A title girl can dream of the “perfect real estate contract” can’t she?
After reviewing and working with thousands of contracts over the last 10 years, myself and our Attorney Martyn Verster, have come to recognize (and daydream about) what the perfect real estate contract looks like. As we have muddled through pre and post closing calamities and sideline litigation due to vague contract language, certain troublesome issues seem to pop up over and over again. Though I am currently enamored with the FAR CRSP13 real estate contract for a variety of reasons, the FAR/BAR version, though more vague, can also work fine when properly prepared.
Here are some nifty addendum and clarifications that protect both buyers and sellers (and realtors too) from future angst before or after the closing process:
Fill in the marital status of buyers and sellers right on the contract. Why? We say “why not?”. The marital status of both buyers and sellers affects the title review and the document signing preparation. Florida does not recognize legal separation as a status for title purposes, so lets sort this issue out in advance. “Missing in action” spouses or the dearly departed spouse have delayed or cancelled many a closing.
Don’t set the closing with a fixed date. As enthusiastic as we all are to close, contracts can take 3-5 days to be fully executed and that is valuable time lost the buyer needs to apply for condo approvals, loans, inspections etc. We recommend i.e. ” 60 days from effective date”. Ask the lender how much time they need to close?
Avoid financing dollar amounts and use percentages instead..As sales price, loan amounts and terms change during the negotiation process, using a “%” for amount financed and the word “balance” for “balance to close” will keep things clear and not subject to calculator errors.
Who pays for what? Make sure all the closing costs are addressed in the body of the contract and who pays for what. i.e. owner and lenders title insurance, deed tax, loan charges, lien search, abstract, curative title defects, HOA special assessments. If it is not addressed, write it in. The FAR/BAR AS IS version in particular has some vague language that can lead to buyer-seller conflicts.
Love that “AS-IS” addendum. If your seller or buyer request this, use the addendum, don’t just write in “as is”. The addendum clarifies how the as-is process works for both sides!
Condo/HOA Association Addendum. Fill every blank or write in “unknown” or “not applicable”. Failure to complete these in their entirety is a sure fire way to get into litigation over undisclosed special assessments. Don’t forget to fill in parking space and storage space #s either. Buyers don’t like to find out last-minute how far they will be carrying their groceries.
Mold/Drywall/Pre-1978 lead paint disclosures. After all the bad press and valid health concerns over these items, buyers get peeved if they weren’t made aware of the dangers and had a contractual option to inspect.
and finally our two favorite and infrequently used addendum that would have reduced our gray hairs...
Condominium Association Disclosure. This thorough and comprehensive questionnaire asks the seller to disclose even a water cooler conversation about a special assessment being considered at a Condo Board Meeting. It pretty much wraps up the disclosure needed on condos. This piece of paper can provide solid foundation to the condo transaction.
Seller Real Property Disclosure. Here is where a Seller tells all! Minor leaks, cracked tile, roof age, cranky water heater. Sellers can say “I told you so!” and here is where they do.
The above items presented as part of a contract can eliminated 98% of common problems before and after closing.
Here is a helpful link for realtors on preparing the new CRSP13 contract
Need more information or a complimentary contract review contact info@theclosingcompany.net or call 305-271-0100×701
Legal disclaimer: I am not an attorney and I am not providing legal advice. Please
consult an Attorney for legal advice before signing any legal documents.
