CONTRACT TO PURCHASE CHANGES

General Comments■ CABR/DR Contract is common, but not mandatory

– Review all contracts carefully

■ Buyer and Seller Language– Fiduciary Duty – Agent is an extension of their client

■ General clean up of terms and reformatting changes throughout

■ Legal provisions have been added by CABR/DR attorneys.

■ This presentation is for educational purposes. Contractual language may vary slightly. All concepts are the same. If in doubt the Contract to Purchase prevails.

■ Comments in Blue text are considered best practices

■ Numbers in (parenthesis) indicate line number referenced on SAMPLE contract on CABR website

1. PROPERTY DESCRIPTION■ The “Further described as” (4)

– Indicate the county Auditor’s parcel number(s) that are to be transferred. – Ensure all individual parcel numbers included in the sale, are included in this

space.■ Search Auditors site by owner’s name

2. TIME IS OF THE ESSENCE

3. PRICE AND TERMSa) Earnest Money Compliance with the Earnest Money has been identified as a contingency

to better identify it as a termination point. (11)

There is only one date provided for collection and verification of submission for deposit of the Earnest Money. (14)

Default for acknowledgement and submission for deposit of Earnest Money is 3 calendar days if not specified. (14)

If the Contract terminates the money will not automatically be disbursed. (19)

3. PRICE AND TERMS a) Earnest Money Guidelines for disbursement vary depending who is holding the earnest money

Ohio Revised Code prevails Separate agreement needed to specify disbursementShould be attached to the Contract

Seller paid closing costs have been moved to the “Price and Terms” section

3. PRICE AND TERMS Settlement Charges

4. FINANCING CONTINGENCY Buyer responsibilities for fees (44)

Be aware of the right of recission for certain loans i.e.HELOC, Blanket or Bridge etc… (45-46)

4. FINANCING CONTINGENCY■ CASH

– Timing to provide verification of funds (49)

– Appraisal for cash transaction moved to section 5.

■ CONVENTIONAL– No change

■ FHA/USDA/VA – USDA has been added as an option to the

FHA/USDA/VA loan type (55)

■ OTHER FUNDING SOURCE (63)

– Must specify – Be aware that right of recission may come into play

■ Financing Timeframe– Once buyer has provided information, Seller loses right to terminate (70-71)

– Buyer shall make a diligent effort to obtain financing (86-88)

4. FINANCING CONTINGENCY

■ Financing Timeframe– (a) PRE-QUALIFICATION

– Minor clarification - ASAP– (b) INTENT TO PROCEED

– Buyer must notify seller in writing name of lender and confirm that they have completed the intent to proceed. 5-7 days

– (c) CONDITIONAL LOAN APPROVAL ■ Written notification from buyer to seller that conditional loan approval has been

received. Will vary depending on time needed to close. – Loan underwritten– Creditworthiness verified– Only thing left is final title, employment verification

– (d) CLEAR TO CLOSE ■ Has been obtained- Timing based on date of closing

4. FINANCING CONTINGENCY

5. APPRAISAL CONTINGENCY Includes the timeframe for obtaining an appraisal in

the event of a cash sale. (93)

Other Funding Source added as a financing option in addition to cash. (93)

6. INCLUSIONS AND EXCLUSIONS■ INCLUSIONS

– Affixed floor coverings (103)

– Affixed humidifiers (106)

– Doorbells/Chimes (107)

– Affixed surveillance, monitoring, security alarm systems/cameras and affixed operating controls (107-108)

– ALL ranges, ovens, microwaves, refrigerators, dishwashers, garbage disposers and trash compactors (No longer just built-in appliances) (111-112)

– Does not include free-standing countertop appliances (112-113)

– All leased items are excluded from the sale (113- 114)

■ EXCLUSIONS– Remember to exclude ALL appliances seller wishes to keep!

IF THERE IS EVER A QUESTION AS TO IF AN ITEM STAYS OR GOES… WRITE IT IN!

7. CERTIFICATION OF OWNERSHIP Seller shall provide title company with right to transfer if Seller is: (126-127)

Power of Attorney Trust Corporation LLC Inheritance

8. SELLERS CERTIFICATION • Seller Certification items have been formatted as a list for

readability.

