In a short sale, the terms and conditions of the agreement are outlined in the short sale approval letter. This is a written statement from your lender which outlines the agreement. In most cases the lender is going state whether they are releasing the lien and waiving their right to pursue you for the remaining balance OR whether they are merely releasing the lien on the property. If a lender only releases the lien in their approval letter, the short sale still occurs, but the remaining balance and obligation under the terms of the note remain intact. We always recommend that our clients have their short sale approval letters reviewed by an attorney. In Arizona, in our experience, lien release only short sale approval letters are fairly rare on a first mortgage. They are more likely to occur on Home Equity Lines of Credit or 3rd liens like pool loans.