Contracts 101
If
selling or buying, contracts will be involved, it is prudent to be familiar
with all you are signing. I know
that many of you are guilty of simply signing documents without reading the
fine print. I know do it myself! If signing a gym membership or a waiver
to rent a jet ski you just glance and sign, right? However, it is crucial that you fully understand the
points of your contract for sale and purchase.
Dates
Dates
on contracts are well laid out, but some buyers/sellers may have trouble fully
understanding due to one common misunderstanding - ‘business days’. The term ‘business days’ is well known
to be the standard Monday through Friday business workweek; and while Florida
contracts did at one time refer to time periods as ‘business days’ they no
longer do. All Florida
contracts are now time framed as ‘calendar days’. Don’t let this be your misunderstanding of the
contract. A 14 day ‘business day’
period can be 20 calendar days!
Escrow Funds
All
contracts will have a section outlining the amount of funds to be escrowed. These funds are held by a third party
and may not be released unless both buyer and seller agree. Escrow will often be placed upon
acceptance of an offer with an additional payment made within an agreed time
frame. As these funds are in place
to protect the seller as well as show buyers promise to perform, it is
important that dates are met as drafted on contract. A lack of depositing funds by agreed upon dates can and will
void the contract, putting both buyer and seller at risk.
“AS IS” vs.
“FAR/BAR-1”
While
there are other options, there are generally two contracts to purchase that you
will run across when buying or selling Florida Real Estate. While familiar to each other, there are
certain terms within both that you need to be aware of. An “AS IS” contract is just that, the
home is sold as is. There are no
repair credits to be made by seller, but buyer can walk for any reason
deemed within the specified time frame. Make sure you are aware of the inspection expiration
date and that it does not exceed an acceptable period. If you are going to contract with a
FAR/BAR-1 you must be aware that if left untouched the seller states they will
pay up to 4.5% of purchase price for any repairs/WDO/open permits. That’s $13,500 on a $300,000 home. It’s not a number a seller wants to
learn about at closing.
Keep
these traps in your radar when going to contract, and be sure once under
contract that you stay on top of them all. An educated buyer/sellers is protected buyer/seller!!
