Presentation on theme: "CABR/DABR REGIONAL Contract to Purchase"— Presentation transcript:
1 CABR/DABR REGIONAL Contract to Purchase 2014 ChangesQuote from VictoriaThis is a summary of key changes in the CABR Contract to Purchase that is now being used by both the Cincinnati Area Board of REALTORS® and the Dayton Area Board of REALTORS®. It is not intended to be a complete tutorial on the contract. It is recommended that REALTORS® attend a course of instruction on the contract in order to obtain a comprehensive understanding of the mechanics and use of the contract. See class schedule at
2 What’s New? Summary of change types: A Joint Task Force comprised of members of the Cincinnati Area Board of REALTORS® and the Dayton Area Board of REALTORS® has spent considerable time and effort to bring to the memberships a regional purchase contract. Some of the changes are minor and/or for clarification purposes. Others are new concepts that will require adjustment by many users.Summary of change types:Updated terminologyChange in formatting (font size/line numbers)Expanded seller certificationsChanges to title insurance, taxes, assessments, prorations that more clearly address a variety of situationsInclusion of reference to use of electronic signatures
3 Summary of Changes Page 1 PRICE AND TERMSLine 24 - wire transfer has been added as an additional method for payment of the final purchase price/balance.
4 Summary of Changes Page 1 FINANCING CONTINGENCYLine 27 - Addition of purpose of use of the real estate has been added. This is due to lending and agricultural recoupment issues.Buyer intends to use the real estate for the following purpose: Owner-occupied Rental Other: ________________________.
5 Summary of Changes Page 1 FINANCING CONTINGENCYLines Language verifying receipt of “FHA for Your Protection: Get a Home Inspection” has been moved up to the body of the financing contingency. No change to the actual language. FHA/VA: The Buyer's obligation to close this transaction is contingent upon Buyer applying for and obtaining (a) q FHA, [(1) fixed or (2) adjustable] (including FHA closing costs) or VA (including VA funding fee) first mortgage loan in the maximum allowable amount (b) at an interest rate at prevailing rates and terms not to exceed _________%, (c) for a term of not less than _______ years or at a higher rate or shorter term agreeable to Buyer. q Buyer has been provided the FHA For Your Protection: Get a Home Inspection disclosure. When the Buyer is financing through FHA or VA, the Seller may be required to pay for certain fees. Check with your lending institution. Whole house inspection fees may be paid by the VA Buyer, but must be paid outside of the Closing. On FHA/VA contracts, the appraiser is not deemed to be a whole house inspector.
6 Summary of Changes Page 2 FINANCING CONTINGENCYLines Settlement Charges: Language has been added to clarify that the seller is responsible for costs incurred to fulfill the terms of the contract and to provide marketable title (e.g. clean up title issues) over and above any fees paid by the seller on behalf of the buyer.In addition to costs incurred in order for the Seller to fulfill the terms of the Contract and to provide marketable title, Seller agrees to pay actual settlement charges on behalf of the Buyer, including, but not limited to, discount points, closing costs, pre-paids and any other fees allowed by Buyer’s lender in an amount not to exceed, _____________.
7 Summary of Changes Page 2 FINANCING CONTINGENCYLines 50 & 55 - Financing Application and Loan Commitment (new heading): Changes to terminology used regarding loan approval. Word “commitment” replaced with “approval”.If Buyer or Buyer’s lender does not notify Listing REALTOR® or Seller, in writing, that a loan commitment approval, has been obtained...
8 Summary of Changes Page 2 APPRAISAL CONTINGENCYLines 59-61, 66 - Language added to clarify the parameters for a cash buyer to terminate the contract due to appraised value. Additional clarification regarding the buyer’s waiver of right to terminate the Contract under this provision not affecting other sections of the Contract. Note that if the buyer wants to avoid paying for an appraisal until after the real estate inspection contingency has been satisfied, ample time should be indicated in Section 3 – (Financing Application and Loan Commitment) for notification that a loan approval has been obtained. Buyer's obligation to close this transaction is contingent upon Real Estate appraising at or above final sales price of the Real Estate. Buyer has the right to obtaining, at its expense, an independent appraisal performed by an appraiser licensed in Ohio which results in the Real Estate appraising at an amount equal to or greater than the Purchase Price. In the event the Real Estate does not obtain an appraised value (by either Buyer’s or Lender’s appraiser) equal to or greater than the Purchase Price, Buyer shall have the right to terminate this Contract by delivering written notice to Seller on or before the expiration of (i) the time-frame set forth in Section 3 above for obtaining an appraisal in connection with a cash sale or (ii) the time-frame set forth in Section 3 above for obtaining a loan commitment (such applicable time period being referred to as the “Appraisal Contingency Period”). If Buyer does not deliver written notice to Seller that Buyer is terminating the Contract prior to the expiration of the Appraisal Contingency Period, then Buyer’s right to terminate this Contract due to appraised value shall be deemed waived.
