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Colorado Course – Chapter 21
CHAPTER 21 COMMISSION-REQUIRED CONTRACT FORMS TABLE OF CONTENTS page
Directions for all Forms tested on license exam & Rule F – 1 Discussion: "Commission Position on Use of Licensee Buy-Out" – 11 Licensee Buy-Out Addendum – 12 Discussion: "Lead Based Paint Disclosures – 14 Lead-Based Paint Disclosure (Sales) – 15 Discussion: Short Sale – 17 Short Sale Addendum (Listing) – 20 Short Sale Addendum (Sales Contract) – 22 Brokerage Disclosure to Buyer/Tenant – 25 Brokerage Disclosure to Seller (Sale By Owner) – 27 Definitions of Working Relationships – 29 Discussion: Seller’s Disclosure Requirements – 30 Seller’s Property Disclosure – 33 Discussion: Square Footage – 40 Square Footage Disclosure – 43 Inspection Objection – 44 Inspection Resolution – 45 Homeowner Warning Notice – 46 Notice of Cancellation – 47 Notice to Terminate – 48 Seller Authorization – 49 Seller Warning – Equity Skimming – 50 Real Property Transfer Declaration – 51 Discussion: Closing Instructions – 53 Closing Instructions – 56 Post-Closing Occupancy Agreement – 59 Green Energy Disclosure – 61 Discussion: "Common Questions about the Change of Status Form" – 65 Change of Status – 66 Residential Addendum to Sales Contract – 67 Exclusive Right to Buy Listing Contract – 69 Introduction to Exclusive Right-to-Sell Listing Contract – 75 Analysis - Exclusive Right-to-Sell Listing Contract – 76 Instructions for Exercise - "Listing Problem #1" – 90
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Colorado Course – Chapter 21
Exclusive Right-to-Sell Listing Contract – to complete – 92 Introduction to Sales Contract – 100 Analysis - Contract to Buy and Sell Real Estate – 104 Instructions for Problem #1 - "Sales Contract - Swan to Hopper" – 136 Contract to Buy and Sell Real Estate – to fill-in for Problem #1 – 139 Instructions for "Counterproposal – Swan to Hopper" – 156 Counterproposal – to fill-in – 157 Instructions for "Agreement to Extend - Swan to Hopper" – 160 Agreement to Extend Contract – to fill-in – 161 Instructions for Exercise - "Agreement to Amend - Swan to Hopper" – 164 Agreement to Amend Contract – to fill-in – 165 Answer Key Table of Contents – 167 Listing Contract Answer Key – 168 Sales Contract Answer Key – 176 Counterproposal Answer Key – 192 Agreement to Extend Answer Key – 195 Agreement to Amend Answer Key – 197
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Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
DIRECTIONS FOR STUDYING THE FORMS TESTED ON LICENSE EXAM Notes: It is essential to know all of the pertinent Rule F forms. You will be tested on the state License exam on two aspects of forms: 1) You will need to know the exact contents of several forms. These forms are set out in full in the chapter. You will be tested heavily on what these forms say, with only minor variations between the "wrong" answers and the "correct" answer. These forms must be studied particularly carefully, because they are certain to be tested: - Exclusive Right to Sell Listing Agreement - Contract to Buy and Sell - Licensee Buy-Out Addendum - Exclusive Right to Buy Agreement 2) You will need to know the language and understand the purpose of the following additional forms, because you will be asked about them on the state license exam These forms are reproduced in this chapter: - Lead-Based Paint Disclosures (Sales) - Short Sale Addendum (Listing) / (Sales) - Brokerage Disclosure to Buyer/ - Brokerage Disclosure to Seller (Sale by Owner) - Definitions of Working - Seller's Property Disclosure (Residential - Change of Status - Square Footage - Homeowner Warning Notice - Notice of Cancel (CO Foreclosure Protection Act) - Notice to Terminate - Inspection Objection - Inspection Resolution - Seller Authorization (Lienholders to disclose info) - Seller Warning – Equity Skimming - Real Property Transfer Declaration - Closing Instructions - Post Closing Occupancy Agreement - Green Energy Disclosure - Sales Contract Addendum Form - Exclusive Right to Buy Form - Counterproposal (in Contract Problem – end Ch. 21) - Agreement To Amend/Extend (in Contract Problem – end Ch. 21) - Strict Due-on-Sale Deed of Trust (in Closings Course) - Promissory Note (in Closings Course) 4) You need to be familiar with the list of “Optional” forms These are contracts that are made available by the Real Estate Commission, but are not
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Colorado Course – Chapter 21
required for use by Licensees (according to Rule F.) In other words, these forms do not “fall under the purview of Rule F” and therefore brokers may use their own versions of the form. This fact will be tested on the state license exam, (because the “optional” forms are easy to confuse with the mandatory Rule-F forms.) 5) The Exclusive Right-to-Sell Listing Contract and the Contract to Buy and Sell Real Estate are heavily tested on the state exam. Therefore, they will be thoroughly detailed in these materials, with line-by-line descriptions of the contents, and then three problems requiring the student to complete the contracts with the given information It bears repeating (from #1, above,) that other forms tested on the state license exam include the Licensee Buy-Out Addendum and the Right to Buy Contract. The student should strive to carefully study those forms – to prepare for test questions on the state exam which will inevitably crop up. The state license exam will also contain questions about some other forms such as the Square Footage Disclosure, Change of Status, and Seller’s Property Disclosure, so we have provided those forms for you here. Although we do not walk you through each line of these forms, you must understand their contents! 6) You will notice that starting in this Chapter 21, the system used in all the previous chapters (text, then short-answer questions, then quiz) has been replaced with the more hands-on approach of filling in the contracts based on questions. Please note that you will not be expected to fill in contract forms on the state license exam. This method is, however, best for reinforcing the information contained in these forms that will be tested on that exam. 7) If you go to the Real Estate Commission’s website, you might notice that there are some contract forms not reproduced in this material. There are several reasons for this, not the least of which is that they would greatly expand these workbooks. Another reason is that some forms are similar to forms in this chapter, but simply cover a different corner of the real world. Therefore, we only reproduce one of the many varieties of Sales Contracts and Listing Agreements. Most importantly, these study materials omit some forms because the state license exam will not contain questions about the contents of that form In part, this is because the contents of some forms apply to a comparatively small percentage of real estate transactions – whereas the license exam tends to focus on much more common situations, such as residential sales In addition, some forms are so new that the license exam has not had a chance to create,
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assess and include questions in the exam (a complicated and lengthy process) about some forms. The student is strongly advised to never refer to outside sources when fulfilling the educational requirements and preparing for the license exam: If it were important, we’d cover it in these materials – so you need not do outside research to read these omitted forms. After you receive your license, however, all forms current at that time will be located on the Real Estate Commission’s website. 8) The facts of the final "contract" problem in this Chapter 21 will blend into the next course, CLOSINGS, and the information from the problem will be used to complete the first closings problem In those Closings problems, you will also be exposed to the Deeds of Trust, Promissory Notes, and Worksheets for Settlement. COMMISSION APPROVED FORMS Through the adoption and promulgation of Commission Rule F, it became compulsory for all real estate brokers licensed by the State of Colorado to use Commission approved forms in most of their contracting 12-61-803(4) C.R.S grants the Colorado Real Estate Commission statutory authority to promulgate standard forms for use by licensees. One of the major purposes of the rule is to help to insure broker compliance with the Colorado Supreme Court Conway-Bogue decision (See case summary in Chapter 16) A second purpose is to help promote uniformity in contracting to the end that the public is better protected The privileges granted should not be abused by the real estate broker. F-1. Permitted and Prohibited Form Modifications (a) No modifications shall be made to a Commission-approved form by a broker except as provided in rules promulgated by the Commission and as set forth in this Rule F-1 through F-7. For purposes of Rule F-1 through F-7, the term “Commission-approved form” means any form promulgated by the Commission; the term “broker” shall also include brokerage firm. (b) A broker may add its firm name, address, telephone, e-mail, trademark or other identifying information on a Commission-approved form. (c) A broker may add initial lines at the bottom of a page of any Commissionapproved form. (d) Any deletion to the printed body of a Commission-approved form, or any “Additional Provision” or “Addenda” which by its terms serves to amend or delete portions of the approved language, must result from negotiations or the instruction(s) of a party to the transaction and must be made directly on the
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printed body of the form by striking through the amended or deleted portion in a legible manner that does not obscure the deletion that has been made. (e) Blank spaces on a Commission-approved form may be lengthened or shortened to accommodate the applicable data or information. (f) Provisions that are inserted into blank spaces must be printed in a style or type that clearly differentiates such insertions from the style or type used for the Commission-approved form language. (g) A broker may omit part or all of the following provisions of a Commissionapproved ( changed font ) “Contract to Buy and Sell Real Estate” (even if the provision is identified by a different Section number), or corresponding provisions in other Commission-approved forms, if such provisions do not apply to the transaction. In the event any provision is omitted, the provision’s caption or heading must remain unaltered on the form followed by the word “OMITTED” . 1. Section 2.5 Inclusions in its entirety or any of its subsections 2. Section 2.6 Exclusions 3. Section 4.4 Seller Concessions 4. Section 4.5 New Loan in its entirety or any of its subsections 5. Section 4.6 Assumption 6. Section 4.7 Seller or Private Financing 7. Section 5 Financing Conditions and Obligations in its entirety or any of its sections 8. Section 6 Appraisal Provisions in its entirety or any of its subsections 9. Section 7.3 Homeowners’ Association Documents in its entirety or any of its subsections 10. Section 8.4 Special Taxing Districts 11. Section 8.5 Right of First Refusal or Contract Approval 12. Section 10.6 Due Diligence Documents 13. Section 10.7 Due Diligence Documents Conditions in its entirety or any of its subsections 14. Section 10.8 Due Diligence-Environmental, ADA (CBS2, CBS3, CBS4) 15. Section 10.7.3 Source of Potable Water (CBS4) 16. Section 10.9 Existing Leases; Modification of Existing Leases; New Leases (CBS3, CBS4) 17. Section 10.15 Existing Leases; Modification of Existing Leases; New Leases (CBS2) 18. Section 11 Tenant Estoppel Statements in its entirety or any of its subsections (CBS2, CBS3, CBS4) 19. Section 15.3 Status and Transfer Letter Fees 20. Section 15.4 Local Transfer Tax
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21. Section 15.6 Sales and Use Tax 22. Section 16.2 Rents 23. Section 16.3 Association Assessments (h) A broker may add an additional page to the “Contract to Buy and Sell Real Estate” , “Counterproposal” and the “Agreement to Amend/Extend Contract” , following such document, that contains the dates and deadlines information set forth in § 3, arranged in chronological date sequence. (i) A broker may omit part or all of the following provisions of the “Counterproposal” and the “Agreement to Amend/Extend Contract” if such provisions do not apply to the transaction. In the event any provision is omitted, the provision’s caption or heading must remain unaltered on the form followed by the words “OMITTED” . 1. 2.
Section 3 Dates and Deadlines table Section 4 Purchase Price and Terms [in the Counterproposal only]
(j) A broker may substitute the term “Landlord” for the term “Seller” and the term “Tenant” for the term “Buyer” in the Brokerage Disclosure to Buyer form, in the Brokerage Disclosure to Seller and Definitions of Working Relationships form when making disclosures in a lease transaction (or use the separate Brokerage Disclosure To Tenant form) . (k) A broker may add signature lines and identifying labels for the parties signatures on a Commission-approved form. (l) A broker may modify, strike or delete such language on a Commissionapproved form as the Commission may from time to time authorize to be modified, stricken or deleted. F-2 Additional Provisions (a) The “Additional Provisions” section of a Commission-approved form must contain only those transaction-specific terms or acknowledgments that result from negotiations or the instruction(s) of the party(ies) to the transaction. (b) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in the “Additional Provisions” section of a Commission-approved form. F-3 Addenda (a) If a broker originates or initiates the use of a preprinted or prepared addendum that modifies or adds to the terms of a Commission-approved contract form which does not result from the negotiations of the parties, such addendum must be prepared by:
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(1) an attorney representing the broker or brokerage firm; or (2) a principal party to the transaction; or (3) an attorney representing a principal party. (b) An addendum permitted by the Rule F-3(a), shall not be included within the body of, or in the “Additional Provisions” section of, a Commissionapproved form. (c) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in an addendum. (d) If an addendum is prepared by a broker’s attorney, the following disclosure must appear on each page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission It was prepared by (insert licensed name of broker or brokerage firm’s) legal counsel.” Broker must retain the document prepared by broker’s attorney for 4 years from the date such addendum was last used by the Broker and provide said document and the name of the attorney or law firm that prepared the addendum to the Commission upon request. (e) If an addendum to a listing, tenant or right to buy contract, is prepared by a broker or brokerage firm, the following disclosure must appear on each page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm).” F-4 Prohibited Provisions No contract provision, including modifications permitted by Rules F-1 through F-3, shall relieve a broker from compliance with the real estate license law, section 12-61-101, etseq., or the Rules of the Commission. Pursuant to Rule E-12, when a written agreement contains a provision entitling the broker to a commission on a sale or purchase made after the expiration of the agreement, such provision must refer only to those person or properties with whom or on which the broker negotiated during the term of the agreement, and whose names or addresses, were submitted in writing to the seller or buyer during the term of the agreement, including any extension thereof. F-5 Explanation of Permitted Modifications The broker shall explain all permitted modifications, deletions, omissions, insertions, additional provisions and addenda to the principal party and must
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recommend that the parties obtain expert advice as to the material matters that are beyond the expertise of the broker. F-6 Commission-Approved Form Reproduction: (a) Commission-approved forms used by a broker, including permitted modification made by a broker, shall be legible. (b) Brokers generating Commission-approved forms through the use of a computer shall ensure that a security software program is utilized that prevents inadvertent change or prohibited modification of Commissionapproved forms by the broker or other computer user. F-7 Forms Promulgated by the Commission: Real estate brokers are required to use Commission-approved forms as appropriate to a transaction or circumstance to which a relevant form is applicable. Commission-approved forms are posted on the Division of Real Estate’s website. Effective June 2009, the Commission will no longer post forms in the Code of Colorado Regulations. The Commission hereby withdraws all forms from the Code of Colorado Regulations. In instances when the Commission has not developed an approved form within the purview of this rule, and other forms are used, they are not governed by Rule F. Other forms used by a broker shall not be prepared by a broker, unless otherwise permitted by law. To obtain the forms promulgated by the real estate commission that are within the purview of Rule F, visit the Division of Real Estate website at: https://www.colorado.gov/pacific/dora/division-real-estate-contracts-and-forms or the Division of Real Estate’s offices at 1560 Broadway, Suite 925, Denver, Colorado 80202. THE FOLLOWING ARE THE FORMS PROMULGATED BY THE REAL ESTATE COMMISSION AND ARE WITHIN THE PURVIEW OF RULE F: REAL ESTATE COMMISSION APPROVED FORMS The student must memorize this list of forms, as you will be tested on which forms are “Rule F” forms. Note: Although listed here, some forms are not reproduced in these course materials – because their contents are not currently necessary to fulfill the educational requirements and are not tested on the license exam If you need - after completing the education - you may access those other forms on the Colorado Real Estate Commission’s website, https://www.colorado.gov/pacific/dora/division-real-estate-contracts-and-forms The contents of the forms that are reproduced in these materials will be tested on the state license exam. Study them carefully to answer final exam and Prep Exam questions, and later in preparation for the license exam.
