Who pays the closing costs in a Florida short sale, and what does it cost the seller?

In most Florida short sales the lender pays the seller's usual closing costs out of the sale proceeds it agrees to accept, so the seller normally brings little or no money to closing; anything the lender will not cover is written into its approval letter.

Key takeaways

The lender's approval letter, not custom, decides which costs are paid and by whom.
Items lenders usually allow: the brokerage commission, documentary stamp tax on the deed, title and settlement charges, and prorated property taxes.
Items lenders often refuse or cap: HOA or condo arrears beyond a set amount, second-mortgage payoffs, repairs, and your own attorney.
If you are asked to bring money, ask for the reason in writing before you agree.
Whether a forgiven balance is taxable is a question for a CPA.

You are already behind, and the last thing you can afford is a surprise bill at the closing table. The good news: in a short sale, the costs a seller would normally pay usually come out of the money the lender agrees to accept, not out of your pocket.

Who pays the closing costs in a short sale?

The lender does, in practice. A short sale only happens because the lender agrees to take less than it is owed and release its lien. The settlement statement shows every cost, and the lender approves that statement line by line. Its approval letter lists what it will pay and what it will not. A foreclosure would cost the lender more, so it normally allows the ordinary seller costs.

Which costs does the lender usually cover?

The brokerage commission, as negotiated in your listing agreement and approved by the lender
Documentary stamp tax on the deed
Title, settlement and recording charges the seller customarily pays in your county
Property taxes prorated to the closing date

What can still cost the seller money?

HOA or condo arrears. Many lenders pay only part of past-due association dues; the rest may be asked of the seller or negotiated with the association.
A second mortgage or other lien. The first lender often caps what it gives a second lienholder, who may ask for a contribution.
Repairs or inspections the buyer asks for.
Your own attorney. Lenders often will not pay a seller's legal fees.
A contribution or promissory note the lender requests as a condition of approval.

Every one of these can be negotiated before you sign. Read what the approval letter says about any remaining balance (the deficiency); whether that balance can still be collected is a legal question.

What does a short sale cost the seller overall?

Usually the cost is not cash at closing; it is the credit effect, the time (often two to four months from contract to closing with a cooperative single-lender file), and any balance the lender does not waive. Questions about a deficiency or a lawsuit are for a Florida-licensed attorney; tax questions are for a CPA.

Do you need a short sale at all?

Only if you owe more than the home will sell for. Many South Florida owners who are behind still have equity, and a regular sale protects it. Start by knowing what your home would sell for today.

This page explains the real-estate side only and is not legal or tax advice. Rely on a Florida-licensed attorney for legal questions.

Sources

How a short sale works in Palm Beach County (PBP), as of September 28, 2026
PBP short sales, as of September 28, 2026

Primary law