Creditor approval
The lender and other lienholders must approve the price, contract terms and closing figures, accept reduced payoffs and agree to release the affected liens.
Paragraph 19 · Addendum G
A signed contract is only the beginning of a Florida short sale.
Addendum G makes the transaction contingent on the seller’s lender and other lienholders approving a reduced payoff, releasing their liens and accepting the terms needed to close.
Interactive short-sale timeline planner
Map the rider’s separate milestones.
Estimate the application target, approval deadline, automatic expiration date and approval-based closing date. Use the exact negotiated numbers from the signed rider.
Estimated milestones
Obtain application forms by—
Approval Deadline—
Automatic expiration—
Approval-based ClosingEnter approval date
This planner adds calendar days and does not decide whether Paragraph 18 moves a date that lands on a weekend or national legal public holiday. Extensions, amendments, valid delivery and the completed rider control.
What Addendum G does
It makes lender and lienholder approval a condition of the sale.
A short sale occurs when the available proceeds will not fully pay the debt secured by the property. The seller can accept the buyer’s offer, but the seller’s lender and any other affected lienholder must still agree to the reduced payoff and release the liens needed for closing.
The rider also addresses the seller’s application process, status updates, approval and expiration deadlines, when most contract periods begin, the closing date and whether the seller may accept a back-up contract.
Six moving parts
Approval must address more than the purchase price.
The written approval, the rider’s dates and the parties’ performance all matter.
Deficiency terms
An approval that does not fully release deficiency claims—or adds obligations affecting a party—requires careful written review and acceptance by the affected party.
Seller application
The seller must timely obtain and complete the lender’s short-sale forms, then promptly supply additional documents the lender requests.
Approval delivery
The current rider calls for an accepted approval copy to be delivered to the buyer and closing agent within three days after the seller receives it.
Shifted time periods
The initial deposit and approval deadline run from the Effective Date; most other contract periods begin when the buyer receives Short Sale Approval.
No lender guarantee
The lender is not a party to the contract and is not obligated to consider, approve or complete the proposed short sale.
If the approval blank is empty90days from Effective Date
Two different exit points
The approval deadline is not automatic expiration.
If accepted Short Sale Approval has not been delivered by the negotiated deadline—90 days from the Effective Date when the blank is left empty—the current rider allows either party to terminate by written notice.
The contract does not automatically end at that first deadline. Automatic termination occurs 30 days after the approval deadline, including extensions, if the approval still has not been delivered.
Until a party properly terminates or automatic expiration occurs, the contract may remain in effect. Confirm every date and delivery method from the signed contract, amendments and Paragraph 18.
A crucial distinction
Lien release and personal debt release are different protections.
Closing the property sale does not necessarily resolve every obligation of the seller.
Can the lien be cleared for closing?
The approval must permit reduced payoff and provide the satisfaction or release needed to remove the mortgage or other lien from the property. This is what allows the transaction to convey the contemplated title.
Can the creditor pursue the unpaid balance?
A lender’s agreement to release its lien is not automatically the same as a written waiver of a deficiency claim against the seller. The approval letter must be reviewed for any remaining personal liability, contribution, note or other condition.
Before committing to the process
Treat the approval letter as a new set of closing instructions.
Every figure, deadline and added condition deserves review before either party spends more money or assumes the sale will close.
Buyer review
- Confirm the negotiated approval deadline and approval-based closing period.
- Ask which contract deadlines are delayed until receipt of Short Sale Approval.
- Budget carefully for inspections, appraisal and loan expenses that may not be recoverable if the lender does not close.
- Review resale restrictions, arm’s-length terms and other lender conditions before accepting them.
- Track foreclosure activity separately; a pending short sale is not itself a guarantee that foreclosure has stopped.
- Do not schedule an inflexible move until approval is received and the closing remains viable.
Seller preparation
- Identify every mortgage, judgment, association lien and other payoff that may affect net proceeds.
- Submit a complete lender package promptly and respond quickly to updated-document requests.
- Have counsel and a tax professional review deficiency, contribution and tax consequences.
- Confirm whether the rider permits back-up contracts and what the lender requires regarding additional offers.
- Deliver any accepted approval to the buyer and closing agent within the rider’s delivery period.
- Do not assume approval of the sale automatically waives the remaining debt.
“Once the lender is reviewing the short sale, foreclosure stops.”
Common misconception
Approval review and foreclosure are separate processes.
Federal mortgage-servicing rules can restrict certain foreclosure steps when a complete loss-mitigation application is submitted early enough, but protection depends on the application’s completeness, timing and the servicer’s status under those rules.
Addendum G also expressly addresses the possibility of a foreclosure sale. If the property is sold at foreclosure before Short Sale Approval and closing, the contract terminates and the buyer’s deposit is returned under the rider. The parties should verify foreclosure status rather than assume lender review has frozen it.