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Listing Contracts LC50 Exclusive Right to Sell BC60 Exclusive Right to Buy LC57 Exclusive Right-to-Lease Listing Contract ETC59 Exclusive Tenant Contract Sales Contracts CBS1 Contract to Buy and Sell Real Estate-Residential CBS2 Contract to Buy and Sell Real Estate (Income-Residential) CBS3 Contract to Buy and Sell Real Estate - Commercial CBS4 Contract to Buy and Sell Real Estate-Land CBSF1 Contract to Buy and Sell Real Estate (Colorado Foreclosure Protection Act) Addenda to Contracts LB36 Licensee Buy-Out Addendum to Contract to Buy & Sell Real Estate PCO70 Post Closing Occupancy Agreement RA33 Residential Addendum to Contract to Buy & Sell Real Estate SWA35 Source of Water Addendum to Contract to Buy and Sell Real Estate EX32 Exchange Addendum to Contract to Buy and Sell Real Estate BDA55 Brokerage Duties Addendum to Property Management Agreement SSA38 Short Sale Addendum (Contract to Buy and Sell Real Estate) EBA53 Exclusive Brokerage Listing Addendum to Exclusive Right-to-Sell Listing Contract SSA39 Short Sale Addendum (Seller Listing Contract) OLA54 Open Listing Addendum to Exclusive Right-to-Sell Listing Contract Disclosure Documents LP45 Lead-Based Paint Disclosures (Sales) LP46 Lead-Based Paint Disclosures (Rentals) BD 24 Brokerage Disclosure to Buyer -Tenant BDT 20 Brokerage Disclosure to Tenant BDD56 Brokerage Duties Disclosure to Seller SD16 Brokerage Disclosure to Seller (Sale by Owner) DSD17 Dual Status Disclosure (Real Estate Broker & Mortgage Broker) DD25 Definitions of Working Relationships SPD19 Seller's Property Disclosure (All Types of Properties) SPD29 Seller's Property Disclosure (Residential) CS 23 Change of Status SF 94 Seller Warning (Colorado Foreclosure Protection Act) Estoppel Statement Green Disclosure Notice of Documents NTC43 Inspection Objection NTC43R Inspection Resolution
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NTT44 NCF34 SA20 SWF30 HWN65
Colorado Course – Chapter 21
Notice to Terminate Notice of Cancellation (Colorado Foreclosure Protection Act) Seller Authorization Seller Warning (Colorado Foreclosure Protection Act) Homeowner Warning Notice
Counterproposal CP 40 Counterproposal Agreements to Amend/Extend Contract AE41 Agreement to Amend/Extend Contract AE42 Agreement to Amend/Extend Closings CL8 EM9 SS60
Closing Instructions Earnest Money Receipt Closing Statement
Deeds of Trust TD72 Deed of Trust (Due on Transfer - Strict) TD73 Deed of Trust (Due on Transfer-Creditworthy) TD74 Deed of Trust (Assumable - Not due on transfer) Promissory Notes EMP Earnest Money Promissory Note NTD82 Promissory Note for Deed of Trust (UCCC - No Default Rate) NTD81 Promissory Note for Deed of Trust Optional Forms SS61 Worksheet for Real Estate Settlement TD-1000 Real Property Transfer Declaration EMR83 Earnest Money Release CICC Common Interest Community Checklist for Brokerage Firm Checklist Listing Firm's Well Checklist 34S Colorado Statutory Power of Attorney for Property LP47 Lead-Based Paint Obligations of Seller LP48 Lead-Based Paint Obligations of Landlord Well Permit Guide GWS-12 Registration of existing well GWS-11 Change of ownership/address - Correction of well location Fee schedule Division of Water Resources Fee Schedule S.B.87 Section 8.4 CBS Substitute Language Special Taxing Districts On the following pages are the forms you must know and understand in order to fulfill the educational requirements for the Associate Broker license.
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As mentioned above, you will also be extensively tested on these forms on the state license exam. Although we summarize several forms and perform section-by-section analyses on other forms, you will be tested – both on our final and Prep exams and the state license exams (Colorado portion) – on all of the forms reproduced. You must be familiar with the content and text of all of the forms presented below, in order to pass these exams.
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Colorado Course – Chapter 21
COMMISSION POSITION ON USE OF "LICENSEE BUYOUT ADDENDUM" The Real Estate Commission, through Rule F, requires real estate licensees to use the Commission approved "Licensee Buyout Addendum to Contract to Buy and Sell Real Estate", when purchasing certain listed properties. The Licensee Buy Out Addendum to Contract to Buy and Sell Real Estate is to be used when a broker enters into a contract to purchase a property either: (1) concurrent with the listing of such property; (2) as an inducement or to facilitate the property owner’s purchase of another property; or (3) continues to market that property on behalf of the owner under an existing listing contract. If any other forms of contract are used under the above-cited circumstances, they must be prepared by an attorney representing one of the parties to each transaction. Unless one of the above situations exists, licensees are not required to use the Buyout Addendum. The term "licensee", as used in Rule F, refers to the individual licensee who has personally taken a listing or to the listing broker or brokerage entity if the buyout is to be accomplished by that broker or brokerage entity. If the listing licensee or broker desires to acquire a listed property solely for personal use or future resale and not as an inducement to the owner, the licensee or broker is advised to: (1) clearly sever their agency or listing relationship in writing; (2) renounce the right to any commission, fee or compensation in conjunction with acquisition of the listed property; and, (3) advise the owner to seek other assistance, representation or legal advice. Future resale of a purchased property, as referred to above, means resale to a third party purchaser with whom the licensee has not negotiated during the listing period. Resale to a person with whom a licensee has conducted previous negotiations concerning the subject property during the listing period (often referred to as a "pocket buyer"), would constitute a violation of 12-61-113(1)(n) in the absence of full written disclosure and acknowledgment by the owner.
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (LB36-10-12) (Mandatory 1-13) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
LICENSEE BUY-OUT ADDENDUM TO CONTRACT TO BUY AND SELL REAL ESTATE
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Date: 1. ADDENDUM TO CONTRACT TO BUY AND SELL REAL ESTATE. This Licensee Buy-Out Addendum , (Contract), (Addendum) is made part of that Contract to Buy and Sell Real Estate dated between Seller and the licensee named below, as Buyer, for the purchase and sale of the Property .
known as No. Street Address
City
State
Zip
All terms of this Addendum have the same meaning as the terms set forth in the Contract. This Addendum shall control in the event of any conflict with the Contract to which it is attached, except, however, this Addendum is subject to the provisions of Good Faith (§ 29) of the Contract. 2.
PROVISIONS TO BE DELETED. The following provisions of the Contract are hereby deleted: 2.1. Section 6.2, Appraisal Condition. 2.2. Section 21.1.2, Liquidated Damages, Applicable. 2.3. Section 21.2, If Seller is in Default. 2.4. Sections 33, 34, Broker’s Acknowledgments and Compensation Disclosure.
3. NOTICE. The following provision of the Contract is amended as follows: Physical Delivery (§ 27.1) is hereby deleted, and the following is substituted as § 27.1: Except as provided in Electronic Delivery (§ 27.2), all notices must be in writing. Any notice to Buyer shall be effective when physically received by Buyer, any individual buyer, or any representative of Buyer. Any notice to Seller shall be effective when physically received by Seller, any individual seller, or any representative of Seller. 4. TERMINATION. The Contract may be terminated at any time by Seller upon written notice to Buyer. Any termination of the Contract shall not affect the listing contract for the Property (Listing Contract). Buyer shall submit all offers to Seller, pursuant to the Listing Contract, or received by Buyer prior to Closing hereunder. If Seller accepts any offer submitted by Listing Brokerage Firm or Buyer after the expiration of the Listing Contract, then, upon Closing of the resulting contract, the Contract shall automatically terminate and Seller shall pay a sale commission pursuant to the expired Listing Contract. Termination by Seller of the Listing Contract shall terminate Buyer’s obligations under the Contract. In the event a deed is delivered to Buyer as provided in Transfer of Title (§ 13) of the Contract, the Listing Contract shall be terminated and no sale commission shall be owed. 5. REIMBURSEMENT. In the event the Contract is terminated by Seller, Seller agrees to immediately reimburse Buyer for all out-of-pocket expenditures incurred by Buyer in anticipation of closing under the Contract in an amount not to exceed $__________. 6. LICENSEE REPRESENTATIONS. Seller acknowledges that Buyer is licensed by the Colorado Real Estate Commission. Buyer represents that Buyer has sufficient resources to fulfill the Contract, subject to Loan Objection (§ 5.2) of the Contract. Buyer further acknowledges that any financial information furnished to Seller or any lender, pursuant to Loan Application (§ 5.1) and Credit Information and Buyer’s New Senior Loan (§ 5.3) of the Contract, are true and correct as of the date such financial information is furnished to Seller and lender, and Buyer agrees to immediately advise Seller of any adverse material change in the contents of the financial information. 7. RESALE, PROFIT/LOSS, EXPENSES. Seller acknowledges that in entering into the Contract, Buyer is exposed to possible losses and expenses. Seller acknowledges that following Closing, the Property may be held by Buyer for a period of time or may be resold immediately, and any profit or loss shall be solely that of Buyer. Seller further acknowledges that there is a chance for profit to Buyer and that certain expenses may accrue to Buyer. Such expenses include costs and expenses of Closing, Copyright 2016 – All Rights Reserved
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holding, and reselling the Property. Buyer may incur additional expenses, or some anticipated expenses may vary, or may not be incurred. In any event, after Closing, Buyer will absorb the loss or receive the profit from any sale and ownership of the Property. The following Section 8 will only apply if the box is checked: 8. OTHER PROPERTY. The Contract is made to assist Seller to purchase and close on that property commonly known as No. (Other Property). Shall Not reimburse Buyer for all out-of-pocket expenditures If such purchase and closing should not occur, Seller Shall in an amount not to exceed $ incurred by Buyer in anticipation of Closing under the Contract. In such event, Seller shall return to Buyer all Earnest Money received by Seller hereunder. Thereupon, Seller and Buyer shall be relieved of all further obligations under the Contract. In the event closing on the Other Property is delayed, the date of Closing on the Property days from the Closing Date (§ 3) of the Contract. shall be extended a like number of days, not to exceed
Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Date
Seller’s Name:
Seller’s Signature 72 73 74 75 76 77 78 79
Buyer’s Signature
Date
Seller’s Name:
Date
Seller’s Signature
Date
NOTICE TO SELLER: THIS CONTRACT IS BINDING ONLY UPON THE BUYER (LICENSEE) WHO PERSONALLY SIGNS ABOVE, UNLESS THE SUPERVISING BROKER OF THE BROKERAGE FIRM WORKING WITH SELLER SIGNS HERE:
LB36-10-12. LICENSEE BUY-OUT ADDENDUM TO CONTRACT TO 13 BUY AND SELL REAL ESTATE 2 of 2 Copyright 2016 – All Rights Reserved Colorado Contracts & Regulations (48Page credit hrs)
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LEAD BASED PAINT DISCLOSURES
MEMORANDUM To: All Interested Parties From: Forms Committee Date: July 10, 1996 RE: Lead-Based Paint Disclosures Recommended Procedures
The Forms Committee recommends the following procedures to be utilized by real estate licensees, who are required to comply with the Federal Lead-Based Paint Disclosure rules for "target housing", i.e. residential property built prior to 1978: [i.e., construction started before January 1, 1978.] 1. At the time the listing contract is signed by the Seller, the Listing Agent (including Transaction-Brokers) should review the Lead-Based Paint Disclosure (Sales) form with the Seller and have the Seller execute the form. The form collectively includes the Disclosure and Excerpts from Federal Lead-Based Paint Laws. The Listing Agent should also sign the Disclosure. 2. The Listing Agent should have copies of the completed and executed Lead-Based Paint Disclosure form available at the property, presumably with the Seller's Property Disclosure form, for prospective purchasers and their agents. 3. When commencing to work with a Buyer, the Selling Agent (including Transaction-Brokers), after presenting the required brokerage relationship disclosures and/or contracts, should provide the Buyer with the Federal EPA pamphlet, "Protect Your Family from Lead in Your Home", and a "blank" LeadBased Paint Disclosure form. In order to familiarize the Buyer with the requirements and the forms, in the event the Buyer is interested in a home built prior to 1978, the Selling Agent should review them with the Buyer. 4. Prior to the Buyer signing an offer on a specific property, the Selling Agent should obtain a copy of the Lead-Based Paint Disclosure for that property, executed by the Seller and the Listing Agent. Ideally, the Selling Agent should be able to obtain a copy at the property during the showing, or from the Listing Agent. 5. If the Selling Agent has not already provided the Buyer with the Federal EPA pamphlet, "Protect Your Family from Lead in Your Home" (Step 3), it should now be provided. 6. The Lead-Based Paint Disclosure form should be completed by the Buyer and signed by both Buyer and Selling Agent It is critical that this be done prior to the Buyer signing the Contract to Buy and Sell Real Estate. As a "fail safe" provision, it is recommended that the Selling Agent include the following language under "Additional Provisions" or in an Addendum: . . . Unless exempt, if the improvements on the Property include one or more residential dwelling(s) built prior to 1978, this contract is expressly conditioned upon the execution of a completed Lead-Based Paint Disclosure (Sales) form by Seller and the required real estate licensees), which must occur prior to or concurrent with Buyer signing such form as an attachment to this contract. All parties must sign such form no later than the Acceptance Deadline. Until so signed, Buyer is not obligated under this contract.
Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Realof Estate School Colorado Course – Chapter 21 The printed portions this form except differentiated additions, have been approved by the Colorado Real Estate Commission. (LP45-9-12)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
LEAD-BASED PAINT DISCLOSURE (Sales)
Attachment to Contract to Buy and Sell Real Estate for the Property known as: Street Address
City
State
Zip
WARNING! LEAD FROM PAINT, DUST, AND SOIL CAN BE DANGEROUS IF NOT MANAGED PROPERLY Penalties for failure to comply with Federal Lead-Based Paint Disclosure Laws include treble (3 times) damages, attorney fees, costs, and a base penalty up to $11,000 (plus adjustment for inflation). The current penalty is up to $16,000 for each violation. Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards Lead Warning Statement Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The Seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the Seller's possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase. Seller's Disclosure to Buyer and Real Estate Licensee(s) and Acknowledgment 1. 2.
Seller acknowledges that Seller has been informed of Seller’s obligations. Seller is aware that Seller must retain a copy of this disclosure for not less than three years from the completion date of the sale. Presence of lead-based paint and/or lead-based paint hazards (check one box below): Seller has no knowledge of any lead-based paint and/or lead-based paint hazards present in the housing. Seller has knowledge of lead-based paint and/or lead-based paint hazards present in the housing (explain):
3.
Records and reports available to Seller (check one box below): Seller has no reports or records pertaining to lead-based paint and/or lead-based paint hazards in the housing. Seller has provided Buyer with all available records and reports pertaining to lead-based paint and/or lead-based paint hazards in the housing (list documents below):
Buyer's Acknowledgment 4. 5. 6. 7.
8.
Buyer has read the Lead Warning Statement above and understands its contents. Buyer has received copies of all information, including any records and reports listed by Seller above. Buyer has received the pamphlet "Protect Your Family From Lead in Your Home". Buyer acknowledges federal law requires that before a buyer is obligated under any contract to buy and sell real estate, Seller shall permit Buyer a 10-day period (unless the parties mutually agree, in writing, upon a different period of time) to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards. Buyer, after having reviewed the contents of this form, and any records and reports listed by Seller, has elected to (check one box below): Obtain a risk assessment or an inspection of the Property for the presence of lead-based paint and/or lead-based paint hazards, within the time limit and under the terms of § 10 of the Contract to Buy and Sell Real Estate; or Waive the opportunity to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards.