• There are additional language changes for clarification and consistency.

• (b) Added “not subject to a lease” (130)

• (c) Not subject to a joint maintenance agreement clarified (131)

• (m) Foreign Investment in Real Property Tax Act (FIRPTA) has been added as a seller certification (154)

9. HOMEOWNER ASSOCIATION Addition of “Minutes for the previous 2 years” as a required

document (169)

Clarification was made regarding who pays for fees required to transfer and who must obtain information required for performing on the contract. (181-192)

Seller’s responsibility to provide association contact information to the title company at least 14 calendar days prior to closing. (189-190)

10. MAINTENANCE Minor language change “Not limited to” (193)

11. HOME WARRANTY PROGRAM

Home Warranty Company named (206)

Buyer selects does not select (205)

12. PROPERTY DISCLOSURE FORM

Inclusion of reference to Ohio REALTORS® Property Disclosure Exemption Form. (208-209)

13. BUYER’S OFF-SITE ACKNOWLEDGEMENT Addition regarding availability and costs of utilities (214-215)

14. REAL ESTATE INSPECTION CONTINGENCY Amended to address:

- Home Inspector Licensure (225)

- Access to Real Estate by buyers, buyer's inspectors and contractors with ability to take photos and videos (232)

- Buyers understanding of the intent of the inspection and the inspections report (236-241)

- Maintenance and cosmetic items are NOT defects- Not a list of repairs - Not required to bring the home up to code- Report may include notes for information purposes only, and does not reflect the

actual condition of the Real Estate- Seller is not required to make corrections unless agreed upon in Defect Notice

(formerly Post Inspection Addendum)

14. REAL ESTATE INSPECTION CONTINGENCY Additional provisions have been added to accommodate three separate inspection periods.

1. Inspection Period

2. Seller Consideration Period

3. Settlement Period

A. Inspection Period• Buyer complete inspections within this time-frame and provide Seller with either• A request for repairs (Defect Notice) (260-263)

OR • Notice of buyer satisfaction (Notice of Satisfaction). (266-267)

14. REAL ESTATE INSPECTION CONTINGENCY3 Separate Time Periods

If no defect notice is provided to the seller within the inspection period time frame the buyer waives the contingency and is deemed to have

accepted the home “as is”. (270-273)

B. Seller Consideration Period The Seller will have a set number of days to consider and respond to the buyer’s

request. (Consideration Period) (272-274)

Seller’s options during the Consideration Period 1) Notice of Agreement to the request (275)

2) A counter-offer to the buyer’s request (277-278)

note-this counter-offer could simply be a notice of refusal to make any corrections

14. REAL ESTATE INSPECTION CONTINGENCY3 Separate Time Periods

The Seller is be deemed to have accepted all requests for corrections if no written response has been delivered to the buyer

during the Consideration Period. (281-284)

C. Settlement Period (283-285)

Outcome of the settlement period Mutual signed written agreement Mutual release if agreement is not reached If no mutual agreement, the contract automatically terminates

14. REAL ESTATE INSPECTION CONTINGENCY3 Separate Time Periods

14. REAL ESTATE INSPECTION CONTINGENCYD. Unilateral Termination (291-306)

- Buyers unilateral right to terminate has been restricted. - Buyer may only terminate for

- Structural Integrity,- Specific Hazardous Materials that pose a hazard to the health and

safety to occupants.

- Not originally disclosed by the seller.

