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CONTRACT CONFUSION
May 9th, 2017 1:30 PM

Barbara’s Blog:

As per the latest Florida Realtor magazine, a new version of the Florida Realtors/Florida Bar Residential Contract and its AS IS companions debuted in April.  One of the most significant changes was to the “Financing” clause. 

The contract no longer mentions “Loan Commitment” but has been replaced by the term “Loan Approval.”  The default time was also changed back to 30 days instead of the extended 45 days because loan approvals are no longer being slowed by the new TILA/RESPA rules. 

One of the most confusing clauses is that now the buyer no longer has a unilateral right to terminate the contract for failure to obtain Loan Approval after the Loan Approval Period ends.  Instead, if a buyer does not obtain Loan Approval within the Loan Approval Period, the buyer may notify the seller of this, in writing, and elect to either terminate the contract or waive the Loan Approval.  If by the expiration of the Loan Approval Period a buyer does not give the seller written notification whether or not the loan has been approved, new language specifies the Loan Approval will be considered obtained.  This results in the buyer’s deposit being at risk if the buyer fails to close, unless the failure is due to (1) seller default, (2) property-related conditions of the Loan Approval are not met, or (3) the appraisal does not support the loan. 

Then there is a seller’s exception that can impact whether or not the contract goes forward.  If a seller has received no written notification – either that a loan was or was not obtained – the seller may unilaterally cancel the contract by giving the buyer written notice within a 3-day period after expiration of the buyer’s Loan  Approval Period.  But if the seller does nothing during this 3-day period, the seller’s right to terminate the contract also expires. 

So, are you thoroughly confused yet?  All the more reason to use a seasoned realtor rather than try to sell a home by owner.  The real estate laws and disclosures change continuously and making sure you know your rights is critical to ensure a smooth transaction and closing. 

Written by Barbara Doeringer


Posted in:Real Estate
Posted by Allen Doeringer on May 9th, 2017 1:30 PMPost a Comment

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