Changes In the New Real Estate Contract - Echo Fine Properties Artboard 1? alert-icon? Artboard 1? ? ? delete-icon? edit-icon? email-icon hide-hover-icon? Artboard 1? login-icon-white Artboard 1? next-icon-left next-icon-right-left next-icon-left-ochre next-icon next-icon-right-grey next-icon-right-ochre plus-with-circle-iconP search-fw-icon? search-icon-ochre search-icon-white
25 SEP

Changes In the New Real Estate Contract

Changes In the New Real Estate Contract

Every few years, the Realtors Associations get together and make all sorts of changes to the FR BAR Contracts.   We Realtors than gather with a trusted Realtor attorney and go over all the changes.

Usually, changes are minor tweaks here or there.  For example, the word “Collected” went from small caps to an all CAPS AND BOLD, “COLLECTED” at the last cycle.  This cycle, however, “Collected” is back where it started in small caps and ditched the bold.  It’s good to know that “Collected” has now been full circle and the fine legal people constructing these changed have “Collected” monetary fees on the changes.

The lawyers are always making the contracts more complicated.  When I started in 2000, our contract was 4 pages.  Somewhere around 2011, the contract blew up in font and accounted for another 5 pages.  That and some added disclaimer verbiage got the contract to 11 pages.  Each few years a few more pages are added. Now we are at 14 pages. Basically, many have felt that the lawyers made a contract that became (or at least looked) more complex in Florida so that they can help interpret the changes they put in it and “collect” more fees.

It’s also not 5 O’clock somewhere anymore as the 5pm deadline has now been removed and it’s now just ‘the end of the day.’ (Section F (Line Item 545)

I do jest – but the basics of the contact is understandable if you are doing lots of transactions and are active. A good Realtor needs to know his or her limitations (very much like that Dirty Harry line).  Language that is written in, needs to go to an attorney is one rule of thumb.  But 95% of the time an attorney is not needed.  When a party wants out or a difficult situation arises, that’s when you know an attorney needs to get involved.

Here is a link that will show you the drafted changes of the new contract which will go into effect on November 1, 2021.

Most changes are very logical and include smart-tech device changes like doorbells and thermostats (Section 1, line item 19). The most pertinent ones are financing where the appraisal (Section 8, line item 89-153) must be completed within the same time limits as obtaining the loan.  Since most Realtors are writing in time limits of less than 30 days, making sure to cancel (the onus to cancel is on the Buyer), is critical.

Communication must also be in writing and delivered in person, fax, or email.  Texts are out. (Section 0, Line Item 640)

Force Majeure got much more complicated (section G Line Item 552) and  got its biggest update since 2005.  It now includes Civil Unrest, government shutdowns, epidemics, pandemics, and mandates. The Pandemic portion is most concerning to me as it’s loosely written. What if someone has Covid? Right now, other illnesses are not a reason not to close.  The contract as worded doesn’t address specifics. What if the surveyor has Covid and couldn’t perform?  What if the Seller won’t allow a walk through because of nervousness of Covid?  I asked one of the lawyers who sat on the committee who drafted the language.

They replied, “We know there will be questions, issues and sometimes interpretation conundrums with these changes.  Many were raised in your email and many of those and others were dealt with by the committee.  Times have certainly changed since this clause was originally drafted and a lot of issues and “events” have come forward in the last few years which no one anticipated and which the committee tried to address.   We’ll see how it’s interpreted by the courts if there are unresolvable issues.  The best we can do is hope that the parties will act in good faith for their use and interpretation of this clause.”

I get that this is a hot potato but seeing how its interpreted by the court goes back to “collecting” again 😊.

10 updated or new riders in all including DD- Seasonal & Vacation Rentals Post Closing and EE-PACE were added. DD was added because of the number of seasonal rentals and Airbnb’s.  EE-PACE is also new and very important to pay attention to. It states:

Property Assessed Clean Energy (PACE) programs provide financing to property owners for improvements to their real property for energy efficiency, renewable energy, and wind resistance, and repayment of the debt through annual property tax bill assessments on the Property, and Florida Statutes, Sec. 163.08(14), states that the Seller shall give the Buyer a written disclosure statement, in the form set forth below, at or before the time Buyer executes a contract to purchase property for which a non-ad valorem assessment has been levied under this section and has an unpaid balance due.

Basically, if the Seller gets a loan for solar panels or impact glass through PACE, the Buyer needs to make sure there isn’t a PACE loan.  Meaning, if you buy a home with impact glass, you’d expect to pay more for that house. However, you want to make sure the Seller pays off the remaining balance at closing and you don’t inherent the payments.  On our end we will put a lot of these safeguards into our contracts as its critical to “collect” the right information on your behalf!

Jeff Lichtenstein is owner and broker of Echo Fine Properties, a luxury real estate brokerage selling real estate in Jupiter  and homes in Palm Beach Gardens, Florida. He has 20 years of real estate experience, has closed over a 1,000 transactions, and manages over 50 agents in a non-traditional model of real estate that mimics a traditional business model.  Some publications he has been quoted in.

Feel free to ask him a question directly at jeff@EchoFineProperties.com.

 

Posted in Open House Blog, Real Estate Tips on September 25, 2021 at 8:49 am.

SHARE

Celebrity Homes

from Beverley Hills
to Palm Beach

Never-before-seen-photos of your
favorite celebrity homes


View More Celebrity Homes

Related Posts


Leave a Reply

Your email address will not be published. Required fields are marked *

Your name and email address are required. Your personal information is strictly confidential and will not be shared with any outside organizations.

Ask Questions

Your Soulmate in Real Estate™

Looking for a Perfect Community to live?

Take our step by step quiz to find a best matching community for you*.

* Patent Pending