9 Summary of Changes Page 2 INCLUSIONS/EXCLUSIONS OF SALELines 70, 72, Inclusions/Exclusions of Sale: Addition of bathroom mirrors due to the increase in the use of “hanging” mirrors in bathrooms as opposed to “mounted” mirrors. If the seller wants to take a “hanging” mirror, it should be excluded in the purchase contract (lines 84-85) - items specifically excluded from the real estate. Addition of lines for other items (which add no additional value to the real estate) and elimination of personal property section (in previous version of the contract).…bathroom mirrors and fixtures;Clarification that television mounting brackets, but not televisions are included in the sale: television mounting brackets (excluding televisions)…
10 Summary of Changes Page 2 CERTIFICATION OF OWNERSHIPLines : Rewording to address the merge of the “Inclusions/Exclusions of Sale” section and personal property sections. Previously, this section only addressed the personal property. Now it all falls under one section and there is also a reference to debts, etc. which fall under Section 19, Conveyance and Closing.Seller certifies that Seller owns all of the above real property and other items as listed in Section 5 and that they will be free and clear of any debt, lien or encumbrances at Closing except_________________________. Seller further certifies that all of the above real property and other items as listed in Section 5 are and will be operational on the date of possession, except: ______________________________.Seller certifies that Seller owns all of the items listed in Section 5 and that they will be free and clear of any debt, lien or encumbrances at closing (except as listed in Section 19 of this Contract). Seller also represents that those signing this Contract constitute all of the owners of the title to the real property and other items as listed in Section 5, together with their respective spouses.
11 Summary of Changes Page 2 SELLER CERTIFICATIONLines 93-98: Rewording of current contract language regarding notices from any public authority indicating work orders, zoning changes and/or assessments against the real estate and additional language to address notices regarding future assessments, hazardous substances, etc.no orders of any public authority are pending (g) no work has been performed or improvement constructed that may result in future assessments, (h) no notices have been received from any public agency with respect to condemnation or appropriation, change in zoning, proposed future assessments, correction of conditions or other similar matters, and (i) to the best of Seller’s knowledge, no toxic, explosive or other hazardous substances have been stored, disposed of, concealed within or released on or from the real property and no other adverse environmental conditions affect the real property except ____________.
12 Summary of Changes Page 3 HOMEOWNER ASSOC/CONDO DOCSLines : Language to clarify that the seller shall pay for the costs incurred in order to provide the buyer with any documents affecting the real estate. Seller will, at Seller’s expense, provide Buyer with a current copy of documents affecting the real estate including, but not limited to documents recorded with the county, …
13 Summary of Changes Page 3 HOMEOWNER ASSOC/CONDO DOCSLines Language to clarify that the seller shall provide (at Seller’s expense) any required written approval for the sale, any letter of assessment required at closing and Seller certification of current HOA fee amount (e.g.: $100/mo). Often, an amount for HOA fees is listed in MLS that the buyer can include in the contract. If that amount is incorrect, the seller would need to correct it and send it back to the buyer. If the amount is left blank (unknown), the seller would need to add the information and send it back to the buyer.Seller agrees, as a condition to Closing, to secure, at Seller’s expense, written approval for this sale if required by the Documents. Seller, at Seller’s expense, shall provide any letter of assessment required at closing by the lender and/or title company. Seller certifies that the current HOA fees are: $_____________.
14 Summary of Changes Page 3 MAINTENANCELines 119, , Buyer provided with option to receive proceeds from insurance policy or terminate the contract in the event that, prior to Closing, the Real Estate is damaged or destroyed by fire or other casualty. Clarification as to purpose of “walk through” prior to closing. Also removal of vague language.Until physical possession is delivered to the Buyer, Seller shall continue to maintain the Real Estate, as described in Section 5, including the grounds and improvements thereon, in good condition.If, prior to Closing, the Real Estate is damaged or destroyed by fire or other casualty, Buyer shall have the option to (a) proceed with the closing and receive the proceeds of any insurance payable in connection therewith, or (b) terminate this Contract. and the Real Estate is not repaired or restored by and at Seller’s cost as it was prior to the damage or destruction, then Buyer has the option to terminate this Contract by written notice to Seller.Buyer and Seller agree that Buyer shall be provided the opportunity to conduct a walk-through inspection of the Real Estate within 48 hours prior to closing, solely for the purpose of ascertaining that the Seller has maintained the Real Estate as required herein and has met all other contractual obligations is in substantially the same condition as it was at the time the Contract was executed, subject to reasonable wear and tear.
