CAR has announced that the new RPA will be released in November of 2014. There are several substantive changes to the form. However, there are six (6) changes that will concern real estate agents and brokers the most:
1. All inspections are treated the same. This includes wood destroying pests, organisms and repairs, as well as general home inspections.
2. The loan contingency period has been extended from 17 to 21 CALENDAR days. The option to allow the contingency to remain until the loan is funded has been removed.
3. The provision for the earnest money deposit that does not provide for the buyer to use a check to escrow is changed to electronic deposit. The default provision remains.
4. The removal of the loan contingency does not remove the appraisal contingency. Both of these contingencies are treated as independent of each other. If the appraisal contingency is removed, and the buyer’s lender rejects the loan due to a low appraisal, the lender’s low appraisal cannot be used to cancel the contract. If the buyer attempts to use this method to cancel the contract, he/she may be subject to the penalties for breach of the contract.
5. The provision that states what is included in the sale provides specifically for “home automation systems”. These systems allow for remote control of lights, appliances, the alarm and heating and cooling systems, as well as others. Most of these systems require a monthly fee and maintenance agreements. If so, the buyer should be made aware, in writing, that at the close of escrow, such agreements shall be the responsibility of the buyer.
6. New Paragraph: this provision specifically deals with items included in the sale that are not owned by the seller and could cause a lien to be recorded against the property.
As a real estate agent or broker, you need to review this new RPA and become very familiar with the new terms and conditions. CAR has made available to all members several training resources to guide you through the agreement. These include but are not limited to, live lecture classes, online courses, webinars, and agent training guides.
Written by Jim Allison