The Florida Association of Realtors uses two different versions of the purchase and sale agreement. One is called " FAR (Florida Association of Realtors)" the other " FAR BAR" (Florida Bar Association). In different parts of the state, real estate agent communities have their own customs as to which version they use. In my Destin FL area, for example, the FAR contract is more common. But a few towns over, in Pensacola, the FAR BAR is prevalent. Now the Florida Association of Realtors is proposing to combine both contracts and make further changes. The decision whether to proceed with the new contract will be made on August 23, during the FAR Annual Convention & Trade Expo. I have reviewed the 21 proposed changes and sent my comments in to my board at the Emerald Coast Association of Realtors. You should do the same, as your input is requested.
Here are my thoughts on the changes:
1. Paragraph 1. d. I find it odd that personal property check boxes include “shed” and other items that might be potentially removed, but don’t include “Window Coverings ”. The new version states window covering automatically stay. If the contract is taking the stance on questioning items that typically stay, like a shed, it should do the same with window coverings for the sake of consistency
2. 125% escrow for repairs not completed – implies that buyer MUST close if repairs are not done by seller . As a buyer, I would be leery to close – what if the air conditioner did not work? Close anyway? Wait six months for the seller to repair? It might never be repaired, as the money sits in escrow. Forcing a buyer to accept that term is far too much micro-management of a contract between buyer and seller. I would line it out if I were representing a buyer. This should be removed from the contract. Ditto to RISK of LOSS provision, which also forces the buyer to accept the property after fire or other casualty, and just accept an escrow until repairs are made.
3. If seller has a title policy, he shall provide a copy to buyer and closing agent within 5 days . Most sellers have one, but can they find it? Most cannot find all their paperwork, so the seller would be in default of the contract if he couldn’t find it. It would be “nice” if they provided it, but to stipulate it in the contract is excessive and not realistic. Remove this requirement.
4. If the seller has a survey, to provide to title agent within 5 days . I suppose that could cause issues if a seller has one, but cannot find it. VERY typical… Thus buyer could claim seller is in default… if they don’t comply. This should be removed.
5. Define “financial failure” of lender … The new contract version says a buyer can get his deposit back if the closing is not funded due to "financial failure" of his lender. I can see a situation where funds didn’t make it to closing on time, so hypothetically, the lender failed financially. This needs to be more clear. Lender “out-of-business” or something more specific should be used here. Another example, a bank was taken over or merged. That might also fit the definition of “financial failure”- but in essence, the closing could still be funded. That might be used as an excuse for a buyer not to close.
6. Change to closing to occur on or BEFORE closing date as mutually agreed . This comes up again and again. Otherwise, the contract says closing must occur ON an exact date.
7. Remove same county closing restriction We often have closings one county away. It should state, “unless otherwise agreed between buyer and seller.”
Finally, ONE POINT that is mentioned nowhere in our Florida purchase and sale agreement- Buyer or Seller shall pay a per diem penalty should they not meet the closing date. Other states have that, and I believe it is the cause of sloppy closing date adherence in Florida.
What are your observations on the new Florida real estate contract proposal?
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
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We all know that States tend to make changes in contracts because of lawsuits. Lawsuits will always occur; moreover, lawsuits will be filed occuring from the language provided. The bottom line is to make sure that every grey area is put in writing. No verbal changes or handshakes, put it in writing. I just helped out one of my agents to close a transaction today that was supposed to close yesterday morning because both parties agreed to move the closing date up one day. The seller does not move out on Monday and says their moving company did not show up until a day late. My buyer's moving company has the company on their truck. We have a problem. Normally, we would go back to the seller and get something from the delay. Here we have no recourse because the contract said to close today and the seller has every right to move the date one day. Even a day change should be put in writing. Though it got a bit nasty....buyers went into a hotel for two days as I am still waiting on funding so they can move in. I guess my point is that it is our job to be thorough, not the government's job. Survey delivered in 5 days? Arghh, I want that survey delivered in 2-3 days max as the buyer has up to "X" amount of days to review it and back out depending on the state. I hate mandates like that as they force a contingency period.
Hi Tim- You bring up a fabulous point. I am adding to my list that we should include a PER DIEM penalty should either party cause a delay in closing. We don't have that in Florida, other states do. And Florida is VERY SLOPPY about parties adhering to closing on time... I don't like micro-management, either.
Wendy. I didn't even know we had new contrcats!!! I guess I need to get out more often. Thanks for the heads up!!
Bryant - We got an alert through our board... All the links are there in my post, and I KNOW you will have an opinion or two!
Thanks for the alert on this. Was not aware of these changes. Have bookmarked the blog so that I can print out the contracts and study them.
Sounds like too many sharks swimming in your contracts...window treatments...hmmm just blinds, not curtains....just valances not sheers, drapes...County closing restrictions..HUH ...here it is that the buyer chooses the place/time to close...If the seller(s) cannot be present, they may pre-sign the documents (a usual case with short sales) and give one of us the POA to attend the closing...and everyone lives happily ever after.
Jim - My board alerted us. You can get comments to your MLS association and they will forward to FAR before the vote on August 23. I put my two cents in!
Sally & David - Florida likes to micro-manage, because people can't think for themselves, lol, right! I personally never agree to sign for seller/buyer or take POA... liability!
Wendy - It would be nice to have one standard form throughout the state that we would all use. As it is now, as I am quite sure you know, we have the choice of two different forms each with their own respective addendums, which don't play well with the other form. If you choose the FAR but don't like the wording of it's associated addendum, you can't substitute the better FAR/BAR form. Then of course you have some boards (Tallahassee I believe) that uses it's own hybrid forms. Definately does not play well with the other forms.
From just a quick read through of the "new" form, it does not seem like a better alternative yet. Need to study some more on it.
Hi Jim - I think they are trying for the one form, which I think would be great, too! I get different ones presented to me, and use the FAR a lot more. I don't like some of the proposed changes, as I outlined above, but I've sent my comments to our MLS per their request, who will forward to the Directors at FAR... Hope it makes a difference.
Our board GAR has just released MORE changes... time to get educated. What kills me is most agents only know which blanks to fill in and don't have a clue about whats in between.
Eric - I agree. The changes they are proposing to ours are pretty big.
Wendy,
Thanks for this information. I am always interested how other state contracts work.
Hey Wendy - It would appear that FAR has elected not to adopt or publish the proposed changes to the contract at this time. Received the e mail about the annual convention updates yesterday.
Not really sure how to feel about this, as I felt that it was a good idea to consolidate the forms to achieve a bit more "standardization" throughout our different boards.
Jim - I did not get that email.... If handy, can you forward it? itswendy@rulnickrealty.com
Wendy - sent the link to you with the article. Let me know if for some reason you do not get it.
Got it, Jim, thank you. I agree, it would eliminate some confusion. My Destin area uses MOSTLY the FAR, but some use FAR BAR. FAR counts business days, FAR BAR calendar. Problems occur with addenda, like short sale, using deadlines. Must calculate differently depending on what type the main body of the contract is!