Last week at our Maxsell Real Estate sales meeting we covered the changes for the new GAR contracts, and there are many. garealtor.com has a good overview of the changes posted here on their website and today I found a good post by Doug Quance of Brokers First realty covering those changes. Excerpts are reposted below and click here to read his entire article.
The buyer has less wiggle room.
What must be the biggest change to the GAR Purchase and Sale Agreement has to do with the method of payment.
In the old version, the buyer could go all the way up closing – only to find out that he/she/they could no longer qualify for the loan… and they would get their earnest money back if they had a Financing Contingency in the agreement.
Obviously, this was very unfair to sellers who often endured high expense of preparing for their move… or worse yet – actually moved… only to discover a sale was not to happen.
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Now there’s much more for the buyer to inspect.
The inspection section of the agreement now includes a new section imposing a duty on the buyer to inspect the neighborhood. The buyer must acknowledge that he/she has had the opportunity to check out the surrounding area, and are satisfied with the result of their inspection.
It’s not just the immediate area, either. You are expected to discover if there are any conditions nearby which may affect the property value such as cemeteries, landfills, power lines, prisons, apartment complexes, factories… even crime.
Another change, which I am truly surprised about, is that the buyer is now responsible for conducting an inspection for termites.
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Now the expense and responsibility is on the buyer.
Of course, depending upon how the agreement is drafted, the termite issue can be addressed by either requesting the seller treat and repair, or terminating the agreement.
Another provision of the Due Diligence Period is a check box where the buyer can warrant whether or not he/she has a) another property under contract and b) the right to enter into other purchase contracts during the Due Diligence Period.
Other changes include the removal of the Lead Paint Disclosure in the Sellers Property Disclosure, simply requiring sellers to attach a separate Lead Paint Disclosure if they declare that the home was built prior to 1978 – or if they declare that they don’t know when the home was built.
The Purchase and Sale agreement includes an express waiver of all of the buyer’s rights under federal law to conduct tests for lead-based paint and/or lead-based paint hazards.
Instead, these issues are dealt with like any other adverse property condition during the Due Diligence Period or Right to Request Repairs in the Inspection Contingency as negotiated in the Purchase and Sale Agreement.
Additionally, email has been added as an acceptable means of giving notice, providing that such email address is provided in the contact information section of the signature page of the Purchase and Sale Agreement.
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and Doug finishes the post with some very good advice:
Are your eyes glazed over, yet?
That’s normal. This stuff is pretty boring for most people.
You don’t need to know how to write a good purchase and sale agreement – you only need to know a good buyer’s agent.
As with most legal contracts, you are likely to be better served if someone representing YOUR interests helps you in the preparation of these documents.
You should, however, have a good fundamental understanding of all of the documents you are signing.
Be sure your agent has explained it to your satisfaction. Don’t feel like you’re stupid because you don’t understand some provision – ask questions!
Thanks for the great coverage of the new GAR contracts Doug and here’s another link to your good work.
