Bankruptcy Release Fee? Short Sale? Confused on Addendum

[Therese V.]

A property that I'm thinking of putting an offer has an Addendum that lists:
"Buyer acknowledges that this property is subject to Short Sale Lender and Bankruptcy Court Approval."
"Buyer will pay a $5,000 Bankruptcy release fee for properties less than $200,000. For properties $200,000 and above release fee will be 3% of the closing purchase price."
"Buyer acknowledges that the attached residential Purchase Agreement will be considered their highest and best offer.

"Property must be purchased in an individual name or LLC. Offers in the name of a corporation , trust or partnership are not acceptable."
"Buyer acknowledges that the property is sold 'AS IS' absolutely no repairs will be authorized."

So, this addendum also lists "in accordance with Nevada law" where things like that would be mentioned. And at the bottom has Greater Las Vegas Association of Realtors copyright 2012. The property is not in Nevada.

Anyone shine light on what this addendum means? The $5k is in cash after closing or added to the mortgage? My realtor just sent me the form to check out and said the listing agent said it will turn away a lot of buyers because it is a different situation.

Does this mean it is a short sale? If so, where does the bankruptcy part come into play? I'm just confused a bit and want to know what I would be getting myself into if we make an offer and win the bid.

Also, does this generally mean I can get it at much cheaper than it was a regular sale? Thoughts on that?

[Account Closed]

Originally posted by @Therese V.:

k marie poe, that's what I figured. /their realtor is in the same state as property. I never care if there are other offers, that doesn't change mine because I'm strictly by the numbers and not emotions.

You think the release is for the seller or the trustee? Does it matter?

It's required by the trustee. If the property is included in the BK, then there is no sale without the BK trustee's cooperation. The seller likely went to the BK with your offer to see if they could get his approval. He says he wants $5K. A short sale won't happen unless the BK trustee approves. If there's no short sale, the lender(s) will eventually foreclose.

Just my opinions and experience with BK. Maybe somebody can chime in and comment if there are circumstance where the trustee can be ignored in this case?

Does the property have any equity? Is it a short sale because of agent fees and closing costs, or is it really upside down?