In our last two articles, we discussed Paragraphs One (1) through Seventeen (17) of the recently revised Regional Sales Contract. This will conclude our review of some of the changes and the unique provisions of that Contract.
Paragraph 19, Title, affords the Seller the right to terminate the contract (and refund the deposit to the Buyer) if settlement is delayed by more than ten (10) days due to inability to obtain a title report. This emphasizes the need to promptly send the Contract to a Title Attorney to start the settlement process and avoid unnecessary delays. Standard provisions guarantying clear title, free and clear of liens, also apply to this Paragraph. There is a reminder at the end of the Paragraph that Purchasers should obtain competent advice regarding the method of holding title, as there may be serious legal and tax consequences for Purchasers.
The Possession Date, Paragraph (20), admonishes the Seller that the Purchaser may be entitled to damages, costs and legal fees if the Seller wrongfully fails to deliver possession at the time of settlement and the Purchaser suffers damages as a result.
According to the terms of Paragraph 23, all fuel oils in the property at the time of settlement become the property of the Purchaser, with no reimbursement to the Seller. We have seen too many situations where the agent has improvidently counseled the Seller to “top” off the tank before closing, and the Seller then attempts to hold the agent responsible for the cost of the additional fuel when it is learned that reimbursement is not part of the Contract. Understanding of this Contract provision will avoid such mistakes.
The Default, Paragraph 26, enumerates a number of events of default, primarily related to failure of Purchasers to lock in interest rates or otherwise comply with reasonable lender requirements. However, Subsection F. is uniquely interesting because it treats failure to apply for homeowner’s insurance within seven (7) days of Ratification as an event of default as well. In Paragraph 27 F. there is an explanation of the need to obtain insurance promptly, because prior claims by the Purchaser, or by the Seller with respect to the subject property, could result in an increased cost or inability to procure homeowner’s insurance at all. The implication is to alert parties to the CLUE Report (Comprehensive Loss Underwriting Exchange), which is the insurance industry’s clearinghouse for information about prior insurance claims.
Finally, Paragraph 27 is a comprehensive (yet probably legally deficient) attempt to limit the liability of agents and brokers. The concepts, however, are helpful in alerting Purchasers of their rights to investigate and inspect for property condition, water quality, zoning and any other issues that may affect the desirability, value or use of the property. Subsection E. is new and reminds Purchasers that their property taxes could “substantially increase” following settlement. The Definitions provisions in Paragraph 29 determine that a day is a calendar day unless otherwise provided, and that time periods end at 9:00 p.m. on the day specified.
If an offer is submitted on your listing on the Regional Sales Contract form, review of this series of articles should help you identify many of the issues to be considered and evaluated.