CONTINGENCY, ADD CONTINGENCY: This contract is contingent upon Sellers Receipt and Approval of acceptable engineering report on Replacemen Property Seller is purchasing out of state. If this contingency is not removed by xx/xx/xxxx, this contract shall be immediately cancelled and all Earnest Money shall be immediately returned to the Buyer. Inspection period shall begin when Seller gives notice that this contingency has been Satisified/Removed.”
CONTINGENCY CLAUSE: A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.
CONDITION: SEE “PREMISES IN SUBSTANTIALLY THE SAME CONDITION”
co·nun·drum: a confusing and difficult problem or question. synonyms: problem, difficult question, difficulty, quandary, dilemma
CORRECTION ON CONTRACT, WRONG BOX CHECKED: “Line #xxx of the Purchase Contract was erroneously checked/marked, and is hereby considered unchecked/unmarked.”
CORRECTION: “Counter Offer #1 to reflect unit #5.” (Or whatever correction is, on offer, counter, addendum, etc).
CRITICAL DATE LIST: I was wondering if there is a quick reference check list or timeline guide for deadlines available as supplement the full rules and regulation guide to help make it easier to meet deadlines (status change requirements, lock box removal, etc.).
The Critical Date List on zipForms is a nice tool to help manage deadlines and due dates in a transaction. Many agents are using it.
CURE NOTICE, UPDATE SPDS due to 1) CHANGES DURING ESCROW, 2) SUBSTANTIALLY SAME CONDITION
(Disclosure must come from seller, may initially hear from 1) title co 2) HOA 3) Listing Agent)
For example, Failure to Disclose HOA Violations (Paint, Structural, Landscaping), or Failure to Disclose water leak in kitchen.
“Sellers Failure to update SPDS as required under section 4f of the Purchase Contract, “Changes During Escrow”. Buyer has become aware of….”
“Failure to deliver Premises in substantially the same condition as of the date of Contract Acceptance under section 6L of the Purchase Contract, “Walkthrough(s)”.
CHANGES DURING ESCROW: AAR RESIDENTIAL REAL ESTATE PURCHASE CONTRACT, section 4f, Changes During Escrow: “Seller shall immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS or otherwise. Such notice shall be considered an update of the SPDS. Unless Seller is already obligated by this Contract or any amendments hereto, to correct or repair the changed item disclosed, Buyer shall be allowed five (5) days after delivery of such notice to provide notice of disapproval to Seller.”
CHANGES DURING ESCROW: SPDS, NOTIFICATION TO SELLER TO UPDATE SPDS DUE TO CHANGES DURING ESCROW
REGARDING SELLER DISCLOSURE, sect xx of the Purchase Contract, CHANGES DURING ESCROW
PLEASE UPDATE THE SPDS TO REFLECT RECENT PROBLEMS OR REPAIRS THAT MAY NOT HAVE
BEEN DISCLOSED AND/OR DISCOVERIES MADE IN THE CLUE REPORT OR BY THE BUYERS INSPECTIONS TO WIT:__________
CURE NOTICE, CONDITION OF PREMISES (CITE WHEN REPAIRS ARE INCOMPLETE): (Question, how could buyer cancel if seller is already obligated to make repairs, as per language in “Changes During Escrow”, and outlined in the sections below? Answer, Argument is based on whether we have the seller, or buyer). (See Changes During Escrow Language)
Sellers have/have not provided an updated SPDS and notification to Buyers that a slab leak/water leak/flood has occurred during the escrow period. This notification is a requirement at outlined in the AAR Residential Real Estate Purchase Contract, section 4f, CHANGES DURING ESCROW.
“Seller(s) has/have not delivered the Premises in substantially the same condition as of the date of contract acceptance.” (NOTE ISSUE, IE, SLAB LEAK, FLOOD/WATER LEAK, DAMAGE, DEAD LANDSCAPING, MISSING FIXTURES, HOA VIOLATION, ETC).
Seller is obligated to deliver the premises in substantially the same condition as of the date of contract acceptance as outlined in the AAR RESIDENTIAL REAL ESTATE PURCHASE CONTRAC T, as follows:
WARRANTIES, section 5a “Seller shall maintain and repair the Premises so that at the earlier of possession or COE, the Premises, including all personal property included in the sale, will be in substantially the same condition as of the date of contract acceptance.”