Real Estate Licensee's Acknowledgment Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
Each real estate licensee signing below acknowledges receipt of the above Seller's Disclosure, has informed Seller of Seller's obligations and is aware of licensee's MacIntosh Real Estate School responsibility to ensure compliance. Colorado Course – Chapter 21 Certification of Accuracy I certify that the statements I have made are accurate to the best of my knowledge.
Seller
Date
Buyer
Date
Seller
Date
Buyer
Date
Real Estate Licensee (Listing)
Date
Real Estate Licensee (Selling)
Date
Copyright 2016 – All Rights Reserved LP 45-9-12. LEAD-BASED PAINT DISCLOSURE (SALES)
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WHAT IS A “SHORT SALE”? In a short sale, the borrower sells the house at a fair market value that is less than the amount owed on the mortgage, and the lender may agree to forgive the remainder of the debt – or may hold the seller liable for the shortfall. This is not the same thing as a “Deed in Lieu of Foreclosure”, where the borrower hands over the property to the lender with the lender's consent instead of (“in lieu of”) waiting for foreclosure. In a “Deed in Lieu” transaction, the lender must sell the house and agrees to forgive the amount that the remaining balance of the mortgage exceeds the house's current value. Because of the tricky procedural and legal ramifications of a Short Sale for brokers, the Colorado Real Estate Commission created the Short Sale Addendum to the Sales Contract. "Broker Participation in Short Sale Transactions" (From the Rocky Mountain Real Estate News - the official newsletter of the Colorado R/E Commission - Fall 2009. Edited for 2014 changes.)
In the past few months, Division of Real Estate staff has studied the escalating trend towards short sale transactions as a method for relieving market pressures on “upside down” homeowners. A short sale requires that a payoff of encumbrances on a property (notes and deeds of trust) be negotiated with lenders or lenders’ representatives with the goal of allowing a sale at a price less than the amount owed on the property. In many cases, lenders participate in those negotiations after weighing the proceeds of a short payoff with anticipated losses from a foreclosure action. In recent years, real estate markets across the country saw extraordinary appreciation driven by unsound mortgage lending practices that were facilitated by unscrupulous and fraudulent behavior from individuals in related real estate professions such as real estate brokerage, mortgage brokerage, the title industry, and real estate appraisers. The inevitable result was a nation-wide correction in real estate values. Homeowners who purchased near the top of the market were then, and are now, faced with the prospect of escalating mortgage payments (from adjustable rate mortgages), mortgage payments that are in excess of their ability to repay, freefalling real estate prices, and the drying up of traditional sources of funds that would allow mortgages with unreasonable terms to be refinanced. Short sale transactions are a function of the current economic climate and will likely continue as long as lenders see them as a better alternative to foreclosures. Some real estate brokers have embraced the process and made short sales part of the services they provide. Other brokers avoid short sales due to the special problems that accompany them, not the least of which is the uncertain nature of dealing with distressed property owners and the short sale negotiation process, which seems contrary to established real estate brokerage procedures. Buyers are frequently disappointed with their own brokers when trying to purchase a short sale. Traditional
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timelines and deadlines are not as important to lenders who do not work with the sense of urgency that prospective buyers have come to expect in real estate transactions. Various short sale models are used to facilitate sales of properties with mortgages in excess of their market value. Some of those business models involve an investor purchaser who steps in to negotiate a short sale with the secured lender(s) for the purpose of reselling at a profit. The negotiation process can be lengthy. Experienced investors are typically better able than homeowners to negotiate with lenders in situations where foreclosure is imminent. In many cases, a homeowner will assign ownership rights to a third party investor by means of quitclaim or warranty deed to facilitate the negotiation process. Homeowners facing foreclosure are at an obvious disadvantage due to their impaired financial ability to seek needed legal advice regarding that transfer of title. Many employing brokers who understand the special nature of the short sale transactions choose to guide their associates away from short sales as a matter of principle. Brokers who elect to make short sale transactions part of the inventory of services they provide should take care to ensure that basic disclosures regarding the nature of the transaction are clearly made to buyers and sellers, including use of forms that comply with the Colorado Foreclosure Act. Prospective buyers commonly complain that real estate licensees fail to disclose that an investor who has taken title to a property (from a distressed homeowner) is negotiating with a lender to arrange the short sale and that if the negotiations are not completed successfully, the transaction will fail. Listing brokers and investors like to describe the “A” side closing (where the investor clears the pre-existing deeds of trust) and “B” side closing (where the end buyer provides funds to close, which may be used to fund the “A” side) as separate even though the closings may be simultaneous and contingent on each other. Having separate “A” and “B” side closings does not relieve the real estate licensees from disclosing that one side of the transaction is contingent on the other. A seller facing foreclosure who elects to attempt a short sale should be made aware that there are potential ramifications after closing. Lenders are under no obligation to cooperate with the seller’s request and could decide to go forward with a foreclosure at any time. The lender could elect to take steps to collect the deficiency from the seller after agreeing to the short sale. If the deficiency is forgiven, the difference between the amount owed and the short sale payoff could be considered taxable income. If a licensee offers negotiation of a short payoff as a listing-related service, the cost of that service must be clearly disclosed. The settlement statement must list the payment for those services in a manner that does not attempt to conceal the actual recipient or the true nature of the charge. Offering brokerage services to distressed homeowners is a reasonable and necessary service to the public in this market. Care should be taken to assure that all
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contingencies are clearly disclosed and that buyers and sellers are given all of the information they need to make fully informed decisions. Brokers who engage in those services are expected to exhibit sufficient knowledge of foreclosures and short sales and the competence to assist buyers and sellers in those transactions. Supervising brokers should be well versed in the mechanics of those transactions as well. IMPORTANT PROVISIONS of the SHORT SALE ADDENDUM This Addendum will only be used in the case of a Short Sale, as described above. If the property is in foreclosure (and the buyer is purchasing the property as an investment and not as his/her primary residence) then the Foreclosure Protection Act Sales Contract will be used, instead. A Short Sale applies – and this Addendum will be used – only when the proceeds of sale will be insufficient to cover the cost of any liens (i.e., the first mortgage that seller is in default with their lender) and those lienholders (i.e., the lender) agree in writing to accept less. Section 3: Seller is acknowledging that despite the sale of the property, s/he may be liable for the shortage – the difference between the loan balance and the sale proceeds to pay off the loan. Consequently, the Seller may terminate the contract if Seller finds lender’s terms unacceptable. Section 5: Adds new Deadline to the Sales Contract Dates & Deadlines Matrix: Seller Deadline for Submission to Lien Holder. Buyer may terminate the contract if seller does not submit a written Short Sale request to all lienholders by this date. (Section 6 also notes that an Agreement to Amend/Extend will be necessary to extend all other dates to allow enough time for the lienholders to assent to the Short Sale. Section 7: Advises the parties that Short Sales are not a “sure thing”, and since the contract is between buyer and seller and the lienholders are not bound by its terms – lenders by not accept the terms of the Short Sale, and the deal may fall through. Additionally, even if the lender agrees to the Short Sale, they may still continue with the foreclosure proceedings. If the Foreclosure is finalized (sold by lender through county public auction) before the Short Sale is completed to buyer, the contract between this Seller and Buyer is naturally terminated. Section 8: This addendum adds the Short Sale Acceptance Deadline to the Sales Contract (discussed later in this chapter.) It also adds new “Termination” rights to the Sales Contract: Both Buyer and Seller may terminate by written notice, as long as it is received by the other party before the Short Sale Acceptance date.
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (SSA39-10-11) (Mandatory 1-12) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
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SHORT SALE ADDENDUM
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(Seller Listing Contract) Date: 1. ADDENDUM TO CONTRACT. This Short Sale Addendum (Addendum) is made a part of the Seller Listing Contract (Seller Listing Contract) dated _______________________ for the sale of the property known as
(Property) Street Address
City
State
Zip
17
for purposes of disclosing to Seller certain matters of a Short Sale and confirming certain rights of Seller.
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This Addendum shall control in the event of any conflict with the Seller Listing Contract. Terms used herein shall have the same meaning as in the Seller Listing Contract. Except as modified, all other terms and provisions of the Seller Listing Contract shall remain the same.
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2.
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3.
PURPOSE AND DEFINITIONS. 2.1. Purpose of Addendum. Seller has debts secured by one or more liens on the Property. The Purchase Price paid by a buyer may not be enough to cover payment for all the liens and costs of sale. If so, for the closing to occur, the affected Lien Holders (§ 2.2 below) must agree to a Short Sale (§ 2.3 below). 2.2. Lien; Lien Holder. A Lien is a recorded claim or lien against the Property, including, but not limited to, a mortgage, deed of trust, mechanic’s lien, judgment or tax lien (Lien). A title insurance commitment may be used to show the Liens against the Property. A Lien Holder is a creditor who has a Lien and agrees to release its Lien in a Short Sale (§ 2.3 below). 2.3. Short Sale. A Short Sale (Short Sale) is a transaction in which any Lien Holder releases its Lien against the Property and (1) accepts an amount less than the full amount Lien Holder claims is owed or (2) treats the debt secured by the Lien differently than as originally provided for in the evidence of debt (such as promissory note). Before a Short Sale can occur, the buyer, Seller, and each Lien Holder (except those creditors that are to be paid the full amount claimed) must consent to the terms of the sale. Sometimes, a Lien is released but the Lien Holder does not agree to release Seller from liability or reduce the unpaid portion of the debt, and the Seller and any guarantors will remain liable after Closing for that unpaid portion, despite the release of the Lien against the Property at a closing. 2.4. Short Sale Acceptance. Short Sale Acceptance (Short Sale Acceptance or SSA) is when Seller receives one or more written statements, signed by each Lien Holder, that specify the terms and conditions of the Short Sale. MANDATORY DISCLOSURES TO SELLER. 3.1. SELLER IS ADVISED TO CONTACT THE COLORADO FORECLOSURE PREVENTION HOTLINE OPERATED IN COOPERATION WITH THE COLORADO DIVISION OF HOUSING AT 1-877-601-4673 OR THE HUD HOUSING COUNSELING AND REFERRAL LINE AT 1-800-569-4287. 3.2. Seller acknowledges that there are alternatives to a Short Sale that may be better for Seller. Seller acknowledges that a Short Sale transaction may result in continued liability of Seller or other persons liable for the debt that could be extinguished through foreclosure, bankruptcy or other loss mitigation options, including but not limited to a negotiated loan modification with Lien Holder. Seller acknowledges that it is the responsibility of Seller to investigate these alternative methods of resolution with Seller’s legal, accounting or financial advisors and with Lien Holder and it is not the responsibility of any real estate broker to undertake any investigation of other options that may be available to Seller. 3.3. Short Sales may have serious adverse legal, tax and economic consequences for Seller and any guarantors. Seller is advised to seek legal and tax counsel to advise Seller of the legal effect and meaning of any Short Sale Acceptance from Lien Holder. 3.4. Lien Holder is not required to agree to a Short Sale. Even if a Lien Holder agrees to a Short Sale, a Lien Holder is not required to forgive repayment of the debt secured by the Lien or release Seller and any guarantors from liability unless Lien Holder’s claim is paid in full. Seller acknowledges that Lien Holder may or may not agree to release Seller or any guarantors from liability to Lien Holder. If not released, Seller and any guarantors will remain liable to Lien Holder for any amount that remains
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unpaid after the Short Sale. To be binding, any release of liability by Lien Holder must be in writing, must be executed by Lien Holder, and must provide that Seller and all guarantors are released from liability. 3.5. Lien Holder may condition its agreement on Seller doing any or all of the following to obtain a Short Sale Acceptance: (1) make a cash payment, (2) sign a new promissory note, (3) continue to owe the Lien Holder the unpaid portion of the debt and (4) agree to other requirements made by Lien Holder. 3.6. If the Lien Holder accepts less than full payment, Seller understands that Seller may incur federal and state tax liability due to a Short Sale and understands that Lien Holder is required to file all required 1099 Forms with the Internal Revenue Service with respect to this transaction. Seller is strongly advised to seek tax advice regarding the potential adverse tax consequences to Seller of a Short Sale. 3.7. Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not necessarily repair or rehabilitate Seller’s credit rating and Lien Holder has no obligation other than to fairly report this transaction to any credit rating agency. 3.8. Release of the Lien against the Property does not by itself release Seller or any guarantors from liability for the debt. 3.9 Seller acknowledges there are no promises or representations regarding: (1) whether Lien Holder will agree to a Short Sale, (2) the terms of any Short Sale Acceptance, or (3) when the Lien Holder will advise of its decision to agree to a Short Sale or provide the written terms and conditions of the Short Sale Acceptance.
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4.
MORTGAGE ASSISTANCE RELIEF SERVICES (FTC – DISCLOSURES).
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IMPORTANT NOTICE
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4.1. You (Seller) may stop doing business with us (the Brokerage Firm and Broker) at any time. You (Seller) may accept or reject the offer of mortgage assistance we (Brokerage Firm or Broker) obtain from your (Seller’s) lender [or servicer]. If you (Seller) reject the offer, you (Seller) do not have to pay us (Brokerage Firm). If you (Seller) accept the offer, you (Seller) will have to pay us (Brokerage Firm) as set forth in Seller Listing Contract for our (Brokerage Firm’s and Broker’s) services. 4.2. Brokerage Firm is not associated with the government, and our (Brokerage Firm’s) services are not approved by the government or your (Seller’s) lender. 4.3. Even if you (Seller) accept this offer and use our (the Brokerage Firm’s and Broker’s) service, your (Seller’s) lender may not agree to change your (Seller’s) loan. 4.4. If you (Seller) stop paying your (Seller’s) mortgage, You (Seller) could lose your (Seller’s) home and damage your (Seller’s) credit rating.
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Seller’s Name:
Seller’s Signature
Broker’s Name:
Date
Broker’s Signature
Date
Brokerage Firm’s Name: 82
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Real Estate Colorado – Chapter 21 The MacIntosh printed portions of thisSchool form, except differentiated additions, have been approved by the Colorado Real EstateCourse Commission. (SSA38-10-11) (Mandatory 1-12)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
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SHORT SALE ADDENDUM
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(Contract to Buy and Sell Real Estate) Date: 1. ADDENDUM TO CONTRACT. This Short Sale Addendum (Addendum) is made a part of the Contract to Buy and Sell Real Estate between Seller and Buyer (Contract) dated _______________________ relating to the sale of the Property known as
(Property). Street Address
City
State
Zip
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This Addendum shall control in the event of any conflict with the Contract. Except as modified, all other terms and provisions of the Contract shall remain the same.
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2.
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3.
