Earlier this month we featured an article about the AS IS Contract. So we felt that it was only appropriate that we go over the Contract for Residential Sale and Purchase next. In Florida these are two most common contracts used for purchasing homes in Florida.
Contract for Residential Sale and Purchase
The section of the Contract for Residential Sale and Purchase that we will go over is Page 2, section 5, subsection (a) & (b)
5. Closing Procedure; Costs: Closing will take place in the county where the Property is located and may be conducted by mail or electronic means. If title insurance insures Buyer for title defects arising between the title binder effective date and recording of Buyer’s deed, Closing Agent will disburse at Closing the net sale proceeds to Seller and brokerage fees to Broker as per Paragraph 19. In addition to other expenses provided in this Contract, Seller and Buyer will pay the costs indicated below.
(a) Seller Costs:
Taxes and surtaxes on the deed
Recording fees for documents needed to cure title
Repairs and Permits: Seller will pay up to $______________ or ______% (1.5% if left blank) of the purchase price for repairs to warranted items (“Repair Limit”); and up to $______________ or ______% (1.5% if left blank) of the purchase price for wood-destroying organism treatment and repairs (“WDO Repair Limit”); and up to $____________ or ______% (1.5% if left blank) of the purchase price for costs associated with closing out open permits and obtaining required permits for unpermitted existing improvements (“Permit Limit”).
Other:_________________________________________________________________
(b) Buyer Costs:
Taxes and recording fees on notes and mortgages
Recording fees on the deed and financing statements
Loan expenses
Lender’s title policy
Inspections
Survey
Flood insurance, homeowner’s insurance, hazard insurance
Other:__________________________________________________________________
You may recall that in the AS IS Contract under the seller costs that there was no amount allotted for repairs at all. With this purchase contract the buyer can request that a dollar amount or percentage of the purchase price to be paid by the seller for Warranted Repair Items, Wood Destroying Organism treatment and repair and closing out open permits and obtaining required permits for unpermitted existing improvements.
So what does this mean to you as a buyer. We will try and make this very easy to understand. In our example we will say that agreed upon purchase price is $200,000 (this way it is pretty easy math). During the home inspection it is determined that the AC System is not working correctly by the buyers home inspector and they suggest that a Licensed AC Company looks at it.
Under Page 4 Section 8 (a) (3) it states:
(3) Repair: Seller will obtain repair estimates and is obligated only to make repairs necessary to bring warranted items into the condition warranted, up to the Repair Limit. Seller may, within 5 days after receipt of Buyer’s notice of items that are not in the condition warranted, have a second inspection made by a professional inspector and will report repair estimates to Buyer. If the first and second inspection reports differ and the parties cannot resolve the differences, Seller and Buyer together will choose, and equally split the cost of, a third inspector, whose written report will be binding on the parties. If the cost to repair warranted items equals or is less than the Repair Limit, Seller will have the repairs made in a workmanlike manner by an appropriately licensed person. If the cost to repair warranted items exceeds the Repair Limit, either party may cancel this Contract unless either 223 party pays the excess or Buyer designates which repairs to make at a total cost to Seller not exceeding the Repair Limit and accepts the balance of the Property in its “as is” condition.
So you can see if you use the Contract for Residential Sale and Purchase there are certain things that the seller is required to do and you as a buyer must adhere to terms and conditions of the contract too. Having an agent represent you who knows how to ensure that you do not get caught in a bad situation is crucial. Nick & Cindy Davis have assisted over 400 buyers just like you purchase their new home. Let us help you find your new home too.
We are always a call to 813-300-7116 or click here away.