Special Stips & Exhibits - Buyer Contracts

Find below recommended EXHIBITS & SPECIAL STIPS for BUYER contracts for homes, condos and REO/foreclosure properties.

SINGLE FAMILY HOMES:

Exhibits and Addenda – portion of the Purchase and Sale Agreement… The four most commonly used exhibits added to buyer contracts are: 1. Financing Contingency 2. Appraisal Contingency (included in the conv. fin. form) 3. FHA Exhibit, (F63). 4. Lead Based Paint Exhibit, (F54) (for pre 1978 properties) If the buyer has a loan to purchase the property, a financing contingency is almost always used to protect the buyer. We always recommend an appraisal contingency. If the buyer is using an FHA loan, (contact the lender to confirm), then and FHA exhibit should be attached. There are many other exhibits that should be added to the contract, depending on the deal.

Recommended Special Stipulations – Purchase and Sale Agreement… Add the below special stips, if they apply to your deal. They are deliberately abbreviated as sellers are wary of long and numerous special stips. Foreclosure sellers will often not accept any of the below recommended special stips and almost always have their own addendums that will override any and all special stips that agents write.

1. “Seller to leave all appliances including washer and dryer, and all attached fixtures including window treatments.” (Many lenders will require removal of this language from a contract and that a Personal Property Amendment be written and attached for such items and that they note a zero value on the amendment.)

2. “Seller to transfer all keys, remotes, alarm codes, mail box codes, door codes etc. at the closing table.”

3. “Seller to permit a buyer 'Walk Through' within 5 days of transfer. Notwithstanding anything contained herein to the contrary, Buyer and Seller agree that all items on the Property Concerns Amendment Agreement shall be completed by Seller in a good and workmanlike manner by closing date. This stipulation shall survive the closing.” (This is recommended for all contracts. The “morning of” or “afternoon before” Walk Through ensures two things: 1. That the property is being conveyed in “substantially same condition” as when the contract was written and 2. That any promised repairs on the Concerns Amendment were written. Always do a walk through just before closing! If the property is damaged, the buyer can terminate without penalty.)

4. Termite Bond Stips- three options: “Seller agrees to provide Buyer with a termite guaranty (bond) by a licensed GA pest control operator covering all buildings on Property for one year at seller expense. Guaranty warrants that if infestation is discovered during the guaranty period, operator will treat infestation and repair all damage resulting from it.”

or “Seller shall transfer termite bond at Seller’s expense.”

or “Seller agrees to transfer termite bond at buyer’s expense.” (None of the above are applicable for REO/Foreclosures or Short Sales. Banks will not approve.)

Special Stips & Exhibits - Buyer Contracts 5. “At closing, the Seller agrees to provide a Buyer's Home Warranty for the term of one year issued at a cost to the Seller not to exceed $______to be ordered by buyer’s broker.” Amounts are typically $495 (or $595 or $695). The amount depends on the quality of the warranty you want to buy them. Also, if they have septic or a swimming pool, be sure to name those things on the home warranty rider and it costs more, so choose a more expensive warranty.) REO/Foreclosure and short sale sellers will not pay for home warranties.

6. “The Sellers Property Disclosure Statement (SPDS) is not attached. Seller shall have three days from the Binding Agreement Date (BAD) to provide Buyer with an accurate and complete GAR SPDS. If Seller fails to timely provide the Statement Buyer may terminate this Agreement within three days from the BAD by providing written notice to Seller. If buyer finds property unacceptable, Buyer may terminate Agreement for any reason within 3 days of receipt of the SPDS.” (If the sellers property disclosure statement has not been made available. Not for REO/foreclosures.)

7. “Home must qualify for the finance program that the buyer has chosen at no cost to the Buyer.” (This stip is only for buyers have a special loan program or even grant programs. Or VA… This ensures that if they don’t qualify for them, that they will receive their earnest money back.) I

8. “Seller shall deliver Property clean and free of debris at time of possession. Seller shall not leave any personal property of Seller in the Property other than what is in this Agreement.” (If there is any concern about the seller leaving debris or personal items behind.)

