Contracts and Contract Changes

1. Contracts and Contract Changes Subtitle

2. Kerry Kidwell, Instructor • I hour of PAAR contract changes • Break • 2 more hours of contract basics • Stay for all 3 hours for 3 hours of CE credit • Slides available at RealEstateEducation.Info

3. How changes happen • Connie Carmody - liaison • Try to keep it to once a year • Note dates on bottom of forms • Be sure to use current one • PBA= Peoria County Bar Assoc

4. Form 1101 Residential Sales Contract

7. Form 1200 Amendments to Residential Sales Contract

14. Form 1211 Inspection Repair Amendment – 14 days

17. Form 1217 Inspection Repair Amendment – 21 days

20. Form 1208 Residential Sales Contract Change Amendment

22. Coming Soon • Lender’s Repair Amendment • Related changes to Financing Amendment

23. Questions?

25. Contracts

26. A simpler time . . .

27. A simpler time . . .

28. Broker / Attorney Accord Agreement between PAAR and the Peoria Bar Association

30. Basic Contract Law Contract must be between competent legal parties to do or not do something

31. Void Contacts have no legal force or effect although essential elements exist Five ways to be NULL and VOID: Illegal purpose Impossible to complete or act of God Forged Lacks consideration – earnest money? Insanity

32. Voidable Contracts May or may not be enforceable Failure of parties to meet some legal requirement Can be voided by innocent / damaged party

33. Voidable Contracts Causes by: • Minor • Intoxication • Fraud • Mistake of law • Mistake of fact • Duress

34. Contract Writing Paper or Electronic? – Get permission upfront to use electronic Print clearly – or type Everything is negotiable, even preprinted standardized language Any changes must be initialed by both parties

35. Contract Writing An agent, without power of attorney, cannot sign or initial for a client Be sure to use contracts commonly used in the area Do NOT leave any blanks that could be filled in later (state law) Verbal comments mean NOTHING under contract law – parol evidence rule

36. Ways to Terminate an offer PRIOR to acceptance Expiration of time - “Time is of the Essence” Death or insanity of offeror Revocation by offeror Reasonable period of time Rejection of offer

37. Remember . . . . . . to have a binding contract it must be accepted, and acceptance communicated back!

38. The Listing ContractForm 1118 Rev 10/17 Top – Address and LEGAL names Who are the sellers? • Gross Price – write like a check. Terms should agree with profile sheet (FHA, Conv., VA, Contract for Deed) • Date – get the year right! • Include your company’s fee, protection period and co-op split – split could vary • Changes to this contract must be in writing

39. The Listing Contract • Explains when your fee is earned and payable • Earnest money forfeiture – company policy • Whoever wins a lawsuit gets legal fees paid • Indemnifies agent from misrepresentations by the Seller. Seller says he has no other contract. Listing company and PAAR not liable for loss of valuables or privacy and personal injury.

40. The Listing Contract 9. Special Assessment covered • Dues, assessment and maintenance fees • Refers to Seller Disclosure. Seller must complete, NOT THE AGENT!

41. The Listing Contract 12. Refers to lead-based paint forms 13. Refers to radon disclosure 14. Seller to furnish title commitment & zoning certificate. Fill in deed per company policy. Preliminary title work may be ordered. 15. Home warranty – select & fill in price, if applicable 16. Who is designated agent? Discuss open houses. Additional Designated Agent form.

42. The Listing Contract 17. May not talk about buyers you may have represented 18. Discuss dual agency. Sign form if consent. (8-8) • Other agents in your office represent buyers. • Refer all prospects to listing agent 21. Fair housing language. Be sure they understand ! 22. Must provide minimum services.

43. The Listing Contract 23. Discuss lock boxes and how they work. Anyone inspecting can take pictures or videos. 24. Explain MLS. Forms for exclusion. Only listing broker can release seller. • Explain that they acknowledge they have read this AND the profile sheet and will go into MLS within TWO business days. • Date & sign. Indicate city and state where signed. • Complete with company and agent names

44. Short Sale Listing AmendmentForm 1215 Rev 8/11 1. Authorization to disclose 2. Disclosures A. may owe at closing B. may cause tax issue C. alternatives D. may not stop foreclosure E. get a lawyer and an accountant 3. Agent needs more information 4. HAFA approved?

45. The Sales ContractForm 1101 Rev1/19

46. The Sales Contract • Use for single-family residential • Use letter of intent or proposal letter for others • Only buyers, sellers and attorneys can add or change the language in a contract • Introduce this form to buyer and seller early • Strike/Type as much as possible • Recommended to put SOMETHING in each blank • Both sides initial at bottom of each page

47. The Sales Contract Dual agency confirmation first! 1. Common address, including town & zip Tax id# - legal description – county approximate lot size –zoning • Time for acceptance – be reasonable! • Price & good funds • Earnest money- must deliver by next business day to escrowee. Seller gives written notice of default. 2 days for buyer to cure. Amount of escrow and who holds

48. The Sales Contract • Method of Payment - Financed or cash? Owner-occupied or investor? Right to see proof of funds. Closing fee paid by? Closing on ______ Look at the calendar! • Possession – check a or b. Seller needs to leave broom clean. Consider using pods.

49. The Sales Contract • Conveyance- type of deed and 5 days to declare how title is to be taken • List items that stay and don’t stay. A bill of sale should be provided by seller, at buyer’s request. Water softener, propane tank and security system leased or owned? N/A if not there. • Condition - choose one. Buyer has 2 days after possession to give notice – not 2 more days to inspect! New construction amendment.

50. The Sales Contract 11. “Termite” clause. Buyer pays for inspection. Seller pays for treatment. “Premises” only. Must be done at least 10 days before closing. If structural damage, Seller can fix or return escrow money. If damage is more than $1,500, buyer can opt out. Need a written estimate. 12. Seller must keep insurance until closing. If damaged, Buyer can keep insurance or cancel.