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Residential Contract for Sale and Purchase

Summary of new Provisions-7/13Summary of new Provisions-7/13Presented by: Marcia TabakPresented by: Marcia Tabak

Access to forms: After connecting to the hotel wireless, Do this: 1 - go to FloridaRealtors.org

2 -Click on “Legal Center” on the left

3- Click on “Hot Topics”

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Residential Contract for Sale and Purchase

New Form # FloridaRealtors/Florida Bar-2

Rev. 8/13

Guide• Note: Begin with Florida

Realtors /Florida Bar-2 form to follow this presentation

• L references line numbers

• (redlines L ) references line numbers on the red lined document

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New Property Description Paragraph 1(d)

• L17-19 (redline L18-20) Added refrigerator(s),

smoke detectors

&

storm shutters/panels as items to be conveyed, if Seller owned and on the Property on the date of the initial offer

• Check boxes with additional personal property items deleted

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Purchase Price

Paragraph 2(a)• L29 (redline L34) Eliminated

option of deposit due upon acceptance. Added a default if neither box is checked

Paragraph 2(b)• L35 (redline L40) Additional

Deposit default changed to 10 days, if blank is not filled in

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Effective Date Paragraph 3(b)

• L49 (redline L54) • Effective Date = date last party

signs and delivers the offer.

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Occupancy and Possession Paragraph 6(b)

• L74,) (redline L81) New provisions and check box for Property subject to lease, or to be leased after Closing. (includes Seller post occupancy)

• NEW Time Frames L75-77 (redline L82-84) Seller to

provide Buyer with lease(s) within 5 days of Effective Date

• L77-81 (redline L84-88) Buyer may terminate Contract within 5 days of receipt of the lease

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Financing ContingencyThird party Financing

Paragraph 8(b)• L90 (redline L97) Added a

new blank line to describe the type of loan being sought

• L93 (redline L101) Added 30 years as a default for term of loan being sought

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Financing Continued• L99 (redline L114) Upon receipt of

Loan Commitment Buyer is to notify Seller in writing,

• L99-104 (redline L114-119) If Buyer doesn’t get the Commitment, either party may terminate except for certain conditions

• Buyer notifies Seller that Commitment has been waived or obtained or 7 days prior to Closing

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Closing Costs; Title Insurance Paragraph 9 (b) and (c )

• L145 (redline L161)Added Owner’s Policy Premium to Buyer’s costs if 9c iii is selected

• L153 (redline L169) includes municipal lien search as an item within definition of Owner’s Policy and Charges

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Flood Zone Paragraph 10 (d)• Revised because of Biggerts

Waters 2012

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Flood Disclosures

• L199-201 (redlines L216-218) Revised references to specific flood areas

• L201-203 (redlines L219-223) If floor elevation is below minimum flood elevation or Property not eligible for insurance through NFIP, then Buyer may terminate.

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• L203 (redlines L 221) Time to terminate for flood related reasons is negotiable, unless

left blank; 20 days is the default

• L206-208 (redlines L223-226) Reference to fact that flood insurance rates for nonprimary residences are increasing

• L208-209 (redlines 226) New flood elevation cert. may be needed

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• L225-227 (redline L242-244) Nonforeign Seller can provide certification of nonforeign status

• L227-229 (redlinesL244-246) Parties should seek expert advice regarding FIRPTA

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FIRPTA Disclosure Paragraph 10(i)

General Inspection

Paragraph 12 b(i)

L250-251 (redlines L267)

Allows Seller to review the relevant portion of the Professional Inspector’s report, if Buyer delivers list of General Repair Items, if Seller makes the request in writing

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Time for Seller to Estimate costs of required repairs

• Paragraph 12 b(iii),c(ii), d(ii)

L267, L290, L306 (redlines L285,L308, L324) Changed

to 10 days from receipt of

notice for Seller to estimate

costs of:

• General Repairs: repairs and notify Buyer or (2) obtain second inspection and report estimates

• WDO Repairs: treatment and cost to repair damage

• Close-out Building Permit for Seller to estimate costs to remedy

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Standards • D. Lease Information:• Previously this Standard dealt

with delivering Leases to Buyer. Now it doesn’t. See Paragraph 6

• L454-456 (redlines L472-475) Estoppel Letters from Tenants are to be delivered to Buyer 10 days prior to Closing. (new time frame)

• L458-461 (redlines L478-481) If info differs materially from what Seller provided pursuant to Paragraph 6 (b),Buyer may terminate 5 days after receipt but not later than 5 days prior to Closing. 2 bites at the

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Standards Continue• F. Time: • L472 (redlines 492)

Time periods that end

on, and dates that occur on

Saturdays and Sundays

extends to next business day,

whether handwritten or preprinted

except

• Time for acceptance and Effective Date

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Standards Continue

• Standard I (ii)

• Closing Location, Documents and Procedure: L494 (redlines L514) Specifies documents that Seller is to furnish. No longer covers who bears the cost for preparation.

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Standards Continue• Standard O. New words added to

caption• L548 (redline 569) Delivery

Delivery is in part defined

in this Standard and

is more significant since

Paragraph 3(b) was revised

• L555-556 (redline L576-577)Contract execution includes electronic signatures

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Standards Continue

• T. Loan Commitment: L571-572 (redline L592-593) Definition of loan commitment excludes pre approval and prequalification.

