(With permission, portions of this article were written based upon an article appearing in the General Counsel Quarterly, a publication of the North Carolina Association of REALTORS®, Volume VI, Issue One, Summer 2002.)
Have you noticed a change in some of the standard contract forms you are using in your residential sales transactions? The Joint Forms Committee of the North Carolina Association of REALTORS® and the North Carolina Bar Association made several revisions to the standard Offer to Purchase and Contract and related forms.
Offer to Purchase and Contract – the contract now allows the buyer to ask that the seller pay a stated amount toward “any of the Buyer’s expenses associated with the purchase of the Property” (¶8), rather than paying money toward the buyer’s closing costs. This change is designed to eliminate disputes over what constitutes a “closing cost.” Conforming changes have also been made to the FHA/VA Financing Addendum which now specifically provides that the amount paid by the seller includes FHA/VA seller mandated lender and inspection costs.
The contract also now requires that the seller deliver marketable and insurable title to the buyer (¶5(e)). In addition, the contract authorizes the Seller’s current and prior closing attorney, and the Property’s title insurer, to release and disclose title documents to the buyer, agents and attorneys.
Finally, references to an inspection addendum were removed from the Inspections provision (¶12), since no such addendum exists.
Contingent Sale Addendum – the Addendum has been changed to require a buyer who waives the contingency to then close on the purchase of the seller’s property by a specified date. It is designed to assure that buyers waive the contingency only if they are in fact prepared to proceed in a timely manner with the purchase of the seller’s property.
In addition, the “time is of the essence” provision has been expanded to expressly include the closing date.
Additional Provisions Addendum – the provision concerning a Septic System Improvements Permit has been renamed “Sewer System.” It now provides that the contract is contingent upon the buyer obtaining a permit from the County for either a conventional or otherwise described sewer system. All costs are borne by the buyer, except that the seller must pay for clearing as much of the property as the County requires. A deadline must be inserted by which the test is to be performed. The buyer is required to use “best efforts” to obtain the permit and the buyer must notify the seller by a stated deadline if he cannot get the permit, “time being of the essence” – otherwise the condition is deemed satisfied.
In addition, the Appraisal provision was separated into two pieces – one addressing Appraisal with Financing Contingency and one addressing Appraisal Without Financing Contingency.
As to the Flood Hazard Zone provision, it now provides that it “may be” necessary for the purchaser to purchase flood hazard insurance rather than it “will be” necessary.
Other Jointly Approved Forms – minor changes were made to both the Owner Association Addendum and the Option to Purchase. Some of these were made in order to accommodate the use of both forms with the newVacant Land Offer to Purchase and Contract. Others were more technical in nature.
Changes to All Forms – in addition to the substantive changes, all forms are now available in an 8½ x 11 format. Each contains a new disclaimer immediately preceding the signature lines stating that the Bar Association and the Association of REALTORS® “make no representation as to the legal validity or adequacy of any provision of this form in any specific transaction.”
CAVEAT: The Commission’s Update Course this year includes coverage of the Offer to Purchase and Contract and related addenda. Many of the changes noted here also will be addressed in that course.
This article came from the October 2002-Vol33-2 edition of the bulletin.