9. “Earnest Money was remitted by ______on behalf of the buyer.” (If the EM was paid by someone other than the buyer)

10. “At closing, Seller will pay PalmerHouse Properties, (Selling Broker) a commission of _____% of sales price.” (To protect yourself if the homeowner is a For Sale By Owner seller or not represented by a broker or a reputable broker)

CONDO Contracts: (Remember that resale condos must be written on the special condo Purchase and Sale Agreement – F33 and not the standard P&SA.)

Exhibits and Addenda –The exhibit that must be added in condo transactions in addition to the most widely used ones noted above in single family is: 1. Community Association Disclosure Exhibit (Assessment/Fees). (F123)

ADDITIONAL CONDO SPECIAL STIPS~ Use as they apply to your deal. First, see the ones above under single family and use if they apply, then add the below as needed for condos.

1. “This agreement is contingent upon seller providing the following additional documents and information within 72 hours of binding agreement: Association Fee/ Assessment Exhibit, condo declaration and documents, by-laws, rules and regulations, most recent financials and

Special Stips & Exhibits - Buyer Contracts budget, and minutes for the most recent two board meetings. If not provided by seller or if anything in therein is not acceptable to buyer, buyer may declare the agreement void and earnest money will be promptly returned to buyer.”

2. “Seller warrants that to the best of seller's knowledge that that there are no special assessments currently due or under consideration. If there are any due or approved prior to closing, Seller agrees to pay for said assessments prior to closing. If the unit’s HOA dues are in arrears, seller agrees to pay them at or before closing.”

3. “Seller warrants that there are___ number of deeded or assigned parking spaces and that the parking spaces numbers are ______. Purchaser reserves the right to terminate the contract unilaterally if said number of parking spaces are not assigned or deeded with the unit.” (Many condos don’t have assigned or deeded parking – but if they do, this will assure that there is no confusion.)

4. Condo Initiation Fee - If you’re representing a condo buyer, you may choose to fill this section in with zeroes to relieve your buyer from paying the initiation fee/aka transfer fee, aka capital reserve contribution. If representing the seller, be on the lookout for buyers agents who put a zero in the below sections. If they do that (and most will), your seller will have to pay the condo transfer fee… which can exceed $1000.

The below if from the GAR CONDO Purchase and Sale Agreement…

Continued….

Special Stips & Exhibits - Buyer Contracts

5. Community Association Disclosure Exhibit. Be SURE to include the Community Association Disclosure with all condo contracts as an exhibit at the time of the offer. (F123). Don’t submit later as it will cause confusion regarding some of the terms and fees. The forms tie together. In Section E of the CAD (see below image) be sure to complete the “initiation fee” (that is generally regarded by agents as the same thing as the transfer fee and the capital reserve contribution- even though they are not the same). If you represent the buyer, put zero in that space, because this section says the BUYER is paying them. If you represent the seller, put in the actual amount. Two months of the unit’s HOA fees is often the figure, but it may be less.

Then, beware of section F. Most condo association require a separate $250 fee to do the “clearance letter” and if this is not checked at the time of the binding agreement, the agent often ends up paying it at the last minute because that’s when the clearance letter happens … right before closing at the time of title clearance. If you’re representing the buyer, check “Seller” in section F. If you’re representing the seller, check “Buyer” in section F.

Form F123

Short sales: Copy the below paragraph into the special stips section of the contract or attach a short sale exhibit!

Short Sale - Buyer acknowledges that the sale of the Property will not generate sufficient cash to pay off the mortgages on the Property and the other obligations of Seller with respect to this purchase and sale transaction. This Agreement is therefore contingent upon Seller’s mortgage lender(s) agreeing to: (1) take a reduced pay off on its mortgage(s) in an amount sufficient such that the purchase price of the Property pays off the reduced amount of the mortgage(s), any other liens, judgments and other encumbrances on the Property, the real estate commission(s) owing to the Broker(s) and the other expenses of sale for which Seller is obligated under this Agreement without Seller having to pay any additional sums; and (2) release Seller from any claim, cause of action, suit or judgment for the amount of the reduction in the payoff on said mortgage(s). In the event, the mortgage lender(s) do not agree to such reductions at least _____ days prior to closing, either Seller or Buyer may terminate this Agreement without penalty upon notice to the other party.