New Regional Sales Contract - Top 10 Thing To Know

The New Regional Sales Contract is out and now the current form to be used in Northern Virginia. Over the course of the last several months teaching dozens of classes to hundreds of agents, I have picked up on a couple of issues that I think may be problematic during the first few months the contract is out. In many cases, these are items that were intended to be positive changes but may have some negative unintended consequences now that the words are set in stone. Here are the Top 10 items to be aware of when drafting a contract using the New Form.

1) Paragraph 4, Down Payment: Be aware that the time for making the Down Payment has been changed from “at Settlement” to “on or before the Settlement Date” which could mean any time before 9 p.m. (or close of business). If you want to schedule a morning closing and be sure the Purchaser has wired funds in advance or brings their certified check to closing, you may want specify that the Down Payment is to be delivered to the Settlement Agent at or prior to the Settlement Conference. Of course, paragraph 20, Possession Date now says keys are to delivered “at Settlement” which may put the Seller in the position of having a buyer demand keys based on a promise to tender the down payment before the day is out.
2) Paragraphs 2 and 3 are now the Specified Financing. If you vary at all from what is here you will not have a Financing Contingency. (See Paragraph 10 C 1, 13, and 26 for references to the capital S capital F Specified Financing.) Agents wishing to leave their clients more flexibility may want to keep Paragraphs 2 and 3 more general, or add language to Paragraph 35 (other terms) that says the Purchaser reserves the right to substitute alternative financing with written notice, and that upon such notice the Alternate Financing will become the new Specified Financing for purposes of the Financing Contingency in Paragraph 10 C).
3) Paragraph 10A – remember that it is the Purchasers responsibility to confirm with their lender that any credit may be used or the credit will be reduced and the Seller will get the windfall.
4) Paragraph 10B – The Appraisal Contingency Addendum is the Virginia Jurisdictional Addendum. If you get a contract with an Appraisal Contingency Addendum attached it is probably the Maryland form!
5) Va. Jurisdictional Addendum Para 4 – don’t ask for an appraisal notice unless you really mean it, otherwise you give the Buyer an option to void the contract just by ignoring you.
6) Paragraph 10C – If you are used to saying 0 days, check Option 2 instead.
7) Paragraph 12 – Make sure your buyers apply for Insurance in the first 7 days.
8) Paragraph 15 -- Purchaser’s may make a Final inspection within 5 days of closing, but if they do, they may not get another “final” inspection on the day of closing.
9) Paragraph 26 – If the Purchaser has a financing contingency on the day of settlement, but fails to settle, they will be in default anyway. The only way to trigger the financing contingency is to deliver a written rejection letter for the Specified Financing.
10) Carry your license number with you on contract writing appointments, there is a new blank for it on the last page!

If any of these items are news to you , I will be happy to shed more light on them at our upcoming Seminar and Workshop at the McLean Community Center on Thursday.
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