Prac pp chp 6

Chapter 6The Purchase Offer

Filling Out the New Residential Purchase Contract

I. Overview of the Latest Purchase Agreement Contract

A. Why Purchase Contracts Are Necessary

Most transactions for the purchase and sale of real estate begin with a written contract between the buyer and seller

In a real estate transactions the following must be addressed: Financing Possession Condition of title Liens

Most buyers do NOT have the available cash to buy a home, financing is a must

B. Major Changes In the Purchase Agreement

The latest CAR® form, released November 2014, reflects “generational changes” essential to the offer and acceptance of a real estate sale

The new form forces increased clarity – more definite and certain terms

C. Contingency Clauses in The Purchase Agreement

A CONTINGENCY CLAUSE is a contract provision that requires a specific action to occur by a certain time in order for the contract to be considered enforceable

If the party named to fulfill the requirements of the contingency clause is unable to do so, both parties are released from their obligations

II. Now More Detailed RPA – CA Form

• Writing the purchase agreement is a vital step in

bringing the buyers and sellers together, and should be worded in simple and concise language

• The CalBRE has often stated that the purchase agreement is the most important document in a real estate transaction

• The broker’s responsibilities in completing or supervising the purchase agreement contract accurately and unambiguously cannot be overemphasized

A. Changing the Preprinted Form

• Written or typed words supersede the printed word if there is a contradiction

• Use the form itself as a checklist that is complete in all important legal respects

• Cross out printed sentences or paragraphs that are not applicable and have the changes dated and initialed by the impacted parties

B. Form: RPA-CA

C. Filling Out the Form – Breaking it Down

1. Offer

3. Finance Terms

D. Loans

Balance of Down Payment or Purchase Price and

Initials

Property Address and Date

Verification of Loan Terms

K. Buyer Stated Financing

4. Sale of Buyer’s Property

5. & 6. Addenda, Advisories, Other Terms

7. Allocations of Costs

Gov’t Reqs, Escrow & Title

Other Costs

8. Items Included & Excluded from Sale

9. Closing and Possession

9. Closing and Possession (cont.)

Warranties, Keys

10. Statutory Disclosures

A. Disclosures (cont.)

B. Natural & Environmental Hazards

C. Withholding Taxes

D. Megan’s Law

E. Gas & Hazardous Liquid Transmission Pipelines

F. Condo/Planned Development Disclosures

11. Condition of Property

Buyer’s Investigation of Property

Buyer’s Investigation of Property (cont.)

13. Title and Vesting

14. Time Periods, Removal of Contingencies,

Cancellation Rights

Notices, Contingencies, Close

G. Effect of Cancellation on Deposits

15. Final Verification of Condition

16. Repairs

17. Prorations

18. Brokers

19. Representative Capacity

20. Joint Escrow Instructions to Escrow

Holder

20. Joint Escrow Instructions to Escrow Holder (cont.)

20. Joint Escrow Instructions to Escrow Holder (cont.)

21. Remedies for Buyer’s Breach of Contract

22. Dispute Resolution

22. Dispute Resolution (cont.)

23. Service Providers & 24. MLS

25. Attorney Fees

26. Assignment

27. Equal Housing Opportunity

28. Terms and Conditions of Offer

29. Time of Essence, Entire Contract, Changes

30. Definitions

31. Expiration of Offer

32. Acceptance of Offer