Ask the Short Sale Expert: Short Sale Form 22SS

Q: How do the terms I outline in Form 22SS affect how the bank reviews the short sale offer?
Marilyn in Mill Creek, WA

A: Form 22SS is the Short Sale Addendum to the Purchase & Sale Agreement. Contrary to what you might expect, many lenders don’t review Form 22SS at all. Banks will look at the contract, but they’re not concerned with the terms. In a short sale, the bank alone dictates the terms, from sale price to closing date. They will look at the net proceeds, and also check to see if there is an addendum that outlines concessions that they will not allow, such as having a seller live in the property after the sale and pay rent. Concessions of this type will all but guarantee that the bank will not approve the sale.

While Form 22SS is of little consequence to the lender, it is critically important to your client. Form 22SS clarifies the process and terms that the buyer and seller agree upon in order to complete the sale. That includes:

  • Whether timelines in the agreement- such as deposit of earnest money or inspection- begin upon mutual acceptance rather than the delivery of lender consent.
  • The number of days a seller has to deliver lender consent to the buyer.
  • The conditions under which the buyer can terminate the contract.

It’s very important to fully understand the implications of how you fill out the form. For example, in Paragraph 4 TERMINATION BY BUYER, if you check neither of the boxes, the buyer can terminate the contract at any time for any reason.

With all these options and variables, Form 22SS can be confusing. If you need assistance with your transaction, we’re happy to help. We pay a 30% referral fee. Call Richard Eastern at (206) 612-5541.

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