Contract Changes! Learn what you need at the Real Estate Law Symposium
Friday, August 23, 2013
Are you up to date with all the changes coming soon to the Residential Sale and Purchase contract?
At the end of August, Florida REALTORS® will release new versions of the Florida REALTORS®/Florida Bar Residential Contract, its AS IS companion, and the Comprehensive Rider.
The changes will be reviewed during ORRA's 23rd Annual Real Estate Law Symposium (seven continuing education credits) on Wednesday, September 4.
Learn more and register for the 23rd Annual Real Estate Law Symposium.
Highlights of significant changes - Residential Contract For Sale and Purchase
New form number: Florida Realtors/Florida Bar-2, new revision date 8/13
1(d) Personal Property: Check boxes previously provided in this subparagraph were removed. Three of those items (refrigerator(s), storm shutters/panels and smoke detectors) were added to the preprinted list of Seller owned items, if existing on the Property on date of initial offer, to be included in the purchase. In the event other items of personal property are to be included or excluded in the purchase, blank lines exist for inserting this information in Paragraph 1 (d) and (e).
2(a) Initial Deposit: Deleted the check box that provided the option that the initial deposit is to be made upon acceptance and added a default if neither check box is selected, directing that the initial deposit is to be 3 days after Effective Date.
2(b) Additional Deposit: Default provision for Buyer to make an Additional Deposit was extended from 3 to 10 days.
3(b) Effective Date: Redefined how to calculate Effective Date. It will be the date the last party has signed and delivered the offer rather than determined merely by the date the last party signed the offer.
6(b) Occupancy and Possession: New check box to use if there will be tenants or occupants (including Seller as a post closing occupant) or future leases for the Property being purchased. Further this paragraph directs that the Buyer must either receive the written leases or a written description (where lease(s) are verbal) of future tenancies within 5 days after Effective Date. Buyer may terminate the Contract within 5 days after receipt of the leases if Buyer finds the terms unacceptable. Previously STANDARD D directed that any lease(s) be provided to Buyer within 5 days after Inspection Period.
8(b) Financing: Added new check box with the word other and a blank line to describe the loan Buyer will seek if loan is not conventional, FHA or VA. (Could insert USDA or FHA 203K where Buyer previously didn’t have the ability to do so in the Financing provision). Blank line that was used to describe the loan sought as a dollar amount or percentage of purchase price was replaced with the term Loan Amount, as defined in Paragraph 2(c). By eliminating this blank, only Paragraph 2 (c) will need to be amended if the Loan Amount changes during contract negotiations. A default of 30 years was added to describe the term of the loan being sought, if blank not filled in.
Contract was reworded with regard to the parties’ rights to cancel if Loan Commitment is not obtained by Loan Commitment Date. Buyer is obligated to notify Seller in writing upon Buyer’s receipt of Loan Commitment. If Buyer fails to obtain Loan Commitment timely, the Contract states either party may cancel thereafter under certain specified conditions. Cancellation can occur before the earlier of (1) Buyer notifying Seller in writing that Loan Commitment was obtained or that Buyer has waived Financing or (2) 7 days prior to Closing. If neither party does timely terminate, the provision specifies the financing contingency is waived.
9(b) Costs to be Paid By Buyer: Added to the list of Buyer’s Costs is the Owner’s Policy Premium if the Miami-Dade/Broward Provision is checked. This was always a Buyer’s cost per 9(c)iii but it wasn’t included in items contained in 9(b).
9(c) Title Evidence and Insurance: Municipal lien search is now included in the definition of Owner’s Policy and Charges. This clarifies that the party who pays the cost of title under 9(c)i or 9(c)ii will also pay for the cost of the municipal lien search. Paragraph 9(c)iii already addressed this.
10(c) Flood Zone: Added a blank for parties to insert the amount of time Buyer has to terminate the Contract if Property is ineligible for flood insurance through the National Flood Insurance Program (NFIP), or lowest floor elevation for flood insurance purposes is below minimum flood elevation. Twenty days after Effective Date, the previous time provided for termination is now the default provision. Also, disclosed rates through NFIP may be increasing on nonprimary residences and that Buyers may be required to obtain a flood elevation certificate to obtain flood insurance.
10(i) FIRPTA Tax Withholding: Now states Seller must inform Buyer in writing if Seller is a foreign person for purposes of FIRPTA. Alternatively, if Seller is not a foreign person, Seller can provide Buyer with a certification of non-foreign status. There is a reference to new STANDARD V which provides some FIRPTA requirements and directs that parties seek expert advice regarding these requirements.
12 (b)(i) General Inspection: Added the ability of Seller to receive a copy of the relevant portion of an inspector’s report regarding an item that Buyer requests Seller to repair, if the Seller submits the written request for the report dealing with such item.
12(b)(iii) General Property Repairs, 12c(i) WDO Repairs and 12d(ii) Close-out of Building Permits: Changed time frame to 10 days (rather than 5) for Seller to have costs estimated for items requiring repair pursuant to the General Repairs Items, WDO damage or Permit Inspection items
STANDARD D. Lease Information: Revised in conjunction with Paragraph 6. Time is lengthened to 10 days prior to Closing (rather than 5 days after Inspection Period) for Seller to furnish either Estoppel Letters or Seller’s affidavit to Buyer. If information about the rental that Buyer obtains pursuant to this Standard D, differs materially from leases provided earlier per Paragraph 6(b), Buyer may terminate within time set forth.
STANDARD F. Time: This revised Standard clarifies when time will extend to the next business day. Now all dates (in addition to time periods) will extend to the next business day if they occur on (in addition to if they end on) a Saturday, Sunday or national legal holiday. ****Note: Two exclusions to this change are specified: (1)time for acceptance and (2)Effective Date.
STANDARD O. Contract Not Recordable etc.: Added the words Delivery and Contract Execution to the caption of this STANDARD. The word Delivery was added to the caption of this STANDARD, to reflect that some acts which constitute delivery are defined. Contract Execution was added because the new final sentence of the Standard clarifies that the parties agree to contract execution by use of electronic signatures.
STANDARD I. Closing Documents: Deleted the reference that Seller was to pay for the preparation of certain documents as this is covered by Paragraph 9.
STANDARD T. Loan Commitment: Specifically omits pre approval and prequalification letters from the definition of Loan Commitment for this Contract.
STANDARD V. FIRPTA: New to the Standards, this provision describes parties’ responsibilities as it pertains to Section 1445 of the Internal Revenue Code. It covers that Buyer must withhold 10% of Seller’s proceeds unless, (1)Seller is not a foreign person per Section 1445 I.R.C.,(2) there is a withholding certificate that requires reduced or eliminated withholding, or (3)there is an exemption claimed. Standard V(iii) addresses Buyer’s choice of escrowing or submitting the withheld funds to the IRS if at time of Closing, Seller’s application for a Withholding Certificate has been submitted to the IRS but the Certificate has not been received. This Standard has taken the place of the FIRPTA rider, known previously as Rider I. For this reason, now Rider I is referenced as RESERVED in Paragraph 19.
19. Addenda. Name of Rider A changed from Condo Assn to Condo Rider. Reference to Rider I previously entitled FIRPTA is marked RESERVED because new STANDARD V has been added to the Contract. Rider P (Lead Based Paint Disclosure) is renamed.
Source: Florida REALTORS®