PURPOSE AND DEFINITIONS. 2.1. Purpose of Addendum. Seller has debts secured by one or more liens on the Property. The Purchase Price may not be enough to cover payment for all the liens and costs of sale. If so, for the Closing to occur, the affected Lien Holders (§ 2.2 below) must agree to a Short Sale (§ 2.3 below). 2.2. Lien; Lien Holder. A Lien is a recorded claim or lien against the Property, including, but not limited to, a mortgage, deed of trust, mechanic’s lien, judgment or tax lien (Lien). A title insurance commitment may be used to show the Liens against the Property. A Lien Holder is a creditor who has a Lien and agrees to release its Lien in a Short Sale (§ 2.3 below). 2.3. Short Sale. A Short Sale (Short Sale) is a transaction in which any Lien Holder releases its Lien against the Property and (1) accepts an amount less than the full amount Lien Holder claims is owed or (2) treats the debt secured by the Lien differently than as originally provided for in the evidence of debt (such as promissory note). Before a Short Sale can occur, Buyer, Seller, and each Lien Holder (except those creditors that are to be paid the full amount claimed) must consent to the terms of the sale. Sometimes, a Lien is released but the Lien Holder does not agree to release Seller from liability or reduce the unpaid portion of the debt, and the Seller and any guarantors will remain liable after Closing for that unpaid portion, despite the release of the Lien against the Property at Closing. 2.4. Short Sale Acceptance. Short Sale Acceptance (Short Sale Acceptance or SSA) is when Seller receives one or more written statements, signed or approved by each Lien Holder, that specify the terms and conditions of the Short Sale. MANDATORY DISCLOSURES TO SELLER AND BUYER. 3.1. Lien Holder is not required to agree to a Short Sale. Even if a Lien Holder agrees to a Short Sale, a Lien Holder is not required to forgive repayment of the debt secured by the Lien or release Seller and any guarantors from liability unless Lien Holder’s claim is paid in full. Seller acknowledges that Lien Holder may or may not agree to release Seller or any guarantors from liability to Lien Holder. If not released, Seller and any guarantors will remain liable to Lien Holder for any amount that remains unpaid after the Short Sale. To be binding, any release of liability by Lien Holder must be in writing, must be executed by Lien Holder, and must provide that Seller and all guarantors are released from liability. 3.2. Lien Holder may condition its agreement on Seller doing any or all of the following to obtain a Short Sale Acceptance: (1) make a cash payment, (2) sign a new promissory note, (3) continue to owe the Lien Holder the unpaid portion of the debt and (4) agree to other requirements made by Lien Holder. 3.3. If the Lien Holder accepts less than full payment, Seller understands that Seller may incur federal and state tax liability due to a Short Sale and understands that Lien Holder is required to file all required 1099 Forms with the Internal Revenue Service with respect to this transaction. Seller is strongly advised to seek tax advice regarding the potential adverse tax consequences to Seller of a Short Sale. 3.4. Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not necessarily repair or rehabilitate Seller’s credit rating and Lien Holder has no obligation other than to fairly report this transaction to any credit rating agency. 3.5. Release of the Lien against the Property does not by itself release Seller or any guarantors from liability for the debt. 3.6. Buyer acknowledges that the Short Sale Conditions (§ 4 below) may lead to termination of the Contract. The Short Sale process may result in delays in the Closing. Buyer is advised to consult with legal counsel about this Addendum and its legal effect.
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3.7. Buyer and Seller Holder is made on the21condition MacIntosh Real Estate School acknowledge and agree that any Short Sale Acceptance by Lien Colorado Course – Chapter that none of the terms of the sale shall differ in any material respect from the terms submitted to the Lien Holder on which the Short Sale Acceptance was based. For purposes of the Contract, any change in the date of Closing, Purchase Price, real estate brokerage commissions, concessions or net proceeds to be paid to, or other remuneration to be received by Seller in connection with the proposed Short Sale shall be deemed a material change. Any material change will require that the Short Sale proposal be re-submitted to the Lien Holder for approval, which could result in delays for approval or even denial of the Short Sale. 3.8. This Addendum should be signed by both Buyer and Seller at time of contracting, as most Lien Holders will not consider a Short Sale until a signed contract is received for their review.
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4. SHORT SALE CONDITIONS. Notwithstanding anything to the contrary in this Addendum, the Contract between Seller and Buyer, for the benefit of both Seller and Buyer, is conditional upon all of the following occurring: 4.1. Seller has received from each Lien Holder a Short Sale Acceptance that is acceptable to Seller. 4.2. Agreement to Amend/Extend Contract signed by Buyer and Seller, so long as both parties agree, in their sole subjective discretion, to the changes to the Contract required by the Short Sale Acceptance.
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5. SELLER DEADLINE FOR SUBMISSION TO LIEN HOLDER. Seller agrees to submit to each Lien Holder a request for a Short Sale and all documents and information requested by Lien Holder, including a copy of the Contract, any Counterproposal, this Addendum and amendments. The initial submission by Seller to each Lien Holder shall be on or before Initial Submission Deadline (§ 5.1 below). Any additional information or documentation requested of Seller by such Lien Holder shall be submitted within five days of such request or Buyer may terminate the Contract pursuant to § 8.2 below. 5.1. Seller Submission Deadline. The Seller Submission Deadline shall be as set forth below. Event Initial Submission
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From days from MEC (§ 3 of Contract)
5.2. Seller Consents to Lien Holder’s Release of Information. Seller consents that Lien Holder and its representatives may supply and communicate any loan, financial information, or other information of Seller, confidential or otherwise, with any of the following involved in the transaction and their representatives: Seller’s attorney, Broker or Brokerage Firm working with Seller, transaction coordinator, title insurance company, Closing Company, and the following as checked: Other Lien Creditors Broker or Brokerage Firm working with Buyer Buyer Buyer’s attorney.
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6.
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7.
100 101 102 103
Deadline
DATES AND DEADLINES. 6.1. Revised Dates and Deadlines and Other Terms. Buyer and Seller acknowledge that an Agreement to Amend/Extend Contract (Amend/Extend) is required to revise the Dates and Deadlines (§ 3 Contract) or other terms based on changes required by the Short Sale Acceptance. If both Buyer and Seller, in their sole subjective discretion, agree to the terms of the Amend/Extend, as evidenced by their signatures on the Amend/Extend then the Contract shall be so amended. UNCERTAINTY OF SHORT SALE. Buyer and Seller acknowledge: 7.1. There are no promises or representations regarding: (1) whether Lien Holder will agree to a Short Sale, (2) the terms of any Short Sale Acceptance, or (3) when the Lien Holder will advise of its decision to agree to a Short Sale or provide the written terms and conditions of the Short Sale Acceptance. 7.2. Until Closing of the Short Sale, Short Sale Acceptance by the Lien Holder will not prevent, hinder or delay the Lien Holder from initiating or proceeding with any enforcement action, including but not limited to a foreclosure. In the event Seller loses ownership of the Property through foreclosure, the Contract shall terminate. 7.3. A significant period of time may be required to determine if a Short Sale Acceptance will be granted. Therefore, Buyer should inform Buyer’s lender of this fact for structuring Buyer’s loan, duration of “loan lock”, etc. Additionally, Closing is normally required to be held shortly following the Short Sale Acceptance. 7.4. After a Short Sale Acceptance is given, Lien Holder will normally not agree to any additional changes to the terms of the Contract that differ from the Short Sale Acceptance, to have repairs performed or to reduce the amount it is willing to accept due to the condition of the Property or results of an inspection. Buyer may want to conduct an inspection of the Property before Seller submits its request for a Short Sale to Lien Holder. The Purchase Price should reflect the condition of the Property and results of such inspection. Buyer recognizes the risk that Lien Holder may not agree to the offer submitted by Buyer. 8. DEADLINE FOR ACCEPTANCE OF SHORT SALE; TERMINATION. Buyer and Seller must receive written notice of the Short Sale Acceptance on or before Short Sale Acceptance Deadline (§ 8.1 below) or the Contract shall terminate. Seller shall cause Buyer to receive a copy of the Short Sale Acceptance within one day of Seller’s receipt of a Short Sale Acceptance from any Lien Holder or Buyer may terminate the Contract pursuant to §§ 8.2 and 8.3.2 below.
SSA38-10-11. ADDENDUM CopyrightSHORT 2016 –SALE All Rights Reserved(Contract to Buy and Sell Real 23 Estate)
Page Colorado Contracts & Regulations (48 credit hrs)2 of 3
Not for Use Before 1-1-12 104
8.1. Short Sale School Acceptance MacIntosh Real Estate Event Short Sale Acceptance Deadline
105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123
Colorado Course – Chapter 21
Deadline. Deadline
8.2. Termination. If any party has a right to terminate the Contract, such termination shall be governed by § 25 of the Contract upon written notice to the other party as described in § 27 of the Contract. 8.3. Additional Rights of Termination. 8.3.1. Seller may Terminate. Seller may terminate the Contract if the terms and conditions from Lien Holder to obtain a release of the Lien are not acceptable to Seller, in Seller’s sole subjective discretion, by Seller’s written notice received by Buyer on or before three days after the Short Sale Acceptance. 8.3.2. Buyer may Terminate. Buyer may terminate the Contract: (1) as provided in § 5 (Seller Deadline for Submission to Lien Holder) by Buyer’s written notice received by Seller on or before Short Sale Acceptance Deadline (§ 8.1) or (2) if the terms and conditions of any Agreement to Amend/Extend Contract are not acceptable to Buyer, in Buyer’s sole subjective discretion, by Buyer’s written notice received by Seller on or before three days after Buyer’s receipt of Short Sale Acceptance. 8.4. Early Termination 8.4.1. Not Applicable. This § 8.4 shall not apply. 8.4.2. Applicable. Both Buyer and Seller have the right to terminate the Contract by written notice to the other party so long as it is received on or before Short Sale Acceptance. Additionally, Seller has the right to accept subsequent offers from other buyers prior to Short Sale Acceptance without liability to Buyer. Note: If no box in this § 8.4 is checked, the provisions of § 8.4.2 shall apply.
Buyer
Date
Buyer
Date
Seller
Date
Seller
Date
124
SSA38-10-11. ADDENDUM CopyrightSHORT 2016 –SALE All Rights Reserved(Contract to Buy and Sell Real 24 Estate)
Page Colorado Contracts & Regulations (48 credit hrs)3 of 3
MacIntosh Real Estate School
Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (BD24-5-09) (Mandatory 7-09)
DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE SELLER AGENCY, BUYER AGENCY OR TRANSACTION-BROKERAGE.
BROKERAGE DISCLOSURE TO BUYER
TENANT
DEFINITIONS OF WORKING RELATIONSHIPS For purposes of this document, seller also means landlord (which includes sublandlord) and buyer also means tenant (which includes subtenant). Seller’s Agent: A seller’s agent works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller. Buyer’s Agent: A buyer’s agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer’s agent must disclose to potential sellers all adverse material facts actually known by the buyer’s agent, including the buyer’s financial ability to perform the terms of the transaction and, if a residential property, whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer. Transaction-Broker: A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction, without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyer’s financial ability to perform the terms of a transaction and, if a residential property, whether the buyer intends to occupy the property. No written agreement is required. Customer: A customer is a party to a real estate transaction with whom the broker has no brokerage relationship because such party has not engaged or employed the broker, either as the party’s agent or as the party’s transaction-broker.
RELATIONSHIP BETWEEN BROKER AND BUYER Broker and Buyer referenced below have NOT entered into a buyer agency agreement. The working relationship specified below is for a specific property described as: _______________________________________________________________ or real estate which substantially meets the following requirements: ___________________________________________________________________________________________________ ________________________________________________________________________________. Buyer understands that Buyer shall not be liable for Broker’s acts or omissions that have not been approved, directed, or ratified by Buyer. CHECK ONE BOX ONLY: Multiple-Person Firm. Broker, referenced below, is designated by Brokerage Firm to serve as Broker. If more than one individual is so designated, then references in this document to Broker shall include all persons so designated, including substitute or additional brokers. The brokerage relationship exists only with Broker and does not extend to the employing broker, Brokerage Firm or to any other brokers employed or engaged by Brokerage Firm who are not so designated. One-Person Firm. If Broker is a real estate brokerage firm with only one licensed natural person, then any references to Broker or Brokerage Firm mean both the licensed natural person and brokerage firm who shall serve as Broker.
BD24-5-09. BROKERAGE DISCLOSURE TO BUYER/TENANT Copyright 2016 – All Rights Reserved
25
Page 1 of 2 Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
CHECK ONE BOX ONLY: Customer. Broker is the seller’s agent and Buyer is a customer. Broker, as seller’s agent, intends to perform the following list of tasks: Show a property Prepare and Convey written offers, counteroffers and agreements to amend or extend the contract. Broker is not the agent of Buyer. Customer for Broker’s Listings – Transaction-Brokerage for Other Properties. When Broker is the seller’s agent, Buyer is a customer. When Broker is not the seller’s agent, Broker is a transaction-broker assisting in the transaction. Broker is not the agent of Buyer. Transaction-Brokerage Only. Broker is a transaction-broker assisting in the transaction. Broker is not the agent of Buyer. Buyer consents to Broker’s disclosure of Buyer’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee shall not further disclose such information without consent of Buyer, or use such information to the detriment of Buyer. DISCLOSURE OF SETTLEMENT SERVICE COSTS. Buyer acknowledges that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies). THIS IS NOT A CONTRACT. If this is a residential transaction, the following provision shall apply: MEGAN’S LAW. If the presence of a registered sex offender is a matter of concern to Buyer, Buyer understands that Buyer must contact local law enforcement officials regarding obtaining such information.
BUYER ACKNOWLEDGMENT: .
Buyer acknowledges receipt of this document on
Buyer
Buyer
BROKER ACKNOWLEDGMENT: On
, Broker provided
(Buyer) with
this document via
and retained a copy for Broker’s records.
Brokerage Firm’s Name:
Broker
BD24-5-09. BROKERAGE DISCLOSURE TO BUYER/TENANT Copyright 2016 – All Rights Reserved
26
Page 2 of 2 Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (SD16-5-09) (Mandatory 7-09) DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE SELLER AGENCY, BUYER AGENCY OR TRANSACTION-BROKERAGE.
BROKERAGE DISCLOSURE TO SELLER (FOR SALE BY OWNER) SELLER
LANDLORD
DEFINITIONS OF WORKING RELATIONSHIPS For purposes of this document, seller also means “landlord” (which includes sublandlord) and buyer also means “tenant” (which includes subtenant). Seller’s Agent: A seller’s agent (or listing agent) works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller. Buyer’s Agent: A buyer’s agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer’s agent must disclose to potential sellers all adverse material facts actually known by the buyer’s agent including the buyer’s financial ability to perform the terms of the transaction and, if a residential property, whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer. Transaction-Broker: A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyer’s financial ability to perform the terms of a transaction and, if a residential property, whether the buyer intends to occupy the property. No written agreement is required. Customer: A customer is a party to a real estate transaction with whom the broker has no brokerage relationship because such party has not engaged or employed the broker, either as the party’s agent or as the party’s transaction-broker.
RELATIONSHIP BETWEEN BROKER AND SELLER Broker and Seller referenced below have NOT entered into a seller agency (listing agency) agreement. The working relationship specified below is for a specific property or properties described as: __________________________________________________________________________________________ Seller understands that Seller shall not be liable for Broker’s acts or omissions that have not been approved, directed, or ratified by Seller. CHECK ONE BOX ONLY: Multiple-Person Firm. Broker, referenced below, is designated by Brokerage Firm to serve as Broker. If more than one individual is so designated, then references in this document to Broker shall include all persons so designated, including substitute or additional brokers. The brokerage relationship exists only with Broker and does not extend to the employing broker, Brokerage Firm or to any other brokers employed or engaged by Brokerage Firm who are not so designated.
SD16-5-09. BROKERAGE DISCLOSURE TO SELLER Copyright 2016 – All Rights Reserved
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Page 1 of 2 Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
One-Person Firm. If Broker is a real estate brokerage firm with only one licensed natural person, then any references to Broker or Brokerage Firm mean both the licensed natural person and brokerage firm who shall serve as Broker. CHECK ONE BOX ONLY: Customer. Broker is the buyer’s agent and Seller is a customer. Broker, as buyer’s agent, intends to perform the following list of tasks: Show a property Prepare and Convey written offers, counteroffers and agreements to amend or extend the contract. Broker is not the agent of Seller. Transaction-Brokerage Only. Broker is a transaction-broker assisting in the transaction. Broker is not the agent of Seller. Seller consents to Broker’s disclosure of Seller’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee shall not further disclose such information without consent of Seller, or use such information to the detriment of Seller. DISCLOSURE OF SETTLEMENT SERVICE COSTS. Seller acknowledges that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies). THIS IS NOT A CONTRACT. SELLER ACKNOWLEDGMENT: .
