Brevard North Carolina Real Estate Blog: Would Your Contract Stand Up in a Court of Law?

Would Your Contract Stand Up in a Court of Law?

On Friday, we will be in class all day as part of our annual continuing education requirement. The dog will go to doggie day care, the cell phonereal estate contract will go on vibrate, and clients with questions will have to wait a little while for a return phone call. But it's all a good thing. Once in a while, I'll be in a CE class when my brain goes numb and my eyes glaze over, but that's usually a result of the messenger, not the message. Some experts are just better at presenting information than others. But by and large, I don't mind CE. It's a chance to "sharpen my saw", something we all should do as much as possible. Selling real esate is serious business and the contracts we write are legal, binding documents.  In a recent Inman News article I read, the author said that when she is filing out a contract, she pictures herself standing in a court room defending what she has written. I thought that was an excellent standard. As Realtors we need to understand every line and every nuance of a contract and be able to explain it throughly. There are parts of every contract that I don't like and I wish that our industry could find a way to construct contracts using language that was easily understood by the general population. But until that day comes, we have what we have.

This upcoming class should be particularly interesting since the NC Real Estate Commission has, once again, changed the Offer to Purchase contract. They like to do that every year....keeps us on our toes. Sometimes it's a simple tweaking of the words but not this time. This time our state is throwing out a huge and often complicated, tedious part of our contract. They are doing away with what is called "Alternative One".

If you've bought real estate in North Carolina recently, you may remember this part of the contract. It's where everyone has to agree on how long a buyer has to get an inspection, what can be included in a repair request, how long a seller has to respond to a repair request, how much the repair contingency is, what is included in pest inspection, and other details. Some of it is a "time is of the essence" issue, some of it isn't. The intention, however, has always been to protect the buyer by giving them plenty of opportunity to learn everything they need to know about a property before they purchase it and multiple ways to get out of the contract if they want to. If anything, our contracts are all about the buyer and do little to protect the seller.

Starting in January, that all goes away. As I understand it, that portion of our Offer to Purchase will function a lot like an Option. Buyers will have a designated amount of time to do their due diligence...whatever that may be...and can get out of the contract for any reason. No more repair requests. That part is fine with me. With our current contract, it spells out the items that a buyer can expect to be functioning and performing the job for which they are intended. But too many times, buyers and their agents will blow right through that list and include items in a repair request that, by contract, are not allowable repair requests. It bogs down the negotiations and can kill a deal.

Next year, a buyer can walk for any reason. 

I'm sure there is more to it than that and I have plenty of questions about earnest money and if "any reason" really means "any reason". I am curious to see what kind of protection a seller will get with this new contract.  Selling a home in this economy is tough enough. Will sellers be getting the short end of the stick?

I don't know, but I'll find out on Friday and will let you know!

 

 

 

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Comment balloon 2 commentsCarol Clay • September 23 2010 08:20AM

Comments

Anxious to hear how this goes Carol!

Posted by Michele Miller ~ REALTOR®, LMC, HSE, CHS, SRES, CMRS, 'Helping You Make the Best Move" (ERA Key Realty~Worcester County Realty Group) about 8 years ago

A Buyer can walk for any reason up to the agreed upon Option Date. And in many ways, this is better for the Seller, because he has been paid an Option Fee to give this Buyer first right of refusal. There will be no Repair Agreements, or Post Repair Agreement Inspections -- which often hang Sellers up.

My questions is this: what is in it for the BUYER? He has made an offer on a property making certain assumptions of the condition of the house.

I'm anxious to hear how this goes too.

Posted by Ellen Mantel Pfann (McDevitt Sotheby's International Realty) about 8 years ago

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