Author Archives: Tanishia Stokes

Financing

The Contract indicates that the buyer must use good faith and make a diligent effort to obtain a mortgage loan application and a written loan commitment for Financing within the amount of time agreed upon by Buyer and Seller. If no specific time is agreed on, the time frame will be 5 days. Buyer must thereafter close on this Contract. Buyer must also inform seller of all disclosures and the overall progress of the loan application and loan commitment.

Financing

This section allows the parties to indicate whether there is a financing contingency to the Buyer’s obligation to close. Buyer must indicate this by checking the appropriate box that either indicates there is no financing contingency and they will be paying by cash or a loan or that the Contract is contingent upon Buyer obtaining a loan commitment. With a contingent Contract, Buyer must obtain a written loan commitment within a specified amount of days. If the days are not specified, the default is 30 days. The type of loan must be specified and the Buyer must indicate whether loan is fixed or adjustable. The initial interest rate percentage must also be indicated.

Assignability

This section allows the buyer to indicate whether or not the contract will be assignable. If the contract is deemed assignable, then the buyer can indicate whether or not the buyer’s liability under the contract can be assigned and the buyer be released from liability.

Occupancy and Possession Continued

Section (b) applies when the property is subject to a lease or rental agreement by someone other than the buyer or seller after the closing date. In this situation, the seller is required to disclose this information in writing to the buyer and also provide the buyer with copies of the lease or rental agreement within 5 days after Effective Date. If the buyer determines that the lease or rental agreement is not acceptable to them they have the ability to terminate the contract. This is done by delivering written notice to the seller 5 days after seller provided the buyer with the copy of the lease or agreement. Seller then must refund the deposit and release the buyer from all duties they had to perform under the contract. If the occupancy is by the seller, there is a separate form for this called Rider U Post-Closing Occupancy by Seller.

Occupancy and Possession

Section (a) states the two different ways that occupancy and possession can be delivered. The first way mentioned is when a Seller delivers occupancy and possession to Buyer at closing. In order for occupancy and possession to be delivered, the Seller must assure that the property is free of tenants, occupants and future tenancies as well as all personal items and trash before closing. Seller must also give Buy all keys and access codes associated with property. The second way that occupancy and possession can be delivered is before closing. In this scenario, when a buyer agrees to occupy the property and take possession of it before closing, they assume what is called the “risk of loss”. The risk of loss means that from the date that the buyer assumes possession of the property, the buyer are agreeing to take the property in the condition that it is and will be responsible for anything that happens to the property from that point on. However, there as special exceptions made for items identified in the property inspection and repair section of the contract.

Closing Date

This section addresses the date of closing, who chooses the date and what documents needs to be brought to closing. The closing date is the time where the contract is delivered. You must indicate the Closing date that was chosen by Closing Agent in the blank field. At the time of closing, you must bring all closing documents with you.

Extension of the Closing Date

First, this section addresses the different situations where a closing date can be extended. These include when closing funds from Buyer’s lender are not available at the time of closing; extreme weather prevents closing; or hazard, wind, flood or homeowner’s insurance is unavailable prior to closing.

Secondly, this section indicates the time in which the above conditions need to be restored. If the utilities, services or availability of the insurances mentioned above is not restored at this time, the contract may be terminated by either party. You must indicate the amount of days that the restoration must occur within or the default time will be 14 days.

Time for Acceptance of Offer and Counter-Offers; Effective Date

Section (a) is where the date that both the buyer and seller must sign the contract and deliver a copy to both parties is indicated. If the contract is not signed and delivered on this date, the offer is considered withdrawn and the deposits must be returned. Section (a) also addresses counter-offers.  The time for acceptance of counter-offers should be within two days after the counter offer is delivered, unless another time is specifically stated in the contract.

Section (b) defines the effective date as the date that the last one of the buyer or seller has signed and delivered the offer or final counter offer. This is when the contract becomes effective.

Purchase Price (Sub Sections c-e)

Section (c) is where the dollar amount of the purchase price amount that will be financed is indicated. This section is detailed further in section 8 of the contract.

Section (d) is where other forms of parts of the purchase price that do not fall within the categories of section (a), (b), or (c) can be indicated.

Finally, Section (e) is where the balance amount of the purchase price, that is to be paid at closing, is indicated. This should not include buyers closing costs, prepaids, or prorations. You should arrive at this amount by adding the amounts in sections (a), (b), (c), and (d), and then subtracting this amount from the overall purchase price on line two.

Purchase Price (Sub Sections a-b):

This section of the contract details the overall purchase price as well as how this price is divided into multiple payments which equal to the overall purchase price. The full amount of the purchase price must be paid in US currency.

Section (a) is where the amount of the initial deposit is listed and the two payment options that can be used to make the initial deposit is indicated. If you will pay the initial deposit at the time that the offer is made, you must check the first box (i). However, if you choose to pay the initial deposit through an escrow agent at a time after the offer is made, you must check the second box (ii). If you choose the second option, you must also indicate the amount of days in which you will deliver the initial deposit to the escrow agent following the effective date. If a time is not chosen the default time of three days will be used. The name, address, phone, email and fax of the escrow agent must also be provided.

Section (b) applies to additional deposits that are being delivered to the escrow agent. You must indicate the amount of the additional deposit and the amount of days following the effective date that the deposit will be delivered to the escrow agent. If the amount of days is not indicated, the default time of ten days will be used.