Of course, if the seller did not provide a clearly written short sale stipulation, and if you did not insist on a clearly written short sale stipulation, then you need to amend the agreement right now!
This agreement is just like any other purchase and sale, but it is subject to the seller's mortgage lender's approval - you don't care what approval looks like, you don't care what the lender negotiates with the seller, you just need a way out if they don't get that approval.
Don't overthink what's happening on the seller's side - you can not micromanage their processes.
Here's the stipulation that I use in Georgia:
"Buyer acknowledges that the sale of the Property will not generate sufficient cash to pay off the mortgages on the Property and the other obligations of Seller with respect to this purchase and sale transaction. This Agreement is therefore contingent upon Sellers mortgage lender(s) agreeing to: (1) take a reduced pay off on its mortgage(s) in an amount sufficient such that the purchase price of the Property pays off the reduced amount of the mortgage(s), any other liens, judgments and other encumbrances on the Property, the real estate commission(s) owing to the Broker(s) and the other expenses of sale for which Seller is obligated under this Agreement without Seller having to pay any additional sums; and (2) release Seller from any claim, cause of action, suit or judgment for the amount of the reduction in the payoff on said mortgage(s). In the event, the mortgage lender(s) do not agree to such reductions at least ____ days prior to closing, either Seller or Buyer may terminate this Agreement without penalty upon notice to the other party."
The Wall Street Journal had a vivid article on 1/27 about short sales - check out the web reference.
When you buy it, the escrow closer or closing attorney will certify the transfer of title free of marketing encumbrances and with a warranty deed entitled to you.
You need to buy title insurance in case something gets messed up - buy title insurance!
Regardless, good luck - dot all of your i's and cross all of your t's - you may need to get out of this, and you do not need a penalty of either time or money.