|
Changes to Multi-Board Residential Contract |
||
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
|
|
||
| 1: The Parties |
No
change |
Place for
buyer and seller initials |
| 2: The Real Estate | ||
| In paragraph 2, reference is made to whether the Property is a condominium, coop apartment or townhome, whether there is a parking space included, the parking space number (if known) and whether the parking space is deeded, limited common element of an assigned space. If this information is not known or not available, Joe Fortunato suggest adding “TBD”. | ||
| 3 :Fixtures and Personal Property | Invisible fence system | invisible fence system, collar(s) and box |
| In the personal property section, the designation “owned” is set forth after “Security System(s)” and “Collar(s) and Box” is set forth after “Invisible Fence System”. | ||
| Security system(s) | Security
system(s) (owned) |
|
| 4: Renumbered | Was: Acceptance | Removed
– renumbered to Purchase Price – no change |
|
|
||
| 5: Mortgage Contingency | 7 calendar days (to apply for mortgage) | 5 business days |
| Old paragraph 5, the Acceptance paragraph (“Earnest money shall be returned and this offer shall be void if not accepted on or before _____”) has been deleted, and I am aware that many licensees objected to its deletion. On the one hand, the language should have read “…offer shall be withdrawn” because an offer that is deemed void could not give rise to a claim for commission in an instance where the offer was for full listing price. Further, the committee differed on whether the paragraph provided a means to urge the Seller to act on an offer. Because of the possible confusion that often resulted due to the fact that some Buyers believed that they could not by law withdraw their offers prior to the date set forth in the paragraph, when in fact an offer may be withdrawn any time prior to acceptance, the committee felt strongly that the paragraph should come out. This paragraph demonstrates the difficulty in drafting one standard form for use in different areas with different customs. | ||
| 6: Closing | No
change |
|
| 7: Possession | Option A & B for possession | Possession
at closing – option moved to Paragraph
32 |
| Possession is to be granted at closing. The committee wanted to discourage Post-Closing Possession, which is now optional and set forth at paragraph 32. If Post-Closing Possession is desired, the terms of a Post-Closing possession agreement are to be negotiated within the ten business day “window” for resolution of Attorney Review and Inspection issues. The optional paragraph 32 continues to contain language sufficient to allow for Post-Closing Possession, including a deposit, daily use and occupancy, plus “holdover rent”. The deposit is now 1%, rather than 2%, of the purchase price. The holdover rent is 1/5th of the deposit per day, instead of 1/15th. | ||
| If when paragraph 32 has not been initialed the seller announces that he/she cannot provide possession at closing, can the buyer invoke the provisions of paragraph 32 and demand a holdback and rent? Yes, definitely. The Seller in the scenario described has no right to withhold possession at closing, so the Seller would have no right to resist the application of paragraph 32 if possession is not surrendered at closing, or any other terms required by the Buyer, for that matter. If the Seller says: "I can't provide possession at closing, but you can't require me to deposit any funds because paragraph 32 is an optional paragraph and we didn't elect to make it part of the contract", then the Buyer would be free to say: "Give me possession at closing or you are in breach of contract; if you won't use paragraph 32, I will require you to deposit 3% of the sales price now and pay double my mortgage payment every month in advance for 6 months" or something like that. I would rather opt for paragraph 32 if I were the Seller in that instance, because if the Seller is in danger of being held in breach of contract the Buyer holds the leverage. | ||
| 8: Disclosures | No content change | Restructured
for clarity |
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
| 9: Prorations | Added: If the amount of the most recent ascertainable tax bill reflects a homeowner, senior citizens or other exemption, Seller has submitted or will submit in a timely manner all necessary documentation to the Assessor’s Office, before or after Closing, to preserve said exemption. Accumulated reserves of a Homeowner/Condominium Association are not a proratable item. | |
| The prorations paragraph (#9) contains two new sentences at the end thereof, referring to tax bill exemptions and reserves of an association. | ||
| 10: Other Provisions | No
change |
Added:
environmental to list of types of inspections |
|
11: Professional Inspections |
Professional inspection services | Now:
licensed or certified inspection services |
| The Inspections paragraph (#11) requires home inspectors to be licensed and others (pest, furnace, etc.) to be certified. If an inspection is done by a friend or relative of the Buyer and the friend is not licensed or certified, as the case may be, the inspection cannot be the basis for negotiation of credits or repairs under this paragraph. | ||
| Interior plumbing system | Now:
plumbing and well system
|
|
| 12: Attorney Review | No
change |
|
| 13: Plat of Survey |
Added: In
addition, the survey to be provided shall be a boundary survey
conforming to the current requirements of the Illinois Department of
Professional Regulation. The survey shall show all corners staked and
flagged or otherwise monumented. The survey shall have the following
statement prominently appearing near the professional lane surveyor seal
and signature: “This professional service conforms to the current
Illinois minimum standards for a boundary survey. A Mortgage Inspection,
as defined, is not a boundary survey, and Does not satisfy the necessary