WALKTHROUGH(S), section 6l “Seller grants Buyer and Buyer’s inspector(s) reasonable access to conduct walkthroughs(s) of the Premises for the purpose of satisfying the Buyer that any corrections or repairs agreed to by the seller have been completed, and the Premises are in substantially the same condition as of the date of contract acceptance.”
RISK OF LOSS PROVISION, section 8b: AAR Residential Real Estate Purchase Contract, section 8b, RISK OF LOSS: If there is any loss or damage to the Premises between the date of Contract acceptance and COE or possession, whichever is earlier, by reason of fire, vandalism, flood, earthquake, or act of God, the risk of loss shall be on Seller, provided, however, that if the cost of repairing such loss or damage would exceed ten percent (10%) of the purchase price, either Seller or Buyer may elect to cancel the contract.
You should also think about some indemnification language and re-emphasize the Buyers seeking legal advice. Buyer agrees to indemnify and hold harmless HomeSmart and Selling Agent regarding slab leak repairs. "Should Buyer/Seller close escrow with incomplete repairs, Buyer does so against the advice of HomeSmart. Buyer agrees to defend, indemnify and hold harmless HomeSmart against any and all claims that may be made regarding the property and its condition." BUYER/SELLER IS HEREBY ADVISED TO SEEK LEGAL, TAX AND ANY OTHER PROFESSIONAL ADVICE DESIRED BY CLIENT.”
CURE NOTICE RESOLVED LANGUAGE “We now consider the cure notice sent xx/xx/xxxx to be both resolved and extinguished as the (buyer/seller) is now in full compliance with the terms of the purchase contract.”
CURE NOTICE, CANCELLATION AFTER CURE NOTICE EXPIRES “Pursuant to a cure notice delivered to you on ______________________and 3 days having passed without a cure of the breach, the contract is now in breach and the non-breaching party elects to cancel the contract as of this date per line xxx of the purchase contract.”
CURE NOTICE RECEIVED, BUYER HAS FAILED TO SIGN LOAN DOCUMENTS NO LATER THAN 3 DAYS PRIOR TO COE
“No later than 3 days prior to the COE date Buyer shall either: 1) Sign all loan documents, or, 2) Deliver to seller or escrow company notice of loan approval without PTD conditions AND date(s) of receipt of Closing Disclosure(s) from lender, or 3) Deliver to seller or escrow company notice of inability to obtain loan approval without PTD conditions.”
If buyer is unable to sign, you can resolve this CURE by delivering an updated LSU with Line #58 and Line #62 checked YES and DATED. This will meet the requirements of item #2 on line #73-74 of Purchase Contract in lieu of Buyer signing 3 days prior to COE.
CURE PERIOD NOTICE DOES NOT APPLY: “In the event that (seller/buyer) does not/fails to (state performance) by xx/xx/xxxx, (seller/buyer) may immediately cancel this contract without delivering a CURE notice; section 7a of the Purchase Contract shall not apply; and Earnest Money shall be immediately (returned/released) to (seller/buyer).”
Just saying “seller/buyer may cancel” may not be enough. RISK REDUCTION: Otherwise, if you deliver cancellation instructions from the (seller/buyer), it could be interpreted as an improper cancellation and the (sellers/buyers) Earnest Money could be at risk.
For example, when additional terms are added to the contract, and a party fails to perform, is it curable? (If permits are not obtained by xx/xx/xxxx, buyer may cancel). Would this require a CURE notice?
CURE PERIOD DOES NOT APPLY: Buyer and Seller agree that COE shall be on xx/xx/xxxx, and that EM shall be non-refundable to buyer in the event this transaction fails to close for any reason other than seller breach. If the transaction does not close by xx/xx/xxxx, Buyer and Seller agree that this escrow shall be immediately cancelled with no need for a cure period notice. Section 7a, Cure Period shall not apply.
Buyer and Seller agree that if X does not Y by xx/xx/xxxx, this contract shall be automatically cancelled without further consent or action of seller or buyer and without regard to any other cancellation provision in this contract, except for section 8b, Risk of Loss. Section 7a, Cure Period shall not apply. EM shall be immediately released to Seller/Buyer. This condition may only be modified by written, mutual agreement between the parties.
