How To Get Around The 30 to 90 Day Seasoning Requirement On A Short Sale

One of the most frequently asked questions I get is: ” Can I challenge the 90 Day seasoning  after receiving the SS approval or is it too damn late?”

My response :

Did you disclose you were selling immediately in your contract?  If so, have your title attorney contact the negotiator and let them know they can’t issue insurance because of the restriction on the deed.  It HAS to have been disclosed that you were reselling in your contract.

The simplest language to address in the 30 day post-closing restriction on transfer.  Review basic contract law and the doctrine of privity.  Basically a contract does not confer rights or impose obligations upon anyone except for the parties to it. The contractual relationship is between the homeowner and the bank. The short sale approval is a settlement of the debt obligation between these parties.  The bank has no contractual relationship with the investor and/or buyer and therefore this language, purporting to impose a restriction on the investor/buyer, is unenforceable against the investor/buyer. With respect to the other no-flip clauses, Bob Massey does an brilliant job of explaining how to handle those banks in his video:




I have located an underwriting bulletin from Stewart title which addresses these problematic clauses in small sale approval letters.  It indicates that such language makes the transaction “uninsurable”.  As Massey suggests, request that the clause be removed from the small sale approval letter as title will not insure the transaction and provide a copy of the title bulletin to support your argument. You might have to bypass the negotiator and contact a supervisor but this should be sufficient to persuade them to delete the offending language.

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