15. PROPERTY SURVEY If Buyers want to have the contract contingent on confirmation of

property lines, they must do so within the inspection contingency time-frame. (310-313)

16. PROPERTY INSURANCE VERIFICATION CONTINGENCY Allows 14 days for the buyer to investigate insurance availability and cost. (314-322)

17. SELLER’S COOPERATION• Addresses seller responsibility for allowing access to the real estate. (323-325)

• Seller shall have ALL utilities on during the pendency period. (325)

• Buyer acknowledges they are not authorized to be present on the real estate without a licensed real estate agent, unless they have written authorization from the seller. (326-327)

18. OTHER CONTINGENCIES/AGREEMENTS No changes, but just a reminder to check the box if additional addenda is used.

19. TITLE INSURANCEA check box has been added

1. Buyer does not select title insurance (343)

2. Buyer does select title insurance (348)

20. PRORATIONS OF REAL ESTATE TAXES Clarification language regarding responsibility for payment of Ohio taxes billed in

arrears (357)

• Tax Prorations are based on the assessment method used by the county in which the Real Estate is located. (369-370)

• Clarification on New Construction Tax Proration (384-391)

• If a major renovation/teardown has taken place that could potentially affect the tax assessment and billing include this in line 382/383 of the contract.

21. OTHER PRORATIONS

22. CONVEYANCE & CLOSING Advises that closing attorney is not representing Buyer or Seller. The Buyer and

Seller may hire their own attorneys. (402)

Addresses responsibility for payment of certain fees. (404)

Addresses an exception to the “time is of the essence” provision in Section 2, in the event the closing must be delayed due to circumstances as identified in the contract. (418-422)

If Buyer and Seller are proceeding in good faith performance and Closing cannot occur due to occurrence or circumstance out of the direct control of either party, the Date of Closing shall be extended for a period of up to 7 calendar days. (418-422)

Unless otherwise agreed, terms of Possession and Occupancy shall extend by an equal number of days. (421-422)

23. POSSESSION AND OCCUPANCY Clarification & closing date placement. (424-427)

Requires the seller to provide keys, garage door openers and programming information. (430-432)

24. AGENCY DISCLOSURES25. COMPANY SPECIFIC PROVISIONS26. MLS AND PUBLIC RECORD ACKNOWLEDGEMENT

No major changes

27. SOLE CONTRACT

Any subsequent conditions, amendments and/or other modifications to this contract shall not be valid and binding upon the parties unless in writing and signed by all parties, upon which such written agreement shall become an integral part of the contract. (449-454)

28. GENERAL TERMS This Contract shall be interpreted and construed in accordance with

the laws of the State of Ohio. Any and all Seller certifications, representations and/or warranties contained herein shall survive the actual date of closing for a period of One (1) year. If any provision of this agreement shall be deemed unenforceable by a court of law, this agreement shall be deemed modified only to the extent of such unenforceable provision(s) and the remainder of the agreement shall remain in full force and effect. (458-462)

29. SELLER NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must, under certain circumstances, withhold tax if the transferor is a foreign person. If Seller is a foreign person (as that term is defined in the Internal Revenue Code and Income Tax Regulations), Seller acknowledges and agrees that at the time of closing, Buyer may require tax withholding from Seller’s proceeds up to the maximum amount permitted by law. (463-467)

30. ELECTRONIC SIGNATURES31. INDEMNITY32. ELECTRONIC WIRE FRAUD33. ACKNOWLEDGMENT

34. CONTRACT ACCEPTANCE DATE Indicates that all contract performance dates and contingencies begin the day

following the Contract Acceptance Date (489-492)

35. EXPIRATION■ Is now a stand-alone section (493-495)

36. BUYERS CERTIFICATIONBuyer’s Signature■ Addition of warranty and certification that all required signatures for the

purchase and financing have agreed to sign any required documents in order to purchase the real estate. (496-499)

■ Change made to the signature lines to accommodate corporate (etc.) signatures. (499)

37. ACTION AND CERTIFICATION BY SELLER■ Certification that all required sellers or those with ownership interest have

signed/agreed to sign necessary paperwork for the sale. (500-504)

■ List all persons or entities, including yourself, who have ownership interest and/or a signature is required to convey the Real Estate. Makes seller action clearer by providing options in a list format. (505-510)

– Seller hereby: ■ accepts said offer and agrees to convey the Real Estate according to the

above terms and conditions (512)

■ rejects said offer (513)

■ counteroffers according to the above modifications initialed and dated by Seller….. (514)

■ Change made to the signature lines to accommodate corporate (etc.) signatures.

Administrative ProcessingAddition of teams

QUESTIONS?