The Short Sale Contract is utilized in South African property transactions where the seller, due to financial distress or market conditions, needs to sell their property for less than the outstanding mortgage amount. This document is essential when standard property sales agreements are insufficient due to the involvement of the mortgage holder in approving the sale terms. The contract addresses unique aspects such as lender approval conditions, potential deficiency judgments, and special closing requirements while ensuring compliance with South African property law, including the Property Law Act and Consumer Protection Act. It provides protection for all parties involved and clearly outlines the responsibilities and expectations in what can be a complex transaction involving multiple stakeholders.
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1. Parties: Identification of the seller, buyer, and current mortgage holder(s)
2. Background: Context of the short sale, including current property value, outstanding mortgage amount, and reason for short sale
3. Definitions: Key terms used in the agreement including Property, Purchase Price, Short Sale, Closing Date
4. Property Description: Detailed legal description of the property including erf number, size, and physical address
5. Purchase Price: Agreed purchase price and acknowledgment that it is below the outstanding mortgage amount
6. Lender Approval: Conditions regarding lender's approval of the short sale and timeline for obtaining approval
7. Due Diligence: Buyer's right to inspect the property and review all relevant documents
8. Closing Conditions: Requirements that must be met before the transaction can close
9. Transfer and Registration: Process and requirements for property transfer and registration
10. Costs and Commission: Allocation of transfer costs, legal fees, and estate agent commission
11. Breach and Termination: Consequences of breach and circumstances allowing termination
12. General Provisions: Standard legal provisions including notices, governing law, and jurisdiction
1. Tenant Rights: Required if the property is currently occupied by tenants, addressing their rights and notice requirements
2. Multiple Mortgage Holders: Required when there are multiple lenders who need to approve the short sale
3. Deficiency Judgment: Optional section addressing whether the lender reserves the right to pursue a deficiency judgment
4. Repair Requirements: Required if specific repairs must be completed before closing
5. Tax Implications: Optional section addressing potential tax consequences of the short sale
6. Relocation Assistance: Optional section if the seller is eligible for any relocation assistance programs
1. Schedule A - Property Details: Detailed description of the property including improvements and fixtures
2. Schedule B - Outstanding Liens: List of all mortgages, liens, and encumbrances on the property
3. Schedule C - Approval Terms: Specific terms required by the mortgage holder for approval of the short sale
4. Appendix 1 - Property Condition Report: Current condition of the property and known defects
5. Appendix 2 - Required Documents: Checklist of documents required from seller for short sale approval
6. Appendix 3 - Timeline: Expected timeline for short sale approval and closing process
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