In a short sale, a contractual agreement is needed to legalize the sale and its resulting forgiving of loan. The short sale contract, a written agreement consented to by both parties, accomplishes this between the lender and current homeowner. Since short sales are subject to so many steps - requesting from lender, real estate agent, negotiating, and the sale itself - the contract is necessary in finalizing the agreement. The short sale contract will state that, by selling the house and at the given price and offering the proceeds as payment, the homeowner will be forgiven of his debt, usually in full. Other than the short sale contract, there is also much other similar paperwork that will need to be signed. Before the short sale is finalized, the homeowner should have completed an application form and a hardship letter, among many others. The buyer is also responsible for completing a contract when the sale has been agreed on.