Just when I know the California Residential Purchase Agreement (RPA) by heart — I can practically recite each paragraph in my sleep — the purchase agreement is being revamped in 2010 by the California Association of REALTORS (C.A.R.). Nothing is written in stone yet, and there may be many more additions and deletions before C.A.R. is finished with its revision, but holy toledo, some of these proposed changes are huge.
There are really good changes proposed such as including the fact that the buyer’s earnest money deposit may be handled in accordance with the short sale addendum, and a notice that increased deposits require a separate liquidated damages clause initialed by all parties — which has always been true but never spelled out so clearly before in the RPA.
A proposed change that is not so good for my Sacramento buyers is the type of financing — whether it’s a conventional mortgage, FHA loan or VA — is now clearly indicated on the purchase agreement. In the past, one had to identify FHA / VA financing only if the seller was contributing. It meant that if a buyer was putting down, say, 10%, and the preapproval letter did not indicate the type of financing, neither the seller nor listing agent could really tell what type of loan the buyer intended to get without asking. Good for sellers, bad for buyers.
The WPA (wood destroying pest addendum) may now require seller payment for completion. In the old WPA, we had the option of designating whether the buyer or the seller would pay for a pest completion and whether it covered Section I or II. The proposed version specifies Section I. Good for buyers, bad for sellers.
It spells out that flat screen TVs and speakers, which are not attached, even if a bracket is used, remain personal property and are not a fixture. I also like the fact that is may require sellers to keep all the utilities on for buyer’s inspections and investigations through the final walk-through.
My favorite paragraph, 14B has several proposed changes, including that sellers no longer can give buyers 24 hours to perform. Now it must be a minimum of 2 days. But it also clearly spells out that the seller must release the earnest money deposit on contract cancellation, if the cancellation falls under the time periods when a buyer has a legal right to cancel.
But a proposed change that I imagine many real estate agents will welcome with open arms is the provision for buyers and sellers to sign electronically at paragraph 30 and 31. I know that thrills me to no end. I just hope the lenders jump on board with this as so many insist on wet ink signatures.
I realize not everybody’s favorite thing to do is read purchase contracts, but there are so many proposed changes in this one that I think it’s prudent to review what’s coming up down the pipeline. It will affect all California real estate agents and their buyers / sellers. These may not take affect until April, assuming all the changes are approved, but April is one of the busiest months in real estate for most of us. If I were you, I’d read it now. Here is the link for new drafts and forms from C.A.R.
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.
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