Monday, July 15, 2013

Yikes! Contract Changes!

Now that the second half of the year is in full swing, it is time to address the annual tradition of changing the Offer to Purchase and Contract (and accessory forms). Each year, the forms committee meets and makes modifications to the Realtor forms based on feedback that they receive from agents. Occasionally, there are major changes (think: adding the Due Diligence language) but most often, the changes are of a more technical nature or to conform to changes in law. The latter is the case this year as the changes are modest and agents will probably not notice a change in flow of the form. I will address some of the changes and encourage you to visit for more extensive coverage of this topic.

One of the changes involved a more detailed explanation of “good funds.” Per the previous version of contract, a buyer who has not delivered due diligence fee or earnest money by the appropriate date only had to deliver “good funds,” however, the rewritten language requires delivery of “cash or immediately available funds.” Failure to comply could allow seller to terminate the contract.  Provision 1(d) states:

Should Buyer fail to deliver either the Due Diligence Fee or any Initial Earnest Money Deposit by their due dates, or should any check or other funds paid by Buyer be dishonored, for any reason, by the institution upon which the payment is drawn, Buyer shall have one (1) banking day after written notice to deliver cash or immediately available funds to the payee. In the event Buyer does not timely deliver cash or immediately available funds, Seller shall have the right to terminate this Contract upon written notice to Buyer. 

Other changes include more specific treatment on status of fuel and fuel tanks (who owns, does content convey), additional topics under due diligence to encourage buyer to investigate issues such as road maintenance and amenities, and language addressing the fact that home is being sold in its existing condition (no need to use wording such as “as is”).

I will comment in a future post regarding other changes. Until then, check out the web address above for the Realtor Association or contact me directly if you have questions. Whenever these changes take place, agents have a 60-day grace period to incorporate the new forms