CURE NOTICE (INVALID CURE NOTICE): Response: Send to Title Company, other agent.
Cure notice is not valid. Seller/Buyer is not in breach. No additional items were incorporated into the contract, therefore no other items convey with the property. Seller/Buyer is in compliance with the contract. If seller/buyer does not close as scheduled, seller will demand the earnest money/pursue all legal alternatives/sue for specific performance/initiate legal proceedings.
The pre closing walk thru/Cure Notice has been delivered and received by the seller. Seller's response is as follows:
As a courtesy, the seller left the lawn equipment, Paint, tiles, and laminate flooring for the buyer. No additional items were incorporated into the contract, therefor no other items convey with the property. Seller is in compliance with the contract. If buyer does not close as scheduled, seller will demand the earnest money.
DEATH: Death in home “could” be revealed in CLUE report. One agent who was selling a home where a murder occurred said the CLUE Report said something like “$12,000 Physical Peril.” (possible clean up costs).
DEATH, DO SELLERS NEED T DISCLOSE DEATH ON PROPERTY? (SEE STIGMATIZED PROPERTY) No.
If buyer asks, say “Let me ask the seller, I’ll get back to you.” Then respond with “I’m not legally required to answer that question.”
DEATH, TWO OWNERS ARE ON DEED, ONE IS DECEASED, RIGHT OF SURVIVORSHIP, DEATH CERTIFICATE TO TITLE:
“The parties acknowledge that second owner listed on the tax records is deceased. Title will be corrected in escrow.”
DEATH, ANTICIPATORY BREACH? OR WAIT UNTIL BREACH? Sellers have been notified that the buyer is deceased. Sellers have also been notified that there are no heirs or assigns that will proceed with the requirements to fulfill /complete the remaining terms of the AAR Residential Real Estate Contract dated xx/xx/xxxx. Therefore, sellers hereby deliver this CURE Notice citing “Anticipatory Breach” in that there is no indication, and no communication to sellers confirming (or that WRITTEN Notice has been received) that the estate of the deceased will fulfill the remaining requirements, terms and conditions of the Purchase Contract.” “Seller intends to cancel this transacton after the three (3) day CURE Notice expires, and will request a release of the Earnest Money to the Seller (OR Buyer).”
DEATH, WHAT HAPPENS IF SELLER OR BUYER DIES BEFORE CLOSING?
DEATH, HOW WAS TITLE HELD? http://www.alllaw.com/articles/nolo/wills-trusts/transferring-real-estate-after-death.html
DEATH, REVOCABLE TRUST: http://info.legalzoom.com/revocable-trust-after-death-one-spouse-23289.html
DEEDS: A special warranty deed is a deed in which the grantor warrants the title against defects in clear title occurring only during their ownership of the property. The grantor of a special warranty deed does not provide a warranty or guarantee against any defects in clear title that existed before their ownership.
A warranty deed contains a guarantee that the grantor has legal title and rights to the real estate. A quitclaim deed offers little to no protection to the grantee. ...Warranty deeds ensure that the grantor has the right to sell the property, and guarantees that there are no liens or encumbrances against the land.
The most common types of deeds include:
· general warranty deeds.
· deeds with limited or no warranties. special warranty deeds. bargain and sale deeds. quitclaim deeds,
· deeds held by trusts. deed of trust. reconveyance deed. trustee's deed.
· deeds executed by courts. administrator deeds. executor deeds. master deeds. sheriff's deeds.
DEATH, WHAT HAPPENS TO TRUST WHEN ONE SPOUSE DIES? https://www.attorneyoffice.com/living-trust-spouse-dies/
DELAY INSPECTION: “The date of X written notice to Y that X has Z shall be deemed the date of contract acceptance for purposes of all applicable contract time periods. Buyer shall promptly open Escrow and deposit Earnest Money as described in the Contract upon receipt of written notice of Sellers Replacement Property Contract Acceptance.”
DELETED PORTIONS OF THE CONTRACT OR ADDENDA, BRING BACK INTO EFFECT: “All deleted portions of the Purchase Contract are hereby reinstated and in full force and legal effect.”
