By Gary S. Mueller, Three Rivers Association of REALTORS® Attorney
By the time you read this, professional sports are either almost done (baseball), ½ way done (football), or just getting started (hockey). Politically, there are only four more weeks to the next State and National election (with municipal elections right around the corner). Concerning your business model, I hope you are experiencing only quality buyers and realistic sellers.
As many of you are aware, the current 6.1 Multi-Board Residential Real Estate Contract (hereinafter “6.1”) is going through a major revision. The revised contract is to be called the 7.0 Multi-Board Residential Real Estate Contract (hereinafter referred to as “7.0”). The targeted date for revisions to be completed is the end of this calendar year. Thereafter, it is anticipated that the final 7.0 Contract will be fully approved by participating Bar Associations and REALTOR® Associations for use early next year. As a result, make sure you send comments and concerns about your experiences with the 6.1 Contract to Debby Bell or me so that one of us can make sure any concerns are discussed prior to finalizing the document.
Since my last major update, the committee has considered the following:
- Modifying the mortgage contingency to add that the transaction is subject to the property appraising for at least the sales price as well as attempting to clarify that the mortgage contingency is achieved when a written loan approval is secured from the lender (as opposed to a written loan commitment);
- Concerning pro-ration of taxes----a reference will be added for a disabled veteran exemption to taxes to put buyers on notice that there may NOT be any tax credit at closing if the seller is a disabled veteran;
- Concerning exemptions----the Committee is working very hard to try to address the reoccurring problem. As many of you know, the tax prorations are initially intended to be a credit from the seller to the buyer for the tax obligations the seller would have had to pay if the seller retained the property. A problem can occur when the seller has been entitled to a senior and/or senior freeze exemption(s) in prior years but, for the year of the sale of the property, the seller may not be entitled to the exemption(s) and may not remember to execute and present the appropriate paperwork to maintain the exemption(s) in the future. This situation can result in the buyer paying for a larger tax bill than he/she/they should when certain tax exemptions are not carried over to the taxes for the year of the sale/purchase. The Committee is still working on this, but I wanted you to know that a fix is not as simple as one might think;
- Concerning attorney review----Consideration is still being discussed to allow the parties to declare the contract null and void if timelines in the contract are not met (subject to extensions by the attorneys for the parties);
- Concerning Seller representations----a provision has been added seeking initials from both Buyer and Seller that all initial and final permits have been or were obtained for improvements to the home;
- Concerning the notice provision----a provision may be added that encourages the parties and their attorneys to share information with agents throughout the process;
- Concerning timelines----The timelines in the 7.0 Contract will require a tutorial to ensure that all within the process are aware of the time changes from the 6.1 Contract. For example, Buyer may have only ten business days from the Date of Acceptance to submit a loan application and to order an appraisal. When the final, 7.0 Contract is fully approved, all provisions of the contract will need to be reviewed, studied, and understood before pounding the pavement. Make sure you are comfortable with all the terms of the contract before presenting to ANY clients.
I had the opportunity to participate in an event in Springfield for IAR and the RPAC contributors. What wonderful experience. If you are interested in contributing $1000 to RPAC, please contact Dave McClintock or myself. If we recruit at least one person each, we can all go to the event next year! It truly was THAT MUCH fun that I hope you will consider contributing.
Also, welcome to our new leadership team at TRAR. We are truly fortunate to have quality representation for our Association. Kudos to the outgoing volunteers who are no longer on the Board. Congrats and best wishes to all the new members of leadership-----Judy is going to rock this! Take care. Stay relevant. Keep pushing!