Which addendum is used when a transaction is contingent upon approval from the seller's lender?

The Short Sale Addendum is specifically designed for situations where a transaction hinges on obtaining approval from the seller's lender. In a short sale scenario, the seller owes more on their mortgage than the property's current market value, and thus, the transaction requires the lender's consent to accept less than what is owed. This addendum outlines the conditions under which the sale can proceed if the lender approves the sale price.

Utilizing this addendum ensures that all parties involved understand that the sale is contingent on the lender’s approval, which can often be a lengthy process requiring detailed documentation and communication with the lender. This clarity helps to protect buyers and ensures that they are aware that the transaction may face delays or complications based on the lender’s response.

On the other hand, the other options refer to different scenarios and do not address the specific requirement for lender approval in a short sale. The Contingency Addendum generally refers to various conditions that must be met for the sale to proceed but is not limited to lender approval. The Additional Terms Addendum is used for outlining extra terms but does not focus specifically on lender contingencies. The Back-Up Offer Addendum is used in cases where a potential buyer is interested in making an offer on a property that is already under contract