Addendum

TREC 45-2 — Short Sale Addendum

This addendum is used when the property sale qualifies as a 'short sale' -- meaning the seller's net proceeds at closing will be insufficient to pay off the outstanding mortgage balance. It defines the short sale, makes the contract contingent on the lienholder (mortgage company) consenting to accep

Source: TREC
Form Number: 45-2
Category: Addendum
Revised: February 19, 2021

Used For

Residential Sales, Farm & Ranch, Vacant Land

Form Outline

The TREC 45-2 form is organized into the following sections:

  1. Header and Property Identification
    Identifies the property and links this addendum to the main purchase contract via the property address.
  2. Short Sale Definition
    Establishes the legal definition of a short sale for purposes of this addendum, requiring that the lienholder consent to the sale, accept reduced proceeds as full payoff, and release the lien.
  3. Seller's Net Proceeds Definition
    Defines how seller's net proceeds are calculated: sales price minus seller's closing expenses (Paragraph 12 of the contract) minus brokerage fees owed by the seller.
  4. Contract Binding Upon Execution; Contingency
    Makes clear the contract is immediately binding and earnest money/option fees must be paid on schedule. However, the contract is contingent on lienholder consent, and neither party must perform other obligations until that consent is obtained. Seller has a duty to diligently pursue consent.
  5. Consent Deadline and Amended Effective Date
    Sets a hard deadline for obtaining lienholder consent. If not met, the contract terminates automatically with an earnest money refund. When consent is obtained, the contract's effective date resets to the notification date, restarting all time-based performance obligations.
  6. Lienholder Refusal or Withdrawal
    Provides an automatic termination if the lienholder refuses to consent or withdraws previously given consent at any point before closing and funding. Earnest money is returned to the buyer, and the seller must promptly communicate any refusal or withdrawal.
  7. Buyer's Unrestricted Right to Terminate
    Clarifies that the buyer's option period runs from the original effective date through and past the Amended Effective Date. The option period does not restart when the Amended Effective Date takes effect -- it runs continuously from the original contract execution.
  8. Time is of the Essence
    Establishes that all deadlines in this addendum are strictly enforced. Missing a deadline by even one day can trigger automatic consequences such as contract termination.
  9. Seller Authorization to Share Information
    Gives the buyer (and buyer's representatives such as the buyer's agent) the right to contact the lienholder directly to check on the status of the short sale approval request.
  10. Multiple Lienholders
    Extends all provisions of this addendum to every lienholder if the property has multiple mortgages or liens. Consent must be obtained from all lienholders, not just the primary mortgage holder.
  11. Signatures
    Provides signature lines for all buyers and sellers. All parties to the main contract must sign this addendum for it to be effective.

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