Wednesday, July 8, 2009

Proposed Changes to Florida Real Estate Contract: How Will It Affect Buyers and Sellers?

The Florida Association of Realtors uses two different versions of the purchase and sale agreement. One is called " FAR (Florida Association of Realtors)" the other "FAR BAR" (Florida Bar Association). In different parts of the state, real estate agent communities have their own customs as to which version they use. In my Destin FL area, for example, the FAR contract is more common. But a few towns over, in Pensacola, the FAR BAR is prevalent. Now the Florida Association of Realtors is proposing to combine both contracts and make further changes. The decision whether to proceed with the new contract will be made on August 23, during the FAR Annual Convention & Trade Expo. I have reviewed the 21 proposed changes and sent my comments in to my board at the Emerald Coast Association of Realtors. You should do the same, as your input is requested. Here are my thoughts:

· Paragraph 1. d. I find it odd that check boxes include "shed" unusual to remove that anyway), but don't include "Window Coverings". If the contract is taking the stance on questioning items that typically stay, like a shed, it should do the same with window coverings for the sake of consistency

· 125% escrow for repairs not completed – implies that buyer MUST close if repairs are not done by seller. As a buyer, I would be leery to close – what if the air conditioner did not work? Close anyway? Wait six months for the seller to repair? It might never be repaired, as the money sits in escrow. Forcing a buyer to accept that term is far too much micro-management of a contract between buyer and seller. I would line it out if I were representing a buyer. This should be removed from the contract. Ditto to RISK of LOSS paragraph

· If seller has a title policy, he shall provide a copy to buyer and closing agent within 5 days. Most sellers have one, but can they find it? Most cannot find all their paperwork, so the seller would be in default of the contract if he couldn’t find it. It would be "nice" if they provided it, but to stipulate it in the contract is excessive and not realistic. Remove this requirement.

· If seller has a survey, to provide to title agent within 5 days. I suppose that could cause issues if a seller has one, but cannot find it. VERY typical… Thus buyer could claim seller is in default… if they don’t comply. This should be removed.

· Define "financial failure" of lender… New proposal states buyer can cancel contract if he cannot close to due financial failure of his lender. I can see a situation where funds didn’t make it to closing on time, so hypothetically, the lender failed financially. This needs to be more clear. Lender "out-of-business" or something more specific should be used here. Another example, a bank was taken over or merged. That might also fit the definition of "financial failure"- but in essence, the closing could still be funded. That might be used as an excuse for a buyer not to close.

· Closing to occur on or BEFORE closing date as mutually agreed. This comes up again and again.

· Remove same county closing restriction. We often have closings one county away. It should state, "unless otherwise agreed between buyer and seller."

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