p1030665Contract and Counter Offer Analysis Series

November 7, 2008 Coldwell Banker Short Sale Counter.

A number of brokerages have created lengthy counter offers and many new home tracts are not using the Greater Las Vegas Association of REALTORS® purchase agreement.  As a service to our agents, in connection with our legal and education departments, please send any such contracts to darrenw@amercicanagrp.com and we will spot light for future blogs and send back an analysis to you.  This is not legal advice, just assisting you in understanding these long winded forms.

Today’s request comes from a salesperson of our southwest office:

“Dear Darren: 

I don’t know if you have run across this yet, but in the interest of protecting our buyers, this really contains a lot of clauses that are very unfavorable to the Prudential, Americana Group, REALTORS® buyer, would love your comments….warnings, etc.”

November 7, 2008 Coldwell Banker Short Sale Counter.

Noted Items have surprises, omitted items do not.

2.         New Financing.  The dates of delivery of conditional loan commitment followed by complete loan approval at which time earnest money is non-refundable. 

3.         Appraisal Provisions:  Paid by Buyer.  Seller has rights to order “reconsideration.”  Seller has right to lower price to appraisal.  Buyer agrees to limit Seller’s liability for cots of repair appraisal conditions. 

4.         Escrow/Title:  Sell has chosen title company; purchase agreement overrides escrow instructions.

6.         Closing Costs:  ALL PAID BY BUYER including detailed list of buyer obligations including loan interest; taxes, etc.  Suggest Counter in part.

7.         Disclosures.

A.  SRPD – Declares it is attached, ensure it is.

D.  Assessments – Seller agrees to provide within 12 days; Buyer has 5 days from receipt to reject. CIC(s) transfer fees paid by Buyer.

E.  LID SID – Buyer assumes all current balances, Buyer duty to discover balances.

K.  Construction Defect.  Seller has 5 days to disclose, Buyer has 5 days to cancel.

Compliance with Building Codes.

O.  Flood.  Buyer has 7 calendar days to cancel and is responsible for flood insurance if required by Lender.

R.  Home Warranty.  Buyer required to pay and Seller is choosing provider?  It is a good idea to gain a home warranty, but the Seller should not be choosing the company if the Buyer is paying.

AA.                        Foreclosure – Home may be lost to foreclosure during escrow, ending Buyer’s rights.

8.         General Contingencies.

A.  Inspections.  Buyer to provide Seller with copy of inspection(s).

9.         Due Diligence.  Buyer has 5 days after bank approval to conduct all Due Diligence and to instruct Seller of rejection.  Parties then have 2 days to negotiate how to handle repairs and/or the parties must cancel in writing or all rejections deemed accepted. 

12.       Contractual Conditions.

B.  Earnest Money Release.  Allows escrow to release EMD if party cannot be located after 30 days.

D.  Buyer Default.  Allows Seller to seek Earnest Money Deposit or specific performance, unlike the GLVAR RPA where the Seller must choose between one of these remedies.  Suggest counter, ‘only remedy if Buyer defaults is retention of EMD as liquidated damages.’

E. Seller Default.  Buyer has no right to specific performance.

I.    Contingencies.  Ensure your Buyer is not required to sell another home to purchase this one.

R. Close of Escrow.  Escrow has 5 days to record.  COE is 20 days after bank approval.  Seller to provide approval within 3 days of its receipt of same.  If not provided to Buyer with 45 days either party may cancel.  If Bank requires greater settlement amount than purchase price and Buyer does not cancel, Buyer required to pay higher difference.  Suggest counter out this section.  ‘Buyer allowed to cancel at any time per GLVAR short sale addendum’

T.   Multiple Counter Offer.  If checked, not valid until Seller ‘resigns.’

OPEN BOX – Review this area, it changes each time.