™ release, which is what a short sale approval does, you may want to consider moving on.
Please keep in mind that since I have not read the contract and have no working knowledge of the transition, my advice is general. I would talk to your broker, and an attorney if you donâ€™t feel confortable with the information you have received to date. Good Luck
If the normal short sale paperwork was included in your sale agreement the owner would not beboundtothe contract if the bank declined the sale or if it was not approved within the agreed upon time frame. Unfortunately too many agents get involved in short sales that have little or no chance of being approved because they don't understand the process. There should never be a lack of communication. This is how short sales get a bad reputation.
Did you have a buyer's agent representing you in this case or did the listing agent write up your offer? I'm wondering because you explain that you've tried to finds answers, get a hold of the listing agent, bank, attorney etc. If a listing agent is unresponsive, it sometimes helps if we escalated up the chain, ie. ask to speak to the office manager or have our broker contact the other broker.
You'll probably never find out what the real issue is, short sales can fall through for several reasons. The bank may not be willing to eat all the costs and is asking for a contribution from the seller which the seller may not be willing or able to do. Or the short sale package was incomplete and either didn't demonstrate true hardship or didn't correctly portray the property's condition. If it required such extensive repairs it should have been documented in the package, complete with pictures and repair estimates.
Sometimes, the way the banks act defies all logic - there are many more players though and the problem could also be caused by them (investor or mortgage insurance for example). Unfortunately, it sounds like that this sale will not happen. My opinion is solely based on the information provided by you, however. You should consult an attorney if you'd like to have your contract reviewed and want to see what options, if any, you have.
Last, but not least, you definitely want to sign the release or otherwise your earnest money deposit wont be released to you. Good luck & all the best!
If they are bound, it's to an unenforceable contract. Short sales are subject to the lender(s) approval. If the lender denies this, your contract would have to state the owners must agree to any subsequent negotiations between you and the bank. If your contract does not contain such a clause, and I've never seen this, I don't know how they could be forced to comply.
I can only speculate without reading your agreement, so if you want to take this to an attorney for review that would be your final answer.