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Residential Real Estate Update

Did you know that GCAAR released revised forms on February 1, 2019?

March 15, 2019

We will discuss the key revisions in a series of posts relating to the revised forms. This first post will focus solely on revisions to GCAAR Form 1301 (Sales Contract).

Several revisions were made to GCAAR Form 1301 (Sales Contract). Some of these revisions were technical corrections with no substantive effect. This post will highlight the more substantive changes to GCAAR Form 1301 (Sales Contract).

Paragraph 7 (Property Maintenance and Condition): In the event that the parties do not check off one of the boxes (“Date of Offer,” Date of home inspection,” or “Other” and fill in a date), then the default option is that the Seller will deliver the Property at Settlement in substantially the same physical condition as of the Date of Offer. Also, language was added to make it clear that the Contract requires the Seller to have smoke detectors and carbon monoxide detectors installed and operational prior to Settlement in accordance with the requirements of the jurisdiction in which the Property is located. From a practical and legal perspective, we generally prefer to see parties using the “Date of home inspection” option, which gives the parties a third-party report to rely upon in the event that an issue arises regarding the property condition.

Paragraph 12 (Wood Destroying Insect Inspection): Wood Destroying Insect (WDI) is now a defined term. The requirement that the WDI report be dated within 60 days of Settlement was removed. With respect to treatment for WDI, the Seller is only obligated to complete treatment recommended by the inspector if the WDI report shows of evidence of live WDI. With respect to repairs for WDI damage, the Seller is obligated to make repairs for WDI damage recommend by the inspector regardless of the presence or absence of live WDI. Treatment for live WDI and/or repairs for WDI damage will be made at Seller’s expense by either a licensed pest control firm (treatment) or a licensed contractor (repairs).

Former Paragraph 15 (Alternate Financing): The Alternate Financing paragraph was removed from GCAAR Form 1301 (Sales Contract), as similar language is contained in each of the financing contingency forms.

Paragraph 16 (Title): Language was added to clarify the role of the Settlement Agent in the transaction. Specifically, language was added to clarify that the Broker, or any agents, subagents or employees of the Broker, and the Settlement Agent are not advising the parties as to certain issues, including but not limited to issues relating to land use, zoning, and possible restrictions on the use of the Property. Furthermore, the parties expressly release the Broker, or any agents, subagents or employees of the Broker, and the Settlement Agent for all liability for damages by reason of any defect in the title. Also, it is now in the discretion of the Settlement Agent to determine whether title to the Property is in the condition required by the Contract (the “Required Condition”). If, as determined by the Settlement Agent, title is not in the Required Condition by the Settlement Date, then the Settlement Date will be automatically extended by 30 days (the “Extended Settlement Date”) to allow the Seller, at Seller’s expense, to promptly take all action necessary to place title in the Required Condition. If title is not in the Required Condition by the Extended Settlement Date, then the Buyer may deliver notice to the Seller declaring the Contract void.

Paragraph 17 (Possession Date): The list of deliverables that the Seller must deliver to the Buyer at Settlement now includes fobs and codes.

Paragraph 26(G) (Title Insurance): Language was added to make it clear that the Settlement Agent and Buyer’s lender (if any) will disclose the owner’s policy premium at the enhanced rate.

Stay tuned for our next post on revisions to the Addendum of Clauses forms.

CONTACT

Matthew D. Alegi

Sarah D. Cline

Danielle M. Dolch

David M. Kochanski

Marc D. Lipman

MORE INFORMATION

For more information regarding our Residential Real Estate Settlements Group or our general real estate transactions and litigation practice, please contact the Group Chair at settlements@shulmanrogers.com.

This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.