Disclaimer and Quit Claim Deeds--
DO NOT CALL REGISTRY-SAN (subscription account number) https://telemarketing.donotcall.gov/profile/create.aspx
SAN NUMBER—NATIONAL DO NOT CALL REGISTERY—TELEMARKETING
Does each individual HomeSmart Agent need to apply independently/individually for a Profile with this organization or is there sufficient group coverage thought our HomeSmart coverage? If so, how does this work? I want to order some people listings for target marketing.
Good Morning Dee, You can access the Don Not Call Registry by going to https://telemarketing.donotcall.gov/
The username will be 10139601-50602 and the password is Homesmart#9. Let us know if you have any other questions
Disclosure Disputes (Latent Defect-Unknown) http://www.lynchlegalfirm.com/Articles/Arizona-Real-Estate-Disclosure-Disputes.shtml
DISCLOSURE REQUIREMENT, COMMISSIONERS RULE: There is a Commissioner’s Rule known as AAC (Arizona Administrative Code) R4-28-1101b that states that a licensee shall disclose anything that could materially or adversely affect the consideration to be paid by any party to the transaction to all parties in the transaction in writing before close of escrow. These include:
DISCLOSURE TRUMPS DISCOVERY! SELLER MUST DISCLOSE MATERIAL INFORMATION!
Sellers are obligated by Arizona common law and case law to disclose all known material facts about a property to the buyer.
(Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986).
The SPDS serves not only to inform buyers, but it can also protect the sellers from future legal action. Lawyers who deal with residential real estate transactions widely report that the most common source of lawsuits is nondisclosure.
What must a seller disclose? Under Arizona law, if the seller of real property knows of facts or latent defects that materially affect the value of the property, and that are not readily observable and are not known to the buyer, the seller is required by law to disclose those facts to the buyer. Disclosure trumps discovery! A latent defect is a fault in the property that could not have been discovered by a reasonably thorough general inspection before the sale. (Also called hidden defect).
What Can Happen to a Seller Who Violates Arizona’s Disclosure Requirements? The buyer may pursue legal action for failure to disclose, fraud, or misrepresentation (intentional or negligent). The buyer may be awarded substantial monetary damages. Or, in unusual cases, a court may void the contract and returned all property or money back to the original parties, as if the purchase never occurred.
Updating the Disclosure Statement If information contained in the SPDS changes after delivery to the buyer, the seller has a duty to disclose this new information. An update to the SPDS might be required. (See Changes During Escrow Section of Purchase Contract)
So please remember, it’s always best to disclose!
DISCLOSURE OBLIGATIONS, SELLER:
DISCLOSE THAT SELLER/BUYER IS LICENSED REAL ESTATE AGENT IN ARIZONA: “Seller/Buyer acknowledges that Seller/Buyer is an Active Licensed Real Estate Agent in the state of Arizona and is representing him/herself in this transaction.” OR “Buyer is a licensed Real Estate Agent in Arizona and is part of the purchasing entity.” OR “xxx, Buyer, is a licensed Real Estate Agent in AZ” OR “This Addendum is for disclosure purposes only: Buyers Agent is related to the Buyer.”
DISCLAIMER DEED: (Also see “One Spouse Buying Without the Other”) What is the name of the disclosure form to use when a spouse will not be on an offer (title)? Thank you,
Hey Renee, the spouse will have to sign a Disclaimer Deed which will come during the escrow. There's really no disclosure, but you could put on page 8 that the Seller is aware that the Buyer is married, but purchasing this property as his sole and separate property. Have a great evening! Kyle
DUAL AGENCY: Do not act for the benefit of one to the exclusion of the other. Be more neutral, a facilitator, ask them "what would you like me to do"....
So we are all aware you cannot represent yourself and the other party. What are you feeling of when representing someone you are related to and another party (dual).. Thoughts (When you are a principal in the transaction, you cannot represent the other principal).
Same theory, and also not allowed because the same argument applies. It's too easy to claim that there's no way you can adequately represent this poor Buyers interests when you are representing your Brother, Sister, Parents, Cousin, etc. on the other side of the deal.
DISABILITY, ARIZONA CENTER FOR DISABILITY LAW:
DOMAIN NAME: If an agent is going to use the word HomeSmart in a domain name, it must be the first word in the domain name and must be separated with a hyphen. Please see page 18 of the HomeSmart Policies and Procedures manual for a written explanation.