15 Summary of Changes Page 3 PROPERTY INSURANCELines Language added to clarify termination parameters and to further define the buyer’s responsibility for inquire about insurance.PROPERTY Insurance: Buyer’s right to terminate this Contract due to insurance availability and/or cost must be satisfied during the of casualty insurance of the Real Estate falls under the Real Estate Inspection Contingency Period (as defined in Section 13 below). Buyer(s) acknowledges that it is Buyer’s sole responsibility to make inquiries with regard to property insurance, including, but not limited to, real and personal property insurance availability and cost.
16 Summary of Changes Page 3 PROPERTY DISCLOSURE FORMLine 139 – Change from “state-mandated” to “Ohio”
17 Summary of Changes Page 3 BUYER’S INSPECTIONS/INSPECTION CONTINGENCYLine Clarification language with regard to any disclosures made by Seller on the Ohio Residential Property Disclosure Form or any other source of disclosure.Not withstanding anything to the contrary, Seller makes no representations…Line 151: Notice that the inspection period may not extend for the full number of days listed in the blank, depending upon timing of presentation of a request for corrections, as a result of the real estate inspection. If the Post-Inspection Agreement is delivered to the listing agent or seller prior to the final date of the inspection period, the date of such delivery will be the end of inspection period:- Buyer shall have up to ________ calendar days (Inspection Period) ….
18 Summary of Changes Page 4 INSPECTION CONTINGENCYClarification as to what sections of the inspection report are required to be provided to Seller in the event the Buyer is requesting repairs:Lines If Buyer is not satisfied with the condition of the Real Estate as revealed by the inspection(s) and desires corrections to material defect(s), Buyer shall provide written notification of any material defect(s) and the relevant portion(s) of the inspection report which describe the basis for the Buyer’s dissatisfaction to the Listing Firm or Seller with a request for corrections desired within the Inspection Period.
19 Summary of Changes Page 4 INSPECTION CONTINGENCYLines : Language advising that if the Post-Inspection Agreement is delivered to the listing agent or seller prior to the final date of the inspection period, the date of that delivery will be the end of inspection period:Delivery of the Post-Inspection Agreement or other written notice requesting corrections to material defects will designate the end of the “Inspection Period”.
20 Summary of Changes Page 4 INSPECTION CONTINGENCYLines : Clarification on delivery of notice of satisfaction of the inspection contingency.IF BUYER DOES NOT DELIVER SUCH NOTIFICATION OF SATISFACTION AND WAIVER OF THIS CONTINGENCY OR WRITTEN NOTIFICATION AS INDENTIFIED IN (a) OR (b) ABOVE….Removal of language that is not clearly definable or enforceable.IT IS NOT THE INTENT OF THIS PROVISION TO PERMIT THE BUYER TO TERMINATE THIS AGREEMENT FOR COSMETIC OR NON-MATERIAL DEFECTS OR CONDITIONS. Buyer agrees that minor repairs and routine maintenance items are not to be considered material defects with regard to this contingency.
21 Summary of Changes Page 4 INSPECTION CONTINGENCYLine Removal of unnecessary language under the Lead-Based Paint Inspection section, as it is included in the Lead-Based Paint Disclosure form and/or law.Buyer has has not received the pamphlet “Protect Your Family From Lead in Your Home.” Every Buyer of any interest in residential real property on which a residential dwelling unit was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. If the dwelling unit was built prior to 1978, Buyer has the right to inspect for lead, at Buyer’s cost, for ten (10) days following Contract acceptance.
22 Summary of Changes Page 4 INSPECTION CONTINGENCYLine Language added to clarify that Seller and REALTOR® are not responsible for disclosed/unknown items vs ANY DEFECTS.SELLER(S) AND REALTORS® shall not be responsible for any UNKNOWN AND/OR DISCLOSED defects in the Real Estate, INCLUDING THE PRESENCE OF ASBESTOS, LEAD, MOLD, RADON OR ANY OTHER HAZARDOUS MATERIALS.
23 Summary of Changes Page 5 OTHER CONTINGENCIES/AGREEMENTSLine Clarification that all addenda must be signed by all parties. See attached Addenda which are signed by all parties and incorporated into this Contract:
24 Summary of Changes Page 5 TITLE INSURANCELine The words “and time” added as a further clarification as to the beginning of coverage for owner’s title insurance policy, if purchased.Title insurance is designed to protect the policyholder of such title insurance for covered losses caused by defects in title (ownership) to the Real Estate that are in existence on the date and time the policy of title insurance is issued.
