Can the tenant purchase residence as short sale?

This seems to be a common question from homeowners and agents alike when this situation presents itself. The simple answer to “Can the tenant purchase residence as short sale?” is yes they may have the opportunity. If the tenant will be allowed to purchase the property It depends on the loan servicers guidelines and if the buyer passes the banks internal buyer verification review. Many mortgage servicers will require that the parties involved sign an arms length affidavit. If the tenant and borrowers relationship is of arms length typically the buyer will be allowed to have a shot at purchasing the property. Just remember that the buyer will likely be audited with an internal buyer verification analysis. If they catch wind of something that makes them feel the transaction is not arms length or that the borrower will be financial benefiting from the sale they will black list the buyer and potentially the borrower from participating in a short sale on the property. Many agents want to disclose as much information as possible and will provide an addendum to the bank advising them that the buyer is a tenant of the property to avoid incurring any potential liabilities. Other agents will not disclose that the tenant is a buyer and will leave it up to the banks findings. When in doubt you should always speak to the representative assigned to the file on the banks end and ask them how they would like you to proceed.

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