Seller acknowledges receipt of this document on
Seller
Seller
BROKER ACKNOWLEDGMENT: On
, Broker provided
with this document via
and retained a copy for Broker’s records.
(Seller)
Brokerage Firm’s Name:
Broker
SD16-5-09. BROKERAGE DISCLOSURE TO SELLER Copyright 2016 – All Rights Reserved
28
Page 2 of 2 Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (DD25 5-09) (Mandatory 7-09)
DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE SELLER AGENCY, BUYER AGENCY OR TRANSACTION-BROKERAGE.
DEFINITIONS OF WORKING RELATIONSHIPS For purposes of this document, seller also means “landlord” (which includes sublandlord) and buyer also means “tenant” (which includes subtenant). Seller’s Agent: A seller’s agent (or listing agent) works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller. Buyer’s Agent: A buyer’s agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer’s agent must disclose to potential sellers all adverse material facts actually known by the buyer’s agent including the buyer’s financial ability to perform the terms of the transaction and, if a residential property, whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer. Transaction-Broker: A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyer’s financial ability to perform the terms of a transaction and, if a residential property, whether the buyer intends to occupy the property. No written agreement is required. Customer: A customer is a party to a real estate transaction with whom the broker has no brokerage relationship because such party has not engaged or employed the broker, either as the party’s agent or as the party’s transaction-broker.
THIS IS NOT A CONTRACT.
I acknowledge receipt of this document on _________________________ .
Signature
Signature
On __________________________, Broker provided ____________________________________ with this document via ____________________________ and retained a copy for Broker’s records. Brokerage Firm’s Name:
Broker
DD25-5-09. DEFINITIONS OF WORKING RELATIONSHIPS Copyright 2016 – All Rights Reserved
29
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
SELLER’S PROPERTY DISCLOSURE AND THE REQUIREMENT TO DISCLOSE MATERIAL DEFECTS. A review of matters to be tested. General Disclosure Requirements: In any Contract (Chapter 1): Fraud Fraud is an intentional statement or omission that persuades or influences another to act to his or her harm. It can also be a false statement made by a person who did not know whether it was true or false. Concealing a material (key, important) defect or fact could also be fraud (negative fraud). Fraud can be a criminal as well as a civil wrong. A contract entered into because of fraud may be voided by the injured party. Fraud as to the nature of the contract could make the contract void rather than voidable. Examples: An owner representing a purchase contract as an option to buy; a seller representing a house as brand-new, when in fact it is 40 years old. Misrepresentation Misrepresentation is a misstatement or concealment of an important fact so that another party is led to act to his or her detriment. Whereas fraud requires the element of intent to deceive, misrepresentation could be a false statement made by someone who believed it to be true. Misrepresentation also allows a contract to be voided and, like fraud, could subject the wrongdoer to civil damages. If a person knew that a statement made to them was false or that a material fact was being concealed, the contract would not be voidable by that person because he or she was not deceived into acting to his or her detriment. General Disclosure Requirements: In Agency (Chapter 2): BROKER TO THEIR PRINCIPAL (Broker to Seller in a Listing agreement, Broker to Buyer in a Buyer-Broker Agency Agreement.) Disclosure. The agent has the duty to keep the agent's principal fully informed of material facts that may affect the subject matter of the agency. If the agent fails to inform the principal, the agent might be responsible for the loss resulting to the principal. (NOTE: "Disclosure" does not mean that an agent should not "disclose aspects of the principal's contract to a third party." If the agent did this without the principal's consent, this would be a violation of the duty of loyalty, and not of disclosure) Example: Broker should inform the seller of a zoning change or proposed change that might enhance the value of the property so that the seller may profit from the increased value.
Copyright 2016 – All Rights Reserved
30
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
The above discussion of the duties and responsibilities of the principal to the agent and of the agent to the principal applies to the employed licensees as well as to the broker. A broker acting as a buyer’s or tenant’s agent owes no duty to conduct an independent inspection of the property for the benefit of the buyer or tenant and owes no duty to independently verify the accuracy or completeness of statements of the seller, landlord, or independent inspectors. AGENT TO THIRD PARTY (BROKER to Buyer if they represent Seller OR BROKER to Seller if they represent Buyer.) An agent is also personally responsible to the third party for any tort (civil wrong, such as fraud) which the agent might commit whether with or without the principal's permission. If a real estate licensee knowingly misrepresents a material fact concerning the property for the purpose of inducing the prospect to purchase and the prospect purchases, relying on the misrepresentation, the agent is responsible for the tort of fraud or deceit. The same principle applies if a broker representing a buyer misrepresents that buyer's financial qualifications to induce an owner to sell. If the agent acted with the principal's consent, or within the scope of this authority, the third party has the choice of recovering any loss from the agent, the principal or both. In turn, a third party is liable to the agent for any tort the third party may commit against the agent. Example: Listing Broker knowingly misrepresents the age of a house to Ray, who purchases it based on that assertion. Although Broker represents the seller, he will still be liable to the buyer, Ray, for fraud. Importantly, the principal is personally liable for the acts of the principal's agent, if the principal authorized the agent to do the wrongful act or if the act was within the scope of the agent's employment. This is called vicarious liability. Thus, a seller of real estate is liable to the buyer for the false representation as to material facts about the property made by the broker or the broker's employed licensees which induced the purchaser to buy, even if the representation was made without the seller's knowledge and consent. Obviously, this is something many principals in real estate transactions are not aware of. Example: Sally, the seller, misrepresents the soil quality to Broker, who repeats that information to Tom. Relying on that erroneous information, Tom buys the property. If Tom later sues Broker for those statements, Broker will not be liable. (But Sally will.) Even a Transaction Broker is responsible for Disclosing Material Facts about their Client (or the Property) – even if it would impact the ultimate sale:
Copyright 2016 – All Rights Reserved
31
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
Seller's (or Landlord's) agent. The broker, acting as either a transaction-broker or a seller-agent, shall perform the following uniform duties when working with seller (or landlord): Disclose to the seller "known" adverse material facts…” Buyer's (or Tenant's) Agent. The buyer's agent has the same duties and responsibilities as the seller's agent (above). In addition, buyer’s agent shall: Disclose facts "actually known"… This is codified into Colorado Law, under C.R.S. 12-61-804 (Chapter 14): “(3) (a) A broker acting as a seller's or landlord's agent owes no duty or obligation to the buyer or tenant; except that a broker shall, subject to the limitations of section 38-35.5-101, C.R.S., concerning psychologically impacted property, disclose to any prospective buyer or tenant all adverse material facts actually known by such broker. Such adverse material facts may include but shall not be limited to adverse material facts pertaining to the title and the physical condition of the property, any material defects in the property, and any environmental hazards affecting the property which are required by law to be disclosed. (b) A seller's or landlord's agent owes no duty to conduct an independent inspection of the property for the benefit of the buyer or tenant and owes no duty to independently verify the accuracy or completeness of any statement made by such seller or landlord or any independent inspector.” BOTTOM LINE: Seller is not required to provide a Seller’s Property Disclosure. Whether they do or do not provide a Property Disclosure form, they still must disclose all Material Defects actually known by seller (or should reasonably be known.) The Broker need not conduct an independent inspection (to determine defects or to verify the seller’s disclosures), but if they actually observe or know of defects, they must disclose them to buyer.
Copyright 2016 – All Rights Reserved
32
Colorado Contracts & Regulations (48 credit hrs)
Not for Use Before 1-1-12 The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (SPD19-10-11) (Mandatory 1-12) MacIntosh Real Estate School
Colorado Course – Chapter 21
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
SELLER’S PROPERTY DISCLOSURE (ALL TYPES OF PROPERTIES) THIS DISCLOSURE SHOULD BE COMPLETED BY SELLER, NOT BY BROKER. Seller states that the information contained in this Disclosure is correct to Seller’s CURRENT ACTUAL KNOWLEDGE as of this Date. Any changes will be disclosed by Seller to Buyer promptly after discovery. Seller hereby receipts for a copy of this Disclosure. If the Property is part of a Common Interest Community, this Disclosure is limited to the Property or Unit itself, except as stated in Section L. Broker may deliver a copy of this Disclosure to prospective buyers. Note:
If an item is not present at the Property or if an item is not to be included in the sale, mark the “N/A” column. The Contract to Buy and Sell Real Estate, not this Disclosure form, determines whether an item is included or excluded; if there is an inconsistency between this form and the Contract, the Contract controls. Date: Property Address: Seller:
I. IMPROVEMENTS If this box is checked, there are no structures or improvements on the Property; do not complete Sections A-G. A.
STRUCTURAL CONDITIONS Do any of the following conditions now exist or have they ever existed:
1
Structural problems
2
Moisture and/or water problems
3
Damage due to termites, other insects, birds, animals or rodents
4
Damage due to hail, wind, fire or flood
5
Cracks, heaving or settling problems
6
Exterior wall or window problems
7
Exterior Artificial Stucco (EIFS)
8
Any additions or alterations made
9
Building code, city or county violations
B.
ROOF Do any of the following conditions now exist:
1
Roof problems
2
Roof material: Roof material:
3
Roof leak: Past
4
Roof leak: Present
5
Damage to roof: Past
6
Damage to roof: Present
7
Roof under warranty until Transferable
8
Roof work done while under current roof warranty
9
Skylight problems
10
Yes
No
Do Not Know
N/A
Comments
Yes
No
Do Not Know
N/A
Comments
Age Age
.
Gutter or downspout problems
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 33
Colorado Contracts & Regulations (48 creditPage hrs) 1 of 7
Not for Use Before 1-1-12 C.
IN WORKING CONDITION
MacIntosh Real Estate School APPLIANCES Are the following now in working condition:
1
Built-in vacuum system & accessories
2
Clothes dryer
3
Clothes washer
4
Dishwasher
5
Disposal
6
Freezer
7
Gas grill
8
Hood
9
Microwave oven
10
Oven
11
Range
12
Refrigerator
13
T.V. antenna:
14
Satellite system or DSS dish: Leased
15
Trash compactor
Owned
Yes
No
Do Not Know
Colorado Course – Chapter 21
Age If Known
N/A
Comments
Age If Known
N/A
Comments
Age If Known
N/A
Comments
Leased Owned
IN WORKING CONDITION
D.
ELECTRICAL & TELECOMMUNICATIONS Are the following now in working condition:
1
Security system:
Owned
2
Smoke/fire detectors:
3
Carbon Monoxide Alarm:
4
Light fixtures
5
Switches & outlets
6
Aluminum wiring (110)
7
Electrical: Phase Amps
8
Telecommunications (T1, fiber, cable, satellite)
9
Inside telephone wiring & blocks/jacks
Yes
No
Do Not Know
Leased
Battery
Hardwire
Battery
Hardwire
Voltage
10
Abandoned communication cables:
11
Ceiling fans
12
Garage door opener
13
Garage door control(s) #
14
Intercom/doorbell
15
In-wall speakers
16
220 volt service
17
Landscape lighting
Yes
No
IN WORKING CONDITION
E. 1
MECHANICAL Are the following now in working condition:
Yes
No
Do Not Know
Air conditioning: Evaporative cooler Window units Central Computer room
2
Attic/whole house fan
3
Vent fans
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 34
Colorado Contracts & Regulations (48 creditPage hrs) 2 of 7
Not for Use Before 1-1-12 4
Humidifier
5
Air MacIntosh purifier Real Estate School
6
Sauna
7
Hot tub or spa
8
Steam room/shower
9
Pool
Colorado Course – Chapter 21
10
Heating system: Type Fuel Type Fuel
11
Water heater: Number of Fuel type Capacity
12
Fireplace: Type Fuel
13
Fireplace insert
14
Stove: Type Fuel
15
When was fireplace/wood stove, chimney/flue last cleaned: Date: Do not know
16
Fuel tanks:
17
Radiant heating system: Hose Type
18
Overhead door
19
Entry gate system
20
Elevator/escalators
21
Lift/hoist/crane
Owned
Leased Interior
Exterior
IN WORKING CONDITION
F.
WATER, SEWER & OTHER UTILITIES Are the following now in working condition:
1
Water filter system:
Owned
2
Water softener:
3
Sewage problems:
4
Lift station (sewage ejector pump)
5
Drainage, storm sewers, retention ponds
6
Grey water storage/use
7
Plumbing problems:
8
Sump pump
9
Underground sprinkler system
Owned Yes
Do Not Know
Age If Known
N/A
Comments
Age If Known
N/A
Comments
Leased
No
Do not know
Do not know
10
Fire sprinkler system
11
Polybutylene pipe:
12
Galvanized pipe:
13
Backflow prevention device: Domestic Irrigation Fire Sewage
14
Irrigation pump
15
Well pump
Yes
No
Leased
No
Yes
Yes
Yes
No No
Do not know Do not know
IN WORKING CONDITION
G.
OTHER DISCLOSURES – IMPROVEMENTS Yes
1
No
Do Not Know
Included fixtures and equipment now in working condition
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 35
Colorado Contracts & Regulations (48 creditPage hrs) 3 of 7
Not for Use Before 1-1-12 MacIntosh Real Estate School
H.
USE, ZONING & LEGAL ISSUES Do any of the following conditions now exist:
1
Current use of the Property
2
Zoning violation, variance, conditional use, violation of an enforceable PUD or non-conforming use
3
Notice or threat of condemnation proceedings
4
Notice of any adverse conditions from any governmental or quasi-governmental agency that have not been resolved
5
Violation of restrictive covenants or owners’ association rules or regulations
6
Any building or improvements constructed within the past one year from this Date without approval by the Association or the designated approving body
7
Notice of zoning action related to the Property
8
Notice of ADA complaint or report
9
Other legal action
I.
ACCESS, PARKING, DRAINAGE & SIGNAGE Do any of the following conditions now exist:
1
Any access problems
2
Roads, driveways, trails or paths through the Property used by others
3
Public highway or county road bordering the Property
4
Any proposed or existing transportation project that affects or is expected to affect the Property
5
Encroachments, boundary disputes or unrecorded easements
6
Shared or common areas with adjoining properties
7
Cross-parking agreement, covenants, easements
8
Requirements for curb, gravel/paving, landscaping
9
Flooding or drainage problems: Past
10
Flooding or drainage problems: Present
11
Signs:
12
Signs: Government or private restriction problems
J.
WATER & SEWER SUPPLY Do any of the following conditions now exist:
Owned
Colorado Course – Chapter 21
II. GENERAL Yes
No
Do Not Know
N/A
Comments
Yes
No
Do Not Know
N/A
Comments
Yes
No
Do Not Know
N/A
Comments
Leased
1
Water Rights: Type
2
Water tap fees paid in full
3
Sewer tap fees paid in full
4
Subject to augmentation plan
5
Well required to be metered
6
Type of water supply: Public Community Well Shared Well Cistern None If the Property is served by a Well, a copy of the Well Permit Is Is Not attached. Well Permit #: Drilling Records Are Are not attached. Shared Well Agreement Yes No. The Water Provider for the Property can be contacted at: Name: Address: Web Site: Phone No.: There is neither a Well nor a Water Provider for the Property. The source of potable water for the Property is [describe source]: SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE GROUND WATER. YOU MAY WISH TO CONTACT YOUR PROVIDER (OR INVESTIGATE THE DESCRIBED SOURCE) TO DETERMINE THE LONG-TERM SUFFICIENCY OF THE PROVIDER’S WATER SUPPLIES.