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Standard V

• Firtpa Replaces Rider I. L576-582 (redlines L597-601) Describes parties’ duties: Buyer to withhold unless:

• L583-586 (redline L604-609) Seller is nonforeign and Buyer accepts this proof

• L589-591(redline L610-612)Certificate for reduced or eliminated withholding has been issued

• L579(redline L600)An exemption is claimed

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Withholding certificate not obtained at Closing

• L592-598 (redlines L613-619) If Seller’s application is pending at Closing but no withholding certificate has been issued, Buyer, at Buyer’s option may:

Escrow 10% or

Submit the 10% to the IRS• L599-604 (Redlines L620-

625) Seller to provide 10% and Buyer to copy Seller with forms

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Addenda Paragraph 19• L606 (redlines L631) • Renamed A. Condominum rider

and H. Homeowners’/Flood and P. Lead Based Paint

• Marked Rider I. RESERVED, as Firpta is now Standard V

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AS IS CONTRACT • AS IS Changes include:

all previous changes except Paragraph 12-Repairs (*Note: line # references up to this point have not been for the AS IS contract &

Other AS IS changes:

Paragraph 10(j),

Paragraph 12

Standard X

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AS IS Changes Con’t• The AS IS Line References

are to the AS IS Contract

• Form# As Is Florida Realtors /Floridabar -2

• Rev. 8/13

• Paragraph 10(j)• L219 (Redline L236)

Paragraph 10(j)- tightened verbiage from “stated” to “provided” to cover verbal statements

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As IS Changes con’t

• Paragraph 12 (a)

• L230 (redline L248) substituted words “after” for “from “ to minimize confusion in calculating time

• L234 (redline L252) removed the word immediately from the statement regarding the Deposit being returned to the Buyer if contract is terminated.

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AS IS Changes CON’T• Standard X

L530 (redline L555)

Limited waiver to physical defects

L532 (redline 557)

Clause to survive Closing

****Skip next 2 slides unless you want to highlight the other differences (these are not new) between the “As Is” Residential Contract for Sale and Purchase (FloridaRealtors/FloridaBar-ASIS-1) and the Residential Contract for Sale and Purchase (FloridaRealtors/FloridaBar-1

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• Title • Form number-

Paragraph 6 (a): Buyer accepts the condition of Property at time of occupancy

Paragraph 9(A): Seller’s closing costs do not include sums for: General Repair Items,

WDO defects,

correcting permits.

Seller is responsible for the As Is Maintenance Requirement.

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Paragraph 10(j): References more than Johnson v Davis language.

Paragraph 11: Seller’s responsibility to maintain the Property is the As Is maintenance Requirement.

Paragraph 12: Inspection of the Property is a free look. Also, Seller is to assist with permit defects at no cost.

Paragraph 18 Standard A (i): Clause that formerly contained a strike out in Para VII of the As Is contract was purposefully deleted.

Paragraph 19: Riders K (As Is) and L (As IS with Right to Cancel) do not appear in addenda but instead are marked reserve.

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Residential Contract for Sale

Comprehensive Rider to the and Purchase Summary of

Changes

• New Form # CR- 2• New Rev. 8/13

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Rider A. Condominium Rider• New title

• Default time frames added to:

1. Buyer obtaining approval by Association

2. Seller to initiate approval of Buyer

3.Document execution for first right of refusal to begin

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Condo Rider Con’t• Paragraph 3(a) Condo

Assessments

• describe payment as a $ amount,

• with a check box indicating when payment is to be made

monthly, quarterly,

semi-annually, annually

Extra line provided, if there is a 2nd assessment

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Condo Rider Con’t.• Paragraph 3(b)

• Italicized language• Directs that Rider B be

used to disclose HOA assessments

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Rider B. Homeowner’s Association Disclosure

• Changed introductory sentence

Why: to confirm that a completed HOA Disclosure,

initialed by the parties was

given to the Buyer prior to contract execution, which

eliminates 3 day right to rescind

if initialed by all parties,

no right to rescind

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Riders con’t

• Rider C. Seller Financing

Added a blank line to describe the term of the loan and a default of 30 years.

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Rider E. FHA/VA

• Paragraph 2• 2• Added a default of $250.00

to cap appraisal repairs, if blank isn’t complete

Paragraph 3Removed blank line and

inserted “purchase price” as the amount the property must appraise to meet FHA financing contingency.

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Rider F. Appraisal Contingency • Deliver Appraisal to Seller, if

low and notice that Buyer wishes to terminate the contract or to remove the contingency, within 3 days of time inserted in the contract

• Additional to Buyer’s right to terminate per Paragraph 8 if appraisal doesn’t support Financing

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Short Sale Approval Contingency

• Paragraph 4 • Substituted a requirement that

Seller must deliver a copy of Seller’s Accepted Short Sale Approval to Buyer instead of just a written notice to keep either party from canceling after Short Sale Approval Deadline.

• New formula for Contract Expiration Date:

• 30 days after expiration of Short Sale Approval Deadline, includimg extensions of Short Sale Approval Deadline.

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Short Sale Approval Contingency Continue

• Paragraph 5• Only initial deposit and Short Sale

Approval Deadline will be calculated from Effective Date

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Homeowners’/FloodInsurance

• Added flood as a new component of rider

• Makes Buyer’s offer contingent on obtaining flood insurance coverage in an amount not to exceed the cap inserted in the blank by a negotiated date.

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• Rider K “As Is”

• Added revisions from the “as is” contract to this rider

• Waiver limited to physical defect and survives Closing

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QuestionsQuestions