25 Summary of Changes Page 5 TITLE INSURANCELinesRemoval of options for providing seller-paid owner’s title insurance and establish time-frame in which Buyer must elect to obtain the owner’s policy, in order for the buyer to receive the seller contribution. Keep in mind that if the Buyer waits until closing to elect to purchase title insurance and receive the seller contribution, it could affect the closing. In order to prevent a possible postponement of the closing, the buyer should provide ample notice that title insurance will be purchased.Seller shall pay an amount not to exceed $300 towards the purchase of an Owner’s Policy of Title Insurance and Buyer shall be responsible for payment of the balance of the Owner’s Policy of Title Insurance premium. Seller’s contribution is payable only if Buyer elects to obtain the owner’s policy no later than the date of closing so that Seller’s contribution may be deducted from Seller’s proceeds at closing.Clarification as to Seller-paid fees: This amount shall be in addition to Seller-paid settlement charges stated in Section 3, if any.
26 Summary of Changes Page 5 TAXES AND ASSESSMENTSComplete rewording to Taxes and Assessments section:Lines : At closing, Seller shall pay or credit on the purchase price (a) all real estate taxes and assessments, including penalties and interest, which became due and payable prior to the closing, (b) a pro rata share, calculated as of the closing date in the manner set forth below, of the taxes and assessments becoming due and payable after the closing, and (c) the amount of any agricultural tax savings accrued as of the closing date which would be subject to recoupment if the Property were converted to a non-agricultural use (whether or not such conversion actually occurs), unless Purchaser has indicated that Purchaser is acquiring the Property for agricultural purposes.
27 Summary of Changes Page 5 TAX PRORATIONSLines : An option for calculating the proration of real estate taxes using the “Short Proration Method” has been added to the purchase contract. (Note: The Short Proration Method is primarily used in Montgomery County.)Tax prorations: All prorations shall be based upon the most recent available tax rates, assessments and valuations. It is the intent of the Seller and Buyer that each shall pay the real estate expenses as follows:Seller’s share is based upon the taxes and assessments which are a lien for the year of the closing. (Long Proration Method- Seller pays entire taxes due which cover the tax period(s) up to the date of closing. If new construction, Long Proration method shall apply. Short Proration Method: ONLY CHECK THIS BOX IF THE SHORT PRORATION METHOD IS TO BE USED - Seller’s share shall be calculated as of the date of Closing, based upon the amount of the annual taxes (as determined by the most recently assessed tax amounts) to establish a daily rate of taxes and then multiplying the daily rate by the number of days from the first day of the current, semi-annual tax period to the date of Closing. If checked, the Short Proration Method shall be applicable and shall supersede the provision to use the Long Proration Method.
28 Summary of Changes Page 5 ASSESSMENTSLines : Any special assessments are payable in a single annual installment and shall be prorated on the long proration method.Line OTHER PRORATIONS: Removal of language “and billed”It is the intent of the Seller and Buyer that each shall pay the real estate expenses listed in (a), and (b) below due and billed for the period of time that each owns the real estate.
29 Summary of Changes Page 6 CONVEYANCE AND CLOSINGLine Clarification language-add condominium: “Condominium or HOA” transfer fees…Lines Language added to establish a uniform definition of what constitutes “marketable title”: (as determined with reference to the Ohio State Bar Association Standards of Title Examination).
30 Summary of Changes Page 6 CONVEYANCE AND CLOSINGLines Language inserted to address additional items that may affect the title: legal highways, assumed mortgage, fees becoming due and payable after closing, etc.(2) Legal highways, (3) any mortgage expressly assumed by Buyer and agreed to by Seller’s current lender in writing, (3) all installments of taxes and assessments becoming due and payable after closing, (4) zoning and other laws, (5) homeowner/condominium association fees becoming due and payable after closing…
31 Summary of Changes Page 6 ELECTRONIC SIGNATURESLines New section added.ELECTRONIC SIGNATURES: Manual or electronic signatures on contract documents, transmitted in original, facsimile or electronic format shall be valid for purposes of this Contract and any amendments, addendums or notices to be delivered in connection with this Contract. Only original, manually signed documents shall be valid for deeds or other documents to be recorded at or after closing or as may be required by Buyer’s lender and/or the title insurance company and/or escrow agent.
32 Summary of Changes Pages 6 & 7 Lines 287, 331 & 340Change from Cincinnati Time to Eastern/Daylight Standard Time to accommodate the expansion of use of the contract outside the Cincinnati area.