7
Type of sanitary sewer service: Public Community Septic System None If the Property is served by an on-site septic system, supply to buyer a copy of the permit.
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 36
Other
Colorado Contracts & Regulations (48 creditPage hrs) 4 of 7
Not for Use Before 1-1-12 Type of septic system: K.
Tank
Leach
Lagoon
ENVIRONMENTAL CONDITIONS Do any of the MacIntosh Real Estate School following conditions now exist or have they ever existed:
1
Hazardous materials on the Property, such as radioactive, toxic, or biohazardous materials, asbestos, pesticides, herbicides, wastewater sludge, radon, methane, mill tailings, solvents or petroleum products
2
Underground storage tanks
3
Aboveground storage tanks
4
Underground transmission lines
5
Animals kept in the residence
6
Property used as, situated on, or adjoining a dump, land fill or municipal solid waste land fill
7
Monitoring wells or test equipment
8
Sliding, settling, upheaval, movement or instability of earth or expansive soils on the Property
9
Mine shafts, tunnels or abandoned wells on the Property
10
Within governmentally designated geological hazard or sensitive area
11
Within governmentally designated flood plain or wetland area
12
Governmentally designated noxious weeds (within last 3 years only) If yes, see Section O.
13
Dead, diseased or infested trees or shrubs
14
Environmental assessments, studies or reports done involving the physical condition of the Property
15
Property used for any mining, graveling, or other natural resource extraction operations such as oil and gas wells
16
Endangered species on the Property
17
Archeological features, fossils, or artifacts on the Property
18
Interior of improvements of Property tobacco smoke-free
19
Other environmental problems
L.
COMMON INTEREST COMMUNITY – ASSOCIATION PROPERTY Do any of the following conditions now exist:
1
Property is part of an owners’ association
2
Special assessments or increases in regular assessments approved by owners’ association but not yet implemented
3
Has the Association made demand or commenced a lawsuit against a builder or contractor alleging defective construction of improvements of the Association Property (common area or property owned or controlled by the Association but outside the Seller’s Property or Unit).
M.
OTHER DISCLOSURES – GENERAL Do any of the following conditions now exist:
1
Any part of the Property leased to others (written or oral)
2
Written reports of any building, site, roofing, soils or engineering investigations or studies of the Property
3
Any property insurance claim submitted (whether paid or not)
4
Structural, architectural and engineering plans and/or specifications for any existing improvements
5
Property was previously used as a methamphetamine laboratory and not remediated to state standards
6
Government special improvements approved, but not yet installed, that may become a lien against the Property
Yes
No
Do Not Know
N/A
Yes
No
Do Not Know
N/A
Comments
Yes
No
Do Not Know
N/A
Comments
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 37
Colorado Course – Chapter 21
Comments
Colorado Contracts & Regulations (48 creditPage hrs) 5 of 7
Not for Use Before 1-1-12 MacIntosh Real Estate School
N.
CROPS, LIVESTOCK & LEASES Do any of the following conditions now exist:
1
Crops being grown on the Property
2
Seller owns all crops
3
Livestock on the Property
4
Any land leased from others: State Federal Private Other
O.
Colorado Course – Chapter 21
III. LAND Yes
No
Do Not Know
N/A
Comments
BLM
NOXIOUS WEEDS Do any of the following conditions now exist: The Colorado Noxious Weed Management Act (35-5.5-101-119 C.R.S) enables County and City governments to implement noxious weeds management programs to reclaim infested acres and protect weed-free land. For a directory of county weed supervisors call 303-239-4173 or see: www.colorado.gov/ag/weeds. Have any of the following occurred to the Property:
1
Have any noxious weeds on the Property been identified?
2
Have there been any weed enforcement actions on the Property?
3
Has a noxious weed management plan for the Property been entered into?
4
Have noxious weed management actions been implemented?
5
Have herbicides been applied?
P.
OTHER DISCLOSURES – LAND Do any of the following conditions now exist:
1
Any part of the Property enrolled in any governmental programs such as Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP), etc.
2
Conservation easement
Yes
No
Do Not Know
N/A
Comments
Yes
No
Do Not Know
N/A
Comments
Seller and Buyer understand that the real estate brokers do not warrant or guarantee the above information on the Property. Property inspection services may be purchased and are advisable. This form is not intended as a substitute for an inspection of the Property. ADVISORY TO SELLER: Failure to disclose a known material defect may result in legal liability. The information contained in this Disclosure has been furnished by Seller, who certifies to the truth thereof based on Seller’s CURRENT ACTUAL KNOWLEDGE.
Seller
Date
Seller
Date
ADVISORY TO BUYER: 1. Even though Seller has answered the above questions to Seller’s current actual knowledge, Buyer should thoroughly inspect the Property and obtain expert assistance to accurately and fully evaluate the Property to confirm the status of the following matters: a. the physical condition of the Property; b. the presence of mold or other biological hazards; c. the presence of rodents, insects and vermin including termites; d. the legal use of the Property and legal access to the Property; SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 38
Colorado Contracts & Regulations (48 creditPage hrs) 6 of 7
Not for Use Before 1-1-12 e. the availability and source of water, sewer, and utilities; f. the environmental and geological condition of the Property; Real Estate School Colorado Course – Chapter 21 g. MacIntosh the presence of noxious weeds; and h. any other matters that may affect Buyer’s use and ownership of the Property that are important to Buyer as Buyer decides whether to purchase the Property. 2. Seller states that the information is correct to “Seller’s current actual knowledge” as of the date of this form. The term “current actual knowledge” is intended to limit Seller’s disclosure only to facts actually known by the Seller and does not include “constructive knowledge” or “common knowledge” or what Seller “should have known” about the Property. The Seller has no duty to inspect the Property when this Disclosure is filled in and signed. 3. Valuable information may be obtained from various local/state/federal agencies, and other experts may assist Buyer by performing more specific evaluations and inspections of the Property. 4. Boundaries, location and ownership of fences, driveways, hedges, and similar features of the Property may become the subjects of a dispute between a property owner and a neighbor. A survey may be used to determine the likelihood of such problems. 5. Whether any item is included or excluded is determined by the contract between Buyer and Seller and not this Seller’s Property Disclosure. 6. Buyer acknowledges that Seller does not warrant that the Property is fit for Buyer’s intended purposes or use of the Property. Buyer acknowledges that Seller’s indication that an item is “working” is not to be construed as a warranty of its continued operability or as a representation or warranty that such item is fit for Buyer’s intended purposes. 7.
Buyer
Buyer hereby receipts for a copy of this Disclosure.
Date
Buyer
SPD19-10-11. SELLER’S DISCLOSURE (ALL TYPES OF PROPERTIES) Copyright 2016 –PROPERTY All Rights Reserved 39
Date
Colorado Contracts & Regulations (48 creditPage hrs) 7 of 7
MacIntosh Real Estate School
Colorado Course – Chapter 21
GUIDELINES FOR MEASURING RESIDENTIAL PROPERTIES “Revised Rule E-43 Governs Square Footage” (from the Colorado Real Estate News, March 2000, updated January, 2003.)
In its first meeting of the new millennium, the Real Estate Commission moved to clarify the responsibility of licensees in representing the square footage of residential properties. A licensee is not required to measure a property, but if the licensee does he or she must disclose the standard, methodology or manner in which the property was measured. The licensee is not required to follow any single standard, such as ANSI. If square footage information is obtained from another source, the source and date of the information must be disclosed in writing and information from sources known to be unreliable cannot be used. The Commission's Forms Committee will be developing a disclosure form for use by licensees later this year. The entire text of the rule is printed below. Rule E-43. This rule applies to residential transactions when a licensee personally measures real estate or provides information from another source of measurement. The licensee listing property is responsible for accurately representing any source of square footage. (a) Licensee measurement. A licensee is not required to measure the square footage of a property. If the licensee takes an actual measurement it does not have to be exact, however, the licensee's objective must be to measure accurately and calculate competently in a manner that is not misleading, and: i. The standard, methodology or manner in which the measurement was taken must be disclosed; ii. The buyer and seller must be advised that the measurement is for purposes of marketing and is not a measurement for loan, valuation or any other purpose; and iii. The buyer and seller must be advised that if exact square footage is a concern, the property should be independently measured. (b) Other sources of square footage. If a buyer or seller is provided information from another source for square footage, that source (whether an actual measurement, building plans, prior appraisals, assessors office, etc.) must be disclosed in writing by the licensee, in a timely manner, including date of issuance. Such disclosure must advise the recipient to verify the information. A licensee may not provide information to a person from a source known to be unreliable and is responsible for indications pointing to obvious mismeasurement by others. (c) A licensee working with a buyer may rely on a representation of square footage by a listing broker, however, such licensee is responsible for indications of obvious mis-measurement by others. Article: “Hey! What’s up with Measuring Property?” (from the Colorado Real Estate News, June 1999)
What’s up is that the old position statement on measuring property has been replaced by Colorado Real Estate Commission Rule E-43 regarding the representation of square footage measurement by real estate brokers.
Copyright 2016 – All Rights Reserved
40
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
Below is the new rule (with emphasis added) followed by some Q&A about the logistics of complying with the who, what, when and where of Rule E-43. Rule E-43. A licensee shall comply with the following concerning the square footage of residential real estate:
(a) The licensee listing property is responsible1 for the accurate representation of square footage. If the licensee takes an actual measurement, it must be based on exterior measurement using a commonly accepted standard.2 The source used for representation of square footage whether an actual measurement, building plans, prior appraisals, assessors office, etc.) must be disclosed in writing by the listing licensee,3 in a timely manner,4 including date of issuance.5 Such disclosure must advise the recipient to verify information.6 A licensee may not refer a person to a source knowing the source to be unreliable7 and is responsible for indications pointing to obvious and significant mismeasurement8 by others. (b) A licensee working with a buyer may rely on a representation of square footage by a listing broker, however, such licensee is responsible for indications of obvious and significant mis-measurement by others.
1. THE RULE MAKES IT ENCUMBANT ON THE LISTING LICENSEE TO ACCURATELY REPRESENT MEASUREMENTS AND GIVE A WRITTEN DISCLOSURE. EVEN THOUGH THIS IS A DISCLOSURE REQUIREMENT OF THE BROKER, IS THE SELLER VICARIOUSLY LIABLE FOR AN INACURRATE REPRESENTATION OF MEASUREMENT BY THE BROKER TO A BUYER? Yes, they are if the seller has an agency relationship with the broker; which is a good reason for the listing broker to also "disclose in writing" to the seller the source used for representation of square footage whether an actual measurement, building plans, prior appraisals, assessors office, etc. 2. WHAT IS AN EXAMPLE OF A COMMONLY ACCEPTED STANDARD OF MEASUREMENT? Standards such as ANSI (The American National Standards Institute), HUD and FANNIE MAE measurement guidelines, etc.) 3.
WHAT FORM AND TYPE OF WRITTEN DISCLOSURE CAN BE USED? Square footage may be a material consideration to some buyers. Disclosure by the listing broker should be given to the buyer before the buyer makes an offer. Such disclosure can be made and disseminated in much the same way as are lead-based paint disclosure forms, requiring signature of the buyer prior to or at the time of contracting. In this way the broker would have proof of the square footage disclosure having been made. Many listing companies leave the lead-based paint disclosures on site for the selling licensee and buyer. Square footage disclosure could be handled the same way. Listing licensees should discuss the form and language of the disclosure with legal counsel. Remember this is a disclosure by the broker and does not belong in the contract between buyer and seller, nor is it a seller’s disclosure and does not belong in the Seller’s Property Disclosure form. Remember that "Disclosure" is not the same as "Disclaimer". It is a disclosure that is required by the new rule and no amount of disclaimer will alleviate the broker’s responsibility to comply Copyright 2016 – All Rights Reserved
41
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
with the rule. So even if the broker’s attorney suggests some addendum language to the contract that says that square footage is not material or a consideration, the broker will still be responsible for making the proper disclosure pursuant to Rule E-43. 4.
TO WHOM IS THE DISCLOSURE MADE? The buyer for sure, but be on the safe side and disclose to the seller also.
5.
WHAT IS A TIMELY MANNER? Square footage may be a material consideration to some buyers. Disclosure by the listing broker should be given to the buyer before the buyer makes an offer, and can be handled in much the same way as lead-based paint disclosures, requiring signatures of both the buyer and listing broker. 6.
WHAT IS MEANT BY "THE DATE OF ISSUANCE"? This is referring to the date of issuance of any of the forms of representation of measurement such as past appraisals, records from the assessor office, the date the licensee took the measurements, etc. 7. WHY MAKE THE LICENSEE "RESPONSIBLE" FOR ACCURATE REPRESENTATION AND THEN ADVISE THE BUYER TO VERIFY "THE INFORMATION"? Accurate representation requires the listing agent to be responsible for the actual measurement or for proper identification of the alternative source. Verification is a safeguard for both the buyer and the listing agent. The advice to verify is not the opportunity for the broker to "disclaim". 8. WHAT IS AN EXAMPLE OF AN UNRELIABLE SOURCE OF MISMEASUREMENT? Sometimes new homebuilders do not use exact measurements and instead round off to the next highest figure. Accepting the measurements taken by the property owner might be risky don’t you think? In some locations, the county assessors office have not performed field audit measurements in 20 years, which means their records may not reflect such things as "room additions" or the tearing down of a bungalow and building a new 5,000 Sq. Ft. home in the exclusive Cherry Creek area. 9. WHAT THE HECK IS: "AN INDICATION OF AN OBVIOUS AND SIGNIFICANT MISMEASUREMENT BY OTHERS"? Well for one thing it doesn’t always have to be a mis-measurement. Let’s say a listing broker uses the square footage supplied by a two-year-old appraisal, but subsequent to the appraisal, the homeowner converted the existing garage into a family room and built a new detached garage.
Copyright 2016 – All Rights Reserved
42
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (SF 94-5-04)
SQUARE FOOTAGE DISCLOSURE This disclosure is made to Buyer and Seller pursuant to the requirements of Colorado Real Estate Commission and applies to improved residential real estate. Check applicable boxes below. Property Address:
1. Licensee Measurement Listing Licensee Has Has Not measured the square footage of the residence according to the following standard, methodology or manner:
Standard/Methodology/Manner Exterior measurement FHA ANSI Local standard Other
Date Measured
Square Footage
2. Other Source of Measurement: Listing Licensee Is Is Not providing information on square footage of the residence from another source(s) as indicated below:
Source of Square Footage Information Prior appraisal (Date of document) Building plans (Date of document) Assessor’s office (Date obtained)
Other
Date
Square Footage
Measurement is for the purpose of marketing, may not be exact and is not for loan, valuation or other purpose. If exact square footage is a concern, the property should be independently measured. Buyer and Seller are advised to verify this information. Any independent measurement or investigation should be completed on or before the Inspection Objection Deadline of the contract. By Listing Licensee
Date
The undersigned acknowledge receipt of this disclosure.
__________________________________________ Seller Date
Seller
Date
__________________________________________ Buyer Date
Buyer
Date
43 DISCLOSURE
Colorado Contracts & Regulations (48 credit hrs)
Copyright 2016 – All Rights Reserved No. SF94-5-04 SQUARE FOOTAGE
MacIntosh Real Estate School
1 2 3 4 5 6 7 8 9 10 11
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (NTC43-10-12) (Mandatory 1-13) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
INSPECTION OBJECTION Date: This Inspection Objection relates to the contract dated _____________________, between (Seller) and
12 13
Colorado Course – Chapter 21
(Buyer),
relating to the sale and purchase of the Property known as: (Contract). Terms used herein shall have the same meaning as in the Contract.
14 15 16 17 18 19 20
NOTE: Resolution of inspection items agreed to by the parties may alter the terms of the Contract and require disclosure by Buyer to Buyer's lender. Buyer is encouraged to consult Buyer's lender prior to entering into a final resolution on inspection matters as the resolution may (1) have a detrimental impact on the Buyer's ability to get the loan; (2) cause delays in the lender’s processing and funding of the loan by Closing; and (3) require further inspections and repairs. Communication with the lender should be in writing.
21 22 23
1.
BUYER’S NOTIFICATION OF UNSATISFACTORY PHYSICAL CONDITION. 1.1. Pursuant to § 10.2.2 of the Contract, Buyer notifies Seller that Buyer requires Seller, on or before to correct or resolve the following unsatisfactory physical conditions of the Property or Inclusions:
,
24 25 26 27
If more space is required, attached are 1.2.
28
A copy of the inspection report
additional pages. Is
Is Not provided in conjunction with this Inspection Objection.
29 30 31 32 33
Pursuant to § 10.3 of the Contract, if Buyer and Seller have not agreed in writing to a settlement of the above matters on or before the Inspection Resolution Deadline, the Contract will terminate unless Seller receives written notice from Buyer withdrawing this Inspection Objection on or before expiration of the Inspection Resolution Deadline.
Buyer 34 35 36 37 38
2.
Date
Buyer
Date
BUYER’S WITHDRAWAL OF INSPECTION OBJECTION.
Buyer withdraws the Inspection Objection and elects to proceed with the Contract.
39
Buyer
Date
Buyer
Date
40
Copyright 2016 – All Rights Reserved
44
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
1 2 3 4 5 6
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (NTC43R-10-12) (Mandatory 1-13) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
INSPECTION RESOLUTION (Amendment To Contract To Buy And Sell Real Estate)
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Colorado Course – Chapter 21
Date: 1.
This Inspection Resolution amends the contract dated , between (Buyer) relating to the sale and purchase of the Property known as: (Contract). Terms used herein shall have the same meaning as in the Contract.
(Seller) and
2. RESOLUTION OF UNSATISFACTORY PHYSICAL CONDITION. Pursuant to § 10.3 of the Contract, Buyer and Seller agree that Seller, on or before , shall correct or resolve the following unsatisfactory physical condition of the Property or Inclusions:
34 35
3. SELLER'S COST. Pursuant to § 10.4 of the Contract, correcting or resolving the unsatisfactory physical condition set forth in this document, shall be paid by Seller.
36 37
4. SURVIVAL. If any agreed upon correction requires action after Closing, the obligations agreed upon shall survive Closing.
38 39 40 41
Note: This document amends the Contract. Buyer must provide a copy of this Inspection Resolution to Buyer's Lender.
Buyer
Date
Buyer
Date
Seller
Date
Seller
Date
42
NTC43R-10-12. RESOLUTION Copyright INSPECTION 2016 – All Rights Reserved
45
Colorado Contracts & Regulations (48 credit hrs)Page 1 of 1
Not for use Before 1-1-11 The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate MacIntosh(HWN65-8-10) Real Estate School(Mandatory 1-11) Colorado Course – Chapter 21 Commission.
HOMEOWNER WARNING NOTICE – Right to Cancel (Colorado Foreclosure Protection Act) Note: The Notice must be in Seller’s principal language as set forth in §11.2 of the Contract and given to the Seller as a separate document accompanying the Contract. This Notice accompanies the Contract dated for the purchase and sale of the Property known as
, between Buyer and Seller
No.
. Street Address
City
State
Zip
THIS TRANSACTION INVOLVES IMPORTANT AND COMPLEX LEGAL CONSEQUENCES, INCLUDING YOUR RIGHT TO CANCEL THIS TRANSACTION WITHIN THREE BUSINESS DAYS FOLLOWING THE DATE YOU SIGN THIS CONTRACT. YOU SHOULD CONSULT WITH AN ATTORNEY OR SEEK ASSISTANCE FROM A HOUSING COUNSELOR BY CALLING: THE COLORADO FORECLOSURE HOTLINE AT 1-877-601-4673. :
The Notice below is translated in Seller’s principal language of
Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Date
Seller’s Name:
Seller’s Signature
Buyer’s Signature
Date
Seller’s Name:
Date
Seller’s Signature
HWN65-8-10. HOMEOWNER WARNING NOTICE – RIGHT TO CANCEL Copyright 2016 – All Rights Reserved 46
Date
Page 1 of hrs) 1 Colorado Contracts & Regulations (48 credit
Not for use Before 1-1-11 1 2
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate MacIntosh Real Estate School (Mandatory 1-11) Colorado Course – Chapter 21 Commission. (NCF34-8-10)
3 4
NOTICE OF CANCELLATION
5
(Colorado Foreclosure Protection Act)
6 7
(Enter Date Contract Signed)
8 9 10 11 12
YOU MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE, WITHOUT ANY PENALTY OR OBLIGATION, AT ANY TIME BEFORE *. (Enter Date and Time of Day)
13 14 15 16
TO CANCEL THIS TRANSACTION, PERSONALLY DELIVER A SIGNED AND DATED COPY OF THIS NOTICE OF CANCELLATION IN THE UNITED STATES MAIL, POSTAGE PREPAID, TO
17
,
18
(Name of (Buyer) Purchaser)
19 20 21
AT (Street Address of (Buyer’s) Purchaser’s Place of Business)
22 23 24
NOT LATER THAN
. (Enter Date and Time of Day)
25 26 27 28
I HEREBY CANCEL THIS TRANSACTION.
29 30
(Seller’s Signature)
Date
(Seller’s Signature)
Date
31 32 33 34 35 36
Note: This Notice of Cancellation is to be attached to the Contract to Buy and Sell Real Estate (Colorado Foreclosure Protection Act) at the time it is supplied to the Seller. *Specify the date and time as the earlier of: 12 Midnight, third business day after Seller signs the Contract; or 12 Noon the day before the foreclosure sale.
NCF34-8-10. NOTICE Copyright 2016 –OF All CANCELLATION Rights Reserved
47
Page Colorado Contracts & Regulations (48 credit hrs)1 of 1
MacIntosh Real Estate School
1 2 3 4 5 6 7 8 9 10 11
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (NTT44-6-15) (Mandatory 1-16) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
NOTICE TO TERMINATE Date: This Notice terminates the contract dated
18 19 20 21
(Buyer)
relating to the sale and purchase of the Property known as: (Contract). Terms used herein shall have the same meaning as in the Contract.
14 15 16 17
between
(Seller) and
12 13
Colorado Course – Chapter 21
BUYER’S NOTIFICATION OF UNSATISFACTORY CONDITION. Buyer notifies Seller that the Contract is terminated (§ 25 Contract) because the following are unsatisfactory to Buyer: Assumption Balance (§ 4.6) Seller or Private Financing (§ 4.7)
Due Diligence Documents, Leases (§ 10.6) Zoning (§ 10.6) CBS 2, 3, 4
Loan Objection (§ 5.2) Existing Loan Review (§ 5.4) Appraisal Provisions (§ 6.2) Association Documents (§ 7.4) Objection to Title (§ 8.4) Special Taxing Districts (§ 8.5)
Environmental, ADA Evaluation (§ 10.6) CBS 2, 3, 4 Conditional Sale (§ 10.7) Methamphetamine Laboratory (§ 10.11) CBS 1, 2, CBSF1 Tenant Estoppel Statements (§ 11.2) CBS 2, 3, 4 Causes of Loss, Insurance (§ 19.1) Damage, Inclusions and Services (§ 19.2)
New ILC or New Survey (§ 9.3) Property or Inclusions Inspection (§ 10.3) Insurability (§ 10.5) Other: _____________________________________
Condemnation (§ 19.3) Short Sale Addendum (SSA38-10-11)
SELLER’S NOTIFICATION OF UNSATISFACTORY CONDITION. Seller notifies Buyer that the Contract is terminated (§ 25 Contract) because the following are unsatisfactory to Seller: Seller Financing (§ 4.7) Credit Information and Buyer’s New Senior Loan (§ 5.3) Release of Liability (§ 5.4) Lender Property Requirements (§ 6.3) Short Sale Addendum (SSA38-10-11) Other:
22 23 24
Terminating Party:
Buyer
Seller
Name:
Signature of Terminating Party
Name:
Date
Signature of Terminating Party
Date
25
NTT44-6-15. NOTICE TERMINATE Copyright 2016 – TO All Rights Reserved
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Page Colorado Contracts & Regulations (48 credit hrs)1 of 1
Not for use Before 1-1-11 The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (SA20-8-10) (Mandatory 1-11) MacIntosh Real Estate School
Colorado Course – Chapter 21
SELLER AUTHORIZATION Property:
Date: If required by Seller’s lender or Lien Holder:
Seller:
Social Security #:
Seller:
Social Security #:
1. Lien Holder:
Account No.:
2. Lien Holder:
Account No.:
3. Lien Holder:
Account No.:
4. Lien Holder:
Account No.:
5. Lien Holder:
Account No.:
6. Lien Holder:
Account No.:
Seller Consents to Lien Holder’s Release of Information. Seller consents that Lien Holder and its representatives may supply any loan, financial or other information of Seller, confidential or otherwise, including nonpublic personal information that may include, but is not limited to account balances, account statements, loan payoff, account history and account activity (provided however, such information and documents shall not contain any Social Security number), and communicate with Seller’s attorney, Broker or Brokerage Firm working with Seller, transaction coordinator, title insurance company, Closing Company, and any of the following involved in the transaction and their representatives:
Broker and Brokerage Firm working with Seller:
Other:
Brokerage Firm’s Name: Broker’s Name: Address:
Phone No.: Fax No.: Electronic Address: Note: This Seller Authorization should be submitted to the Lender’s Loss Mitigation Department, if applicable. If the Property is in foreclosure, this form should also be submitted to the Lender’s law firm.
Seller
SA20-8-10. SELLER AUTHORIZATION Copyright 2016 – All Rights Reserved
Seller
49
Colorado Contracts & Regulations (48 credit hrs)
Not for use Before 1-1-11 The printed portions of this form, except differentiated additions, have been approved by the Colorado Real MacIntosh Real Estate School Colorado Course – Chapter 21 Estate Commission. (SWF30-8-10) (Mandatory 1-11)
SELLER WARNING – EQUITY SKIMMING § 18-5-802 (6), C.R.S. (Colorado Foreclosure Protection Act)
WARNING: PURCHASER, (BUYER), WILL NOT ASSUME OR PAY ANY PRESENT MORTGAGE, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AGAINST THE PROPERTY. THE SELLER, , UNDERSTANDS HE/SHE WILL REMAIN RESPONSIBLE FOR ALL PAYMENTS DUE ON SUCH MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AND FOR ANY DEFICIENCY JUDGMENT UPON FORECLOSURE. I HAVE HAD THE FOREGOING READ TO ME AND UNDERSTAND THE PURCHASER, (BUYER), WILL NOT ASSUME ANY PRESENT MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AGAINST THE PROPERTY DESCRIBED AS: . STREET ADDRESS
CITY
STATE
ZIP
SELLER Date
SWF30-8-10. SELLER – EQUITY SKIMMING Copyright 2016 – AllWARNING Rights Reserved
50
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
REAL PROPERTY TRANSFER DECLARATION - (TD-1000) GENERAL INFORMATION Purpose: The Real Property Transfer Declaration provides essential information to the county assessor to help ensure fair and uniform assessments for all property for property tax purposes. Refer to 39-14-102(4), Colorado Revised Statutes (C.R.S.). Requirements: All conveyance documents (deeds) subject to the documentary fee submitted to the county clerk and recorder for recordation must be accompanied by a Real Property Transfer Declaration. This declaration must be completed and signed by the grantor (seller) or grantee (buyer). Refer to 39-14-102(1)(a), C.R.S. Penalty for Noncompliance: Whenever a Real Property Transfer Declaration does not accompany the deed, the clerk and recorder notifies the county assessor who will send a notice to the buyer requesting that the declaration be returned within thirty days after the notice is mailed. If the completed Real Property Transfer Declaration is not returned to the county assessor within the 30 days of notice, the assessor may impose a penalty of $25.00 or .025% (.00025) of the sale price, whichever is greater. This penalty may be imposed for any subsequent year that the buyer fails to submit the declaration until the property is sold. Refer to 39-14-102(1)(b), C.R.S. Confidentiality: The assessor is required to make the Real Property Transfer Declaration available for inspection to the buyer. However, it is only available to the seller if the seller filed the declaration. Information derived from the Real Property Transfer Declaration is available to any taxpayer or any agent of such taxpayer subject to confidentiality requirements as provided by law. Refer to 39-5-121.5, C.R.S and 39-13-102(5)(c), C.R.S. --------------------------------------------------------------------------------------------------------------------------------------------1. Address and/or legal description of the real property sold: Please do not use P.O. box numbers.
2. Type of property purchased: ! Single Family Residential ! Townhome ! Condominium ! Multi-Unit Res ! Commercial ! Industrial ! Agricultural ! Mixed Use ! Vacant Land ! Other 3. Date of closing: Month
Day
Year
Date of contract if different than date of closing: Month
Day
Year
4. Total sale price: Including all real and personal property. $ 5. Was any personal property included in the transaction? Personal property would include, but is not limited to, carpeting, draperies, free standing appliances, equipment, inventory, furniture. If the personal property is not listed, the entire purchase price will be assumed to be for the real property as per 39-13-102, C.R.S. ! Yes ! No If yes, approximate value $ Describe 6. Did the total sale price include a trade or exchange of additional real or personal property? If yes, give the approximate value of the goods or services as of the date of closing. ! Yes ! No If yes, value $ If yes, does this transaction involve a trade under IRS Code Section 1031? Yes No 7. Was 100% interest in the real property purchased? Mark "no" if only a partial interest is being purchased. ! Yes ! No If no, interest purchased % 8. Is this a transaction among related parties? Indicate whether the buyer or seller are related. Related parties include persons within the same family, business affiliates, or affiliated corporations. ! Yes ! No Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
9. Check any of the following that apply to the condition of the improvements at the time of purchase. ! New ! Excellent ! Good ! Average ! Fair ! Poor ! Salvage. If the property is financed, please complete the following. 10. Total amount financed. $ 11. Type of financing: (Check all that apply) ! New ! Assumed ! Seller ! Third Party ! Combination; Explain 12. Terms: ! Variable; Starting interest rate ! Fixed; Interest rate ! Length of time ! Balloon payment Yes No. If yes, amount
% % years Due date
13. Please explain any special terms, seller concessions, or financing and any other information that would help the assessor understand the terms of sale.
For properties other than residential (Residential is defined as: single family detached, townhomes, apartments and condominiums) please complete questions 14-16 if applicable. Otherwise, skip to #17 to complete. 14. Did the purchase price include a franchise or license fee? ! Yes ! No If yes, franchise or license fee value $ 15. Did the purchase price involve an installment land contract? ! Yes ! No If yes, date of contract 16. If this was a vacant land sale, was an on-site inspection of the property conducted by the buyer prior to the closing? ! Yes ! No Remarks: Please include any additional information concerning the sale you may feel is important.
day of , 20 . 17. Signed this Enter the day, month, and year, have at least one of the parties to the transaction sign the document, and include an address and a daytime phone number. Please designate buyer or seller. Signature of Grantee (Buyer) !
or Grantor (Seller) !
18. All future correspondence (tax bills, property valuations, etc.) regarding this property should be mailed to: ( Address (mailing)
) Daytime Phone
City, State and Zip Code Copyright 2016 – All Rights Reserved
52
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
CLOSING INSTRUCTIONS CP-34 - SETTLEMENT SERVICE PROVIDER SELECTION, CLOSING INSTRUCTIONS AND EARNEST MONEY DEPOSITS The Commission issues this position statement to clarify how settlement service providers are selected, when closing instructions must be completed by a real estate broker (“broker”) and how earnest money is to be handled. Selection of settlement service providers Regardless of whether a broker is acting as a single agent or transaction broker, all brokers acting in their licensed capacities are required to advise their clients to obtain expert advice as to material matters about which the broker knows but the specifics of which are beyond the expertise of the broker. (See Chapter 14, C.R.S. 12-61-804(1)(c)(V), 12-61-805(1)(c)(V), and 12-61-807(2)(b)(II).) Expert advice includes, but is not limited to, the brokering of a mortgage, performing title searches and issuing insurance, appraising real property, surveying and issuing improvement location certificates, performing property inspections and other due diligence (including environmental) and practicing law (which also includes analyzing the legal implications of the foregoing). Brokers need to ensure that they perform the acts required by the real estate brokerage practice act, based on the capacity in which they have agreed to practice, i.e. as a single agent or transaction broker. A common standard of practice amongst brokers is to provide the names of three settlement services providers in a specific area of practice and allow the consumer to choose. The Commission understands that there are occasions when a broker cannot provide the names of three separate settlement service providers that practice in one specific area, but regardless of how many names may be provided, it is imperative that final selection of the settlement service provider be left to the consumer, not the broker. Closing Instructions The purpose of closing instructions is for the consumer to engage the company that will be responsible for ultimately closing the sales transaction. In most transactions, the company responsible for closing the transaction is a title company, although there are brokers that provide these services. As stated above, the consumer is responsible for the selection of settlement service providers, including the individual or company that performs the closing services. If the broker is performing the closing services, including the preparation, delivery and recording of closing documents and the disbursement of funds, the broker is the “Closing Company” and thereby is responsible for
Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
completing the Commission-approved Closing Instructions at the time that the Contract to Buy and Sell Real Estate is executed by the buyer and seller. As required by Commission Rule E-4 and C.R.S. 12-61-113(i), the broker shall retain a copy of the Closing Instructions for future use or inspection by an authorized representative of the Real Estate Commission. If a title company is engaged to perform the closing services, the Division of Insurance requires that a title entity provide closing and settlement services only when there are written instructions from all necessary parties. See Division of Insurance Rule 3-5-1. All amendments to existing written instructions with a title entity must also be in writing. If a title company is engaged to provide the closing services, it is the “Closing Company” and it is the responsibility of the title company to complete the closing instructions as required by the Division of Insurance. The broker should make a reasonable effort to obtain a copy of the closing instructions from the title entity for the broker’s transaction file, to ensure compliance with Commission Rule E-4 and C.R.S. 12-61-113(i) as stated above. Earnest Money Deposits Commission Rule E-1(o) requires the selling broker to deliver the contract and the earnest money to the listing broker, unless the parties have otherwise agreed in writing. The listing broker is required to deposit the money in the broker’s escrow or trust account in a recognized depository no later than the third business day following the day on which the broker receives notice of contract acceptance. If the selling broker receipts for a promissory note, or thing of value, such note or thing of value must be delivered with the contract to the listing broker to be held by the listing broker. Any check or note must be payable, or assigned, to the listing broker. Upon receipt of the earnest money, the listing broker must complete the Earnest Money Receipt as the Earnest Money Holder. A copy of the receipt must be retained by the broker to ensure compliance with Commission Rule E-4 and C.R.S. 12-61-113(i). If the buyer and seller have agreed in writing that a third party or entity will hold the earnest money, the listing broker must deliver the earnest money to the third party or entity. The listing broker must obtain a dated and signed Earnest Money Receipt from the third party or entity upon delivery of the earnest money. For record keeping purposes, the broker must retain a copy of the Earnest Money Receipt and a copy of the earnest money check, note or other thing of value as required by Commission Rule E-4 and C.R.S. 1261-113(i).
Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
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Colorado Course – Chapter 21
Section 10 of the Closing Instructions is relatively new: If the Title (closing) Company receives written notice that the sales contract has been terminated, the Title Company must release the Earnest Money within 5 days. Since the Title Company representative also signs the Closing Instructions, this form is a contract on the Company, as well. Therefore, the “5 day” provision is contractually binding on the Title Company. This also means, however, that both Buyer and Seller agree in writing (by signing the Closing Instructions) to give the Title Company proper notice of Termination and written instructions of to whom to return the Earnest money.
Copyright 2016 – All Rights Reserved
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Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (CL8-9-12) (Mandatory 1-13) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
CLOSING INSTRUCTIONS Date: , Seller, and , Buyer, engage , Closing Company, who agrees to provide closing and settlement services in connection with the Closing of the transaction for the sale and purchase of the Property 1.
PARTIES, PROPERTY.
15 16
known as No.
,
17 18 19 20
and more fully described in the Contract to Buy and Sell Real Estate, dated , including any counterproposals and amendments (Contract). All terms of the Contract are incorporated herein by reference. In the event of any conflict between this Agreement and the Contract, this Agreement shall control, subject to subsequent amendments to the Contract or this Agreement.
21 22 23 24
2. TITLE COMMITMENT, EXCEPTIONS AND POLICY. Closing Company Agrees Does Not agree that: upon completion of a satisfactory title search and examination, it will furnish a Title Insurance Commitment; and it will issue a Agrees Does Not agree to Title Insurance Policy provided that all requirements have been fulfilled. Closing Company furnish copies of Exceptions.
25 26 27 28
3. INFORMATION, PREPARATION. CLOSING, RECORDING. Closing Company is authorized to obtain any information necessary for the Closing. Closing Company agrees to prepare (excluding legal documents), deliver and record all documents required or customarily recorded, and disburse all funds pursuant to the Contract that are necessary to carry out the terms and conditions of the Contract.
29 30
4. CLOSING FEE. Closing Company will receive a fee of $ settlement services (Closing Fee).
31 32
5. RELEASE, DISBURSEMENT. Closing Company is not authorized to release any signed documents or things of value prior to receipt and disbursement of Good Funds, except as provided in §§ 9, 10 and 11.
33 34 35
6. DISBURSER. Closing Company shall disburse all funds, including real estate commissions, except those funds as may be separately disclosed in writing to Buyer and Seller by Closing Company or Buyer’s lender on or before Closing. All parties agree that no one other than the disburser can assure that payoff of loans and other disbursements will actually be made.
36 37 38
Cashier’s Check, at 7. SELLER’S NET PROCEEDS. Seller will receive the net proceeds of Closing as indicated: Seller’s expense Funds Electronically Transferred (wire transfer) to an account specified by Seller, at Seller’s expense Closing Company’s trust account check.
39 40
8. CLOSING STATEMENT. Closing Company will prepare and deliver an accurate, complete and detailed closing statement to Buyer and Seller at time of Closing.
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9. FAILURE OF CLOSING. If Closing or disbursement does not occur on or before Closing Date set forth in the Contract, Closing Company, except as provided herein, is authorized and agrees to return all documents, monies, and things of value to the depositing party, upon which Closing Company will be relieved from any further duty, responsibility or liability in connection with these Closing Instructions. In addition, any promissory note, deed of trust or other evidence of indebtedness signed by Buyer will be voided by Closing Company, with the originals returned to Buyer and a copy to Buyer’s lender.
46 47 48 49 50
10. RETURN OF EARNEST MONEY. Except as otherwise provided in § 11, Earnest Money Dispute, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder shall release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money shall be made within five days of Earnest Money Holder’s receipt of the written mutual instructions signed by both Buyer and Seller, provided the Earnest Money check has cleared.
51 52
11. EARNEST MONEY DISPUTE. In the event of any controversy regarding the Earnest Money (notwithstanding any termination of the Contract), Earnest Money Holder shall not be required to take any action. Earnest Money Holder, at its option
Street Address
Copyright 2016 – All Rights Reserved
City
56
State
for
Zip
providing
closing
Colorado Contracts & Regulations (48 credit hrs)
and
MacIntosh Real Estate School
Colorado Course – Chapter 21
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and sole subjective discretion, has several options: (1) await any proceeding, (2) interplead all parties and deposit Earnest Money into a court of competent jurisdiction and shall recover court costs and reasonable attorney and legal fees, or (3) provide notice to Buyer and Seller that unless Earnest Money Holder receives a copy of the Summons and Complaint or Claim (between Buyer and Seller) containing the case number of the lawsuit (Lawsuit) within one hundred twenty days of Earnest Money Holder’s notice to the parties, Earnest Money Holder shall be authorized to return the Earnest Money to Buyer. In the event Earnest Money Holder does receive a copy of the Lawsuit, and has not interpled the monies at the time of any Order, Earnest Money Holder shall disburse the Earnest Money pursuant to the Order of the Court.
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12. SUBSEQUENT AMENDMENTS. Any amendments to, or termination of, these Closing Instructions must be in writing and signed by Buyer, Seller and Closing Company.
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13. CHANGE IN OWNERSHIP OF WATER WELL. Within sixty days after Closing, Closing Company shall submit any required Change in Ownership form or registration of existing well form to the Division of Water Resources in the Department of Natural Resources (Division), with as much information as is available and the Division shall be responsible for obtaining the necessary well registration information directly from Buyer. Closing Company shall not be liable for delaying Closing to ensure Buyer completes any required form.
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14. WITHHOLDING. The Internal Revenue Service and the Colorado Department of Revenue may require Closing Company to withhold a substantial portion of the proceeds of this sale when Seller is either of the following: (a) a foreign person, or (b) will not be a Colorado resident after Closing. Seller should inquire of Seller’s tax advisor to determine if withholding applies or if an exemption exists.
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15. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
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16. COUNTERPARTS. This document may be executed by each party, separately, and when each party has executed a copy, such copies taken together shall be deemed to be a full and complete contract between the parties.
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17. BROKER’S COPIES. Closing Company shall provide, to each broker in this transaction, copies of all signed documents that such brokers are required to maintain pursuant to the rules of the Colorado Real Estate Commission.
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18.
NOTICE, DELIVERY, CHOICE OF LAW. 18.1. Physical Delivery. Except as provided in § 18.2, all notices must be in writing. Any notice or document to Buyer is effective when physically received by Buyer, any individual buyer, any representative of Buyer, or Brokerage Firm of Broker working with Buyer. Any notice or document to Seller shall be effective when physically received by Seller, any individual seller, any representative of Seller, or Brokerage Firm of Broker working with Seller. Any notice or document to Closing Company shall be effective when physically received by Closing Company, any individual of Closing Company, or any representative of Closing Company. 18.2. Electronic Delivery. As an alternative to physical delivery, any signed documents and written notice may be Facsimile Email Internet No Electronic delivered in electronic form by the following indicated methods only: Delivery. Documents with original signatures shall be provided upon request of any party. 18.3. Choice of Law. This Contract and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in this state for property located in Colorado. Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Date
Buyer’s Signature
Address:
Address:
Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address:
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Date
Colorado Contracts & Regulations (48 credit hrs)
MacIntosh Real Estate School
Colorado Course – Chapter 21
Seller’s Name:
Seller’s Name:
Seller’s Signature
Date
Seller’s Signature
Address:
Address:
Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address:
Date
93 94
Closing Company’s Name:
Authorized Signature
Title
Date
Address: Phone No.: Fax No.: Electronic Address: 95 96 97 98 99 100 101 102 103 104 105 106 107 108
(TO BE COMPLETED ONLY BY BROKER AND CLOSING COMPANY) (Broker) Working with Seller Working with Buyer engages Closing Company as Broker’s scrivener to complete, for a fee not to exceed $ at the sole expense of Bill of Sale Colorado Real Estate Commission approved Promissory Broker, the following legal documents: Deed Note Colorado Real Estate Commission approved Deed of Trust. Closing Company agrees to prepare, on behalf of Broker, the indicated legal documents pursuant to the terms and conditions of the Contract. The documents stated above shall be subject to Broker’s review and approval and Broker acknowledges that Broker is responsible for the accuracy of the above documents.
Brokerage Firm’s Name: Broker’s Name:
Broker’s Signature
Date
Authorized Signature
Title
Closing Company’s Name:
Date
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Page Colorado Contracts & Regulations (48 credit hrs)3 of 3
Not for Use Before 1-1-12 1 2 3 4 5 6
The MacIntosh printed portions of thisSchool form, except differentiated additions, have been approved by the Colorado Real EstateCourse Commission. Real Estate Colorado – Chapter 21 (PCO70-10-11) (Mandatory 1-12) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
7
POST-CLOSING OCCUPANCY AGREEMENT
8 9 10 11
(Seller Rent-Back Agreement) Note: This form is to be used only for short-term residential occupancy for a term not to exceed 30 days. A residential lease shall be used for a term longer than 30 days.
12 13 14
1. This Post-Closing Occupancy Agreement (Agreement) is entered into between (Seller), and (Buyer), relating to the occupancy of the following legally described real estate in the County of , Colorado:
15 16 17
known as No. Street Address
CO State
City
(Property). Zip
18 19 20 21
2. Buyer and Seller entered into that certain Contract to Buy and Sell Real Estate dated __________________, and any amendments (Contract). All terms of the Contract are incorporated herein by reference. In the event of any conflict between this Agreement and the Contract, this Agreement shall control, subject to subsequent amendments to the Contract or this Agreement.
22 23
3. Seller shall retain possession of the Property from date of Closing to ________ days subsequent to Closing as set forth in the Contract (Term).
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4. During the Term of this Agreement, Seller shall, at Seller's sole expense, keep the improvements and any personal property on the Property and owned by Buyer in the same condition and repair, normal wear and tear excepted, as of Closing, except as set forth in § 5. Unless such services are provided by a third party (e.g., homeowner’s association), Seller also shall maintain the landscaping and mow the lawn as previously maintained. Seller shall provide timely notice to Buyer of any improvement requiring maintence or repair.
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5. Buyer shall, at Buyer’s sole expense, maintain and repair the heating and cooling systems including ventilation and ducts, plumbing, electrical wiring, roof and structural components of the Property and all appliances in the Property owned by Buyer, and the lawn sprinkler system, if any. Seller shall be responsible for any misuse, waste, neglect or damage to the Property or personal property on the Property caused by Seller or Seller’s family or visitors.
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6. Upon reasonable prior notice to Seller, Buyer shall have access to the Property at all reasonable times and Buyer, or Buyer’s designee, may enter the Property without interference or disturbing Seller’s possession of the Property. Buyer shall have the right, but not the obligation, to restore the Property and any items of personal property owned by Buyer to the same condition of repair and cleanliness as existed at the date of this Agreement, or Closing, whichever shall be later, and, in such event, Seller shall pay Buyer, in addition to the rent, the costs of such repair or replacement.
38 39
7. Rent shall be at the rate of $____________ per day for the Term of the occupancy, payable in advance at Closing and delivery of deed. Should Seller vacate earlier, the unearned rent Shall Shall Not be refunded to Seller.
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8. Should Seller not timely surrender possession of the Property to Buyer, Seller shall be subject to eviction and shall be additionally liable to Buyer for payment of $____________ per day from and after the Term, until possession is delivered to Buyer.
43
9.
44 45
10. Electric and gas service incurred during Seller’s occupancy shall be paid by Seller final reading and payments for said utilities and services shall be made by both parties.
Water and sewer charges incurred during Seller’s occupancy shall be paid by
PCO70-10-11. POST-CLOSING OCCUPANCY