What Is a Short Sale?
A short sale occurs when a homeowner sells their property for less than the remaining balance on the mortgage, and the lender agrees to accept the reduced amount as satisfaction (full or partial) of the debt. The term "short" refers to the sale price falling short of the loan balance.
Short sales are an alternative to foreclosure. They allow the borrower to avoid a foreclosure judgment on their record, and the lender avoids the legal costs and delays of Florida's judicial foreclosure process.
Florida Short Sale Process
- Hardship documentation — The borrower submits a hardship letter and financial documentation to the lender explaining why they can no longer make payments.
- Listing and offer — The property is listed for sale. When an offer is received, it is submitted to the lender along with the short sale package.
- Lender review — The lender's loss mitigation department reviews the offer, orders a BPO (broker price opinion) or appraisal, and determines whether accepting the offer is better than foreclosing.
- Approval or counter — The lender approves the sale price, counters with a higher amount, or rejects the short sale entirely.
- Closing — If approved, the sale closes through a title company. The lender receives the net proceeds and issues a payoff.
The Florida short sale process typically takes 3 to 6 months from offer submission to lender approval, though complex cases with multiple lienholders can take longer.
Deficiency Liability
The critical question in any Florida short sale is whether the lender waives the deficiency, the difference between the loan balance and the sale price. Under Section 702.06, Florida Statutes, a lender can pursue a deficiency judgment unless the short sale approval letter explicitly releases the borrower from the remaining balance.
Borrowers should never sign a short sale agreement without confirming that the deficiency is waived in writing. Some lenders issue approval letters that accept the sale but reserve the right to pursue the deficiency later.
Short Sale vs. Deed in Lieu vs. Foreclosure
- Short sale — Property sold to a third-party buyer at market price. Less credit damage than foreclosure. Lender must approve.
- Deed in lieu — Property transferred directly to the lender. Faster but lender may not accept if junior liens exist.
- Foreclosure — Court-ordered sale at auction. Most credit damage. Longest timeline in Florida (6-18+ months).
Related Terms
- Foreclosure — The alternative the short sale avoids
- Deed in Lieu — Another foreclosure alternative
- Mortgage — The loan the short sale satisfies
- Encumbrance — Liens that must be addressed in the short sale
Barnes Walker Short Sale Guidance
Barnes Walker's real estate attorneys advise borrowers and buyers in short sale transactions, ensuring deficiency waivers are secured and title issues are resolved before closing. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC