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Short Sale Agreement for Philippines

Short Sale Agreement Template for Philippines

A Short Sale Agreement under Philippine law is a legally binding document that facilitates the sale of a property for less than the outstanding mortgage balance, with the lender's explicit approval. This agreement is structured to comply with Philippine property laws, banking regulations, and the Civil Code of the Philippines, ensuring proper documentation of the transaction between the distressed seller, the buyer, and the lending institution. The document outlines the terms of sale, purchase price, debt forgiveness provisions, and the specific obligations of all parties involved, while incorporating necessary consumer protections and regulatory requirements unique to the Philippine jurisdiction.

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What is a Short Sale Agreement?

The Short Sale Agreement is utilized in situations where a property owner cannot maintain mortgage payments and seeks to sell the property for less than the outstanding loan balance. This document, governed by Philippine law, provides a structured framework for negotiating and executing such transactions, helping prevent foreclosure while offering a potential solution for both the distressed seller and the lender. The agreement encompasses crucial elements including property valuation, debt forgiveness terms, tax implications, and closing conditions, all aligned with Philippine banking regulations and property laws. It's particularly relevant in challenging economic conditions or when property values have significantly decreased, offering a regulated alternative to foreclosure that can benefit all parties involved. The document must comply with various Philippine regulations, including the General Banking Law of 2000 and the Real Estate Service Act of 2009.

What sections should be included in a Short Sale Agreement?

1. Parties: Identifies all parties to the agreement: the seller (property owner), the buyer, and the lender/mortgagee

2. Background: Explains the current situation, including property details, outstanding mortgage amount, and reason for short sale

3. Definitions: Defines key terms used throughout the agreement

4. Property Description: Detailed description of the property being sold, including legal description and current encumbrances

5. Purchase Price: States the agreed purchase price and acknowledges it is less than the outstanding mortgage balance

6. Lender's Approval: Details the lender's consent to accept less than the full mortgage amount and terms of debt forgiveness

7. Closing Conditions: Specifies all conditions that must be met before the sale can be completed

8. Representations and Warranties: Statements of fact by the seller regarding the property's condition and status

9. Seller's Obligations: Lists all requirements and commitments of the seller

10. Buyer's Obligations: Lists all requirements and commitments of the buyer

11. Closing Process: Details the steps and timeline for completing the transaction

12. Default and Remedies: Specifies what constitutes default and the available remedies

13. Governing Law: Establishes that Philippine law governs the agreement

14. Execution: Signature blocks for all parties and notarization requirements

What sections are optional to include in a Short Sale Agreement?

1. Broker Involvement: Required when real estate brokers are involved in the transaction, detailing their roles and commissions

2. Tax Implications: Added when specific tax consequences need to be acknowledged by the parties

3. Property Inspection: Include when the buyer requires specific inspection rights or when the property is sold 'as-is'

4. Deficiency Judgment Waiver: Added when the lender agrees to waive their right to pursue the seller for any remaining balance

5. Relocation Assistance: Include when the buyer or lender agrees to provide relocation assistance to the seller

6. Third-Party Claims: Required when there are additional lienholders or claims on the property

7. Confidentiality: Added when parties wish to keep the terms of the short sale private

What schedules should be included in a Short Sale Agreement?

1. Schedule A - Property Details: Comprehensive legal description of the property and included fixtures

2. Schedule B - Outstanding Liens: List of all current liens, mortgages, and encumbrances on the property

3. Schedule C - Required Repairs: If applicable, list of repairs that must be completed before closing

4. Schedule D - Closing Documents: List of all required documents for closing

5. Appendix 1 - Property Photos: Current photographs of the property's condition

6. Appendix 2 - Financial Statement: Seller's financial statement demonstrating hardship

7. Appendix 3 - Title Documents: Copies of relevant title documents and certificates

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Philippines

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions



































Clauses



































Relevant Industries

Real Estate

Banking & Finance

Legal Services

Property Development

Mortgage Services

Financial Advisory

Property Management

Relevant Teams

Legal

Real Estate Operations

Credit Risk Management

Mortgage Services

Property Valuation

Compliance

Loss Mitigation

Transaction Processing

Asset Management

Financial Analysis

Relevant Roles

Real Estate Attorney

Bank Manager

Mortgage Officer

Real Estate Broker

Property Valuation Specialist

Legal Counsel

Financial Advisor

Loss Mitigation Specialist

Credit Risk Manager

Real Estate Transaction Manager

Property Developer

Foreclosure Specialist

Banking Compliance Officer

Real Estate Investment Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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