07 Jul California Association of REALTORS® Revamps Residential Purchase Agreement
At the cornerstone of every successful real estate transaction there is the standard Residential Purchase Agreement, a document that paves the way for smooth and efficient real estate exchanges. After a period of great struggle for the California real estate market, the California Association of REALTORS® noticed some room for improvement in the agreement and has lately taken the opportunity to address those issues by revamping the agreement for 2014 and beyond.
Although no major changes have been made that would radically alter the way real estate transactions are carried out in the state of California, significant amendments have been made to the language that account for a number of peculiarities and problems encountered in the most recent market. Here are a few of the most noticeable changes made to the California Residential Purchase Agreement.
Lender Limits on Buyer Credits
In the Financing section of the agreement, a paragraph entitled Lender Limits on Buyer Credits has been added. The language of the paragraph makes provisions to prepare a buyer who offers a large price on a home, but then seeks to reduce it by asking for big credits, for disallowances extended by the lender to those credits.
Another provision that has been added to the agreement is a section titled Representative Capacity. This section outlines what must be done when a signing party is not physically present but acting through representation. The agreement specifically outlines that parties must complete a specified addendum and deliver it within three days in order to give the representative party authority to act on his or her behalf.
Loan Contingency and Appraisal
The new form of the agreement also mandates that loan contingency is not automatically based on the appraisal of the home. The language states that a buyer cannot back out of a sale for the sole reason of the home not appraising to the sale price unless the appraisal contingency has been waived or removed.
Leased or Liened Items and Systems
This section has been added to the area of the agreement that details what items are included and excluded from the sale. The rise in solar systems that come with long-term lease in California homes prompted the addition of this section. The section provides that the buyer’s approval of and ability to assume the lease is made a contingency of the home purchase.
Scope of Duty
In an effort to protect the broker, the CAR added a detailed section to the agreement that outlines the many things that brokers are not responsible for and are not required to do.
Removal of Termite Reports
One change that will be of particular notice to southern California REALTORS®, is the removal of the termite report from the list of inspections whose cost is allocated by negotiation between buyer and seller. Termite inspections are now being lumped in along with other inspections a buyer may want to request.