requirements. Effect: Requires staked monumented survey and removes old
optional Paragraph 34 |
|
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
| 14: Notice | Business Hours: 9AM to 5PM | Business
Hours: 8AM to 6PM |
| No notice by e-mail | Added
(d) By sending e-mail transmission. Notice shall be effective as of date
and time of e-mail transmission, provided that the notice transmitted
shall be sent on business days during business hours (8AM to 6PM
Chicago Time) and provided further that the recipient provides
written acknowledgment to the sender of receipt of the transmission (by e-mail, facsimile, or by regular mail). In the event e-mail notice is transmitted during non-business hours, the effective date and time of notice is the first hour of the first business day after transmission. |
|
| Notice (paragraph #14) can be made via E-mail, so long as the recipient gives to the sender a written acknowledgement. The business day is now 8:00 am to 6:00 pm, to make it easier to give notice. | ||
| Agents were NEVER supposed to get bump notices. Notices are to be given to buyers to be effective. Agents may receive courtesy copies only. And the Buyers' Designee paragraph stated that the Designee was not supposed to be the agent or the attorney. | ||
| 15: The Deed | No
Change |
|
| 16: Title | No
Change |
|
| Possession Escrow | Moved
to Paragraph 32 |
|
| 17: Property Tax Escrow | In the event the Real Estate is improved but has not been previously taxed as improved | In
the event the Real Estate is improved, but has not been |
| In paragraph 17 (“Real Estate Property Tax Escrow”), the language was changed from “...but has not been previously taxed as improved…” to “…but has not been previously taxed as for the entire year as currently improved…” to expand applicability of this section from new construction to teardowns as well as to newly constructed properties that were purchased and then resold within a year after the issuance of an occupancy permit. The committee found that the Contract was used less often by builders but more often in situations of resale of teardowns and in situations involving resale of newly constructed homes by the original purchaser. | ||
| 18: Performance | No
change |
|
| 19: Damage | No
change |
|
| 20: Seller Representations | Seller represents and warrants | Removed
the word warrants Added: notice of special service area and any improvements for which the required permits were not obtained to those things the seller must disclose |
| Seller's Representations paragraph (#20) was amended to provide for a representation of receipt of no written notice of PENDING as well as of confirmed Special Assessments. | ||
| Seller’s Representations (#20) now include a representation that the Property is not subject to a Special Service Area. | ||
|
From Joseph R. Fortunato, Jr.:
If Seller makes improvements without required permits, the Seller
should modify the representation made in paragraph 20. I tell
licensees to refrain from crossing out parts of paragraph 20, but
rather to tell their sellers to contact their attorneys to amend
paragraph 20 during Attorney Review. I also believe a Seller
would be best advised to contact the applicable Building Department
and apply for a permit. Also, regarding teardowns, the
representation that there are no improvements included in full in the
most recent tax assessment needs to be modified.
|
||
| 21: Condition/Inspection | Inspection to be 72 hours prior | Now
inspection to be prior to possession (no time specified) |
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
| 22: Compliance | No
Change |
|
| 23: Escrow Closing | No
Change |
|
| 24: Flood Insurance | No
Change |
Flood Insurance (#24) was not modified, but some suggested an “opt-out” provision for Buyers. That suggestion was rejected. |
| 25: Facsimile | No
Change |
|
| 26: Business Days | No
Change |
|
| 27: Condominiums | No
Change |
Condominiums (#27) –no substantive change, but merely reformatted (the contract underwent extensive editing). |
| 28: Good Faith | No
Change |
|
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
| 29: Sale of Buyer’s Real Estate | ||
| Sale of Buyer’s Real Estate (#29) has several changes. Paragraph 29 (A) (4) (a) and (b) have minor changes. Paragraph 29 (A) (5) has additional language requiring Buyer cooperation. Paragraph 29 (B) has a new third subparagraph for instances where the Buyer’s home sale falls through immediately or soon after the date for obtaining a contract has passed but well before the closing date. Paragraph 29 (E) no longer allows for notice to “Buyer’s designee.” Remember to compare the notice provisions under paragraph 29 with the general Notice provisions of paragraph 14 – they are different. | ||
| Paragraph
A |
Must be listed in 7 calendar days | Now
5 business days Added: For information only before the name of the broker with whom the home will be listed |
| Paragraph B | This Contract is contingent upon Buyer procuring a contract for the sale | Renamed
to: Contingencies Based Upon Sale and/or Close of Buyer’s Real Estate This Contract is contingent upon Buyer having a contract for the sale of Buyer’s real estate in full force and effect as of Added (3) If the contract for the sale of Buyer’s real estate is terminated for any reason after the date set forth in Paragraph 29 (B) (1) (or after the date of this Contract if no date is set forth in Paragraph 29 (B) (1), Buyer shall, within three (3) business days of such termination, notify Seller of said termination. Unless Buyer, as part of said notice, waives all contingencies in Paragraph 29 and complies with Paragraph 29 (D), this Contract shall be null and void as of the date of notice. If written notice as required by this subparagraph is not serviced within the time specified, Buyer shall be in default under the terms of this Contract. |
| Paragraph C | No
Change |
|
| Paragraph D | …increase
the earnest money to a total of $
|
…deposited
with the Escrowee the additional sum of $
|
| Paragraph E | Removed
Buyer’s Designee |
|
| Paragraph (3.0) |
March, 2000 Version |
Version 3.0 |
| Residential Real Estate Contract | Multi-Board
Residential Real Estate Contract 3.0 |
|
| 30: Cancellation of Prior |
No Change |
|
| 31: Interest Bearing Account | Was $10,000 or more | No minimum requirement. |
| Added: The Buyer shall be responsible for any administrative fee (not to exceed $75) charged for setting up the account. | ||
| Interest-Bearing Accounts (#31) no longer requires a minimum deposit, but allows for an “administrative fee” of not more than $75.00 to set up the account. | ||
| 32: Post Closing | Combined
old option of post closing possession from Possession Paragraph 7
(Paragraph 8 on old contract) and Possession Escrow (Paragraph 18 of old
contract). Added: If within ten (10) business days after Date of Acceptance written agreement on a post closing possession agreement cannot be reached by the Parties, this Contract shall be null and void and earnest money refunded to Buyer upon written direction of the Parties to Escrowee. If written notice is not served within the time specified this provision shall be deemed waived by the Parties and this Contract shall remain in full force and effect. |
|
| 33 : Well and Septic | No Change |
Note however, that the well was added to the Professional Inspections paragraph |
| 34: Dual Agency | No Change | |
| 35: “As-Is” Condition | No Change | |
| 36: VA or FHA |
Added
language to stipulate buyer does not have to purchase
the property if it does not appraise and requires the agent to |
|
| VA or FHA Financing is covered by paragraph 36. The FHA Amendatory Rider language is now included. Other language in FHA or VA Riders that require a signature of a broker or agent was not included, because the Contract is intended to be signed only by the parties. | ||
| 37: Interim Financing | No
Change |
|
| 38: Miscellaneous | Removed individual paragraphs | Removed
Assumption of Seller’s Mortgage, Articles of |
| A new “Miscellaneous Provisions” section allowed the committee to delete from the Contract the 4 paragraphs referred to, which provide for a significant saving of space. Agreements in these four areas are to be drafted by counsel for the respective parties and executed on or before closing. | ||
| 39: Specified Party | No
Change |
|
| Signature Area | Added:
The Parties represent that text of this form has not Residential
Real Estate Contract 3.0 |
|
| Social
Security numbers of buyers and sellers removed |
||
| Added: This offer was presented to Seller by on (date) at (time). This offer is rejected (Sellers initials, date) | ||
|
|
No
Change |
|
| On line 392 the representation was intended to prevent unauthorized “knock-off contracts”, especially those that designated title providers and restricted the rights of the parties. | ||
| The copyright is held by the Illinois Real Estate Lawyers Association for the benefit of all the Boards and Bar Associations that participated. An opinion from an Intellectual Property Law attorney suggested that one entity hold the copyright and that entity should be prepared to litigate issues of unauthorized use. In this manner, the Boards would avoid the expense of such litigation. | ||
| The last two sentences on page 8 provide for proof of presentation of offers and an indication that the Seller has rejected an offer in a multiple-offer scenario. A Seller negotiating price or other terms with a Buyer would not use this section. | ||
More ...
Joseph
R. Fortunato, Jr.
Fortunato, Farrell, Davenport
& Arnold, Ltd.
4112 Cass Avenue, Westmont, IL 60559
Legal counsel for the REALTOR Association of the West/South Suburban Chicagoland, President of Illinois Real Estate Lawyers Association and a member of the Common Contracts committee.
“Some have expressed concern about the integrity of the home buying process, a concern I share. They refer to the fact that an agent may inform a buyer that there may be no way of knowing that an offer has been accepted, or even presented. I submit that the requirement of an acceptance by a definite date and time will not prevent listing agents from "pocketing" offers and refusing to present them. We have attempted to prevent such actions by requiring the date and time of contract presentation and the initials of the seller memorializing that the seller rejected the offer. But if a listing agent refuses to present all offers, the requirements of license law notwithstanding, the presence in the contract of a date and time for the voiding of offers will have no effect on such conduct.
I do not understand the point about the unattractive alternative the buyer might have when withdrawing an offer. I envisioned, rather, that a buyer would be able to withdraw an offer not to put pressure on a seller to act or not to act, but rather to allow the buyer to make an offer on another property when the first offer had not yet been acted upon by a seller. I guess the presence or absence of the provision in question makes no difference in the situation where a buyer wants to look elsewhere to buy another property, nor would it seem to make any difference if a seller was weighing several offers; and as I stated earlier, it would make no difference if an unethical listing agent refused to present an offer because he or she wanted to present an offer from his or her own buyer.
Further, I submit that a buyer does not need acknowledgement from a seller that the buyer's offer has been withdrawn. Why would the seller need to acknowledge anything? Earnest money would not be deposited until after the acceptance of the offer. The buyer would not have to wait until the deadline to move on to another property. Indeed, the presence of the deadline would not require the buyer to wait until the deadline to withdraw the offer and move on. “
05/01/03