Q: What rights does the seller's bank have in a short sale and can they make their own terms that go outside a written cont

A: In a short sale the seller's bank has significant leverage. Essentially, they can dictate terms to release their lien and those terms may go beyond the agreement between the buyer and seller. Your question does not provide information on the type of lien the bank wanted satisfied or why they would condition their release on the payment of the lien. Nor am I privy to the lender's acceptance of terms between the seller and the lender. In regard to your lender's disclosures - the disclosures are limited to your closing costs. In the present case, it is essentially the seller and their lender amending the offer and requiring new terms to close. I'm not sure why this all happened so late in the process. Unfortunately, as I do not think the change is a change in terms of your loan or costs, I do not a path forward to claim that your lender is somehow responsible to make up the difference.

A: Mr. Greller is 100% correct. You as buyers have a written agreement with the SELLERS, not with the seller's bank. So any breach of contract issues you have are with the sellers and are irrelevant to the bank. The sellers bank is having to reduce the balance of the loan to accommodate the seller--and benefit the buyers--in any short sale; that is why they could care less about the buyers having to reimburse the bank for the seller's outstanding liens before they will approve the short sale. Notwithstanding these facts of life, you probably can pull out of the deal without losing anything, because the sellers did not tell you to look out for their lien.