A Review of the GCAAR Regional Contract – Part 1 of 3

The GCAAR Regional Sales Contract was significantly revised effective January

1, 2012. Although it is not the form primarily used in Frederick County, it is a Contract
preferred by Realtors in Washington, D. C., Virginia and in some parts of Montgomery
County, MD. Agents should understand the basic differences and issues presented by the
Regional Sales Contract if offers are presented on local listings by agents using the
GCAAR form.

The first Paragraph of the Contract includes a description of the property being
sold. It incorporates the legal description (which the MAR Contract form does not), as
well as the street address of the property.

The second Paragraph of the revised Contract provides for the required use of a
Jurisdictional Addendum, which is required for DC, VA and/or MD.

In the financing aspects of the Contract, there are many provisions relating to
assumption of financing, including a specific paragraph (3.E) dealing exclusively with
loan assumptions. Since so few loans are now assumable without buyer qualification, it
seems to be a pointless provision. However, the Contract requires the use of a Financing
Addendum for Conventional, FHA and VA financing.

The Deposit paragraph (4.) acknowledges receipt of the deposit. It also gives the
option of using a promissory note as a deposit. It is a mistake to even suggest the use of
such an illusory form of securing performance, as in the event of a default by the
purchaser, there would not be actual cash at risk. Additionally, the Contract provides that
the deposit will not be placed in escrow until after the date of ratification. Although the
deposit may be placed in an interest bearing account, the buyer waives the right to
interest earned, which will thus go to the party holding the deposit.

Paragraph 6 of the Contract sets forth the date for settlement, and the Purchaser
designates the Settlement Agent that will be handling the closing.

In a significant change to the Contract, the systems and appliances are no longer
required to be in “normal working order” as previously provided. Instead, the Regional
Contract now is a clearly “as is” contract. The purchaser is offered the opportunity to
have a home inspection, and the parties are then expected to negotiate and agree upon all
aspects of the property condition at closing. Even though the Contract calls for the
property to be delivered in “as is” condition, sellers are, nevertheless, required to disclose
any and all known latent material defects in the property.

Paragraph 8 affords the purchaser access to the property for the purposes of
having any agreed upon inspections conducted, as well as to allow the appraiser for the

lender to perform their appraisal.

Paragraph 9 of the GCAAR Contract regarding Utilities has an acknowledgement
if the property is on a private septic system, and also it requires designation of the
number of bedrooms for which the septic system is approved. This provision should help
avoid controversy when the purchaser is intending to enlarge or improve the property,
since they should be given disclosure of the number of bedrooms that are approved for
the system.

In the portion of the Contract describing the property and fixtures to convey
(Paragraph 10.), the language identifies the listed items that convey, “if existing”. Any
wall mounted electronic components do not convey, eliminating confusion over
televisions and systems affixed to the property, which now clearly do not convey. The
paragraph also acknowledges that certain leased systems such as water treatment systems
or security systems do not convey unless otherwise agreed.
It must be considered that the GCAAR Contract requires the use of a
Jurisdictional Addendum. Without such addendum, there are no notice provisions, and
many of the statutory requirements of Maryland Law are absent. In our next article, we
will continue with the discussion of additional provisions of the GCAAR Contract, and
discuss how to avoid problems or confusion.

Real Estate Title Company in Gaithersburg, MD
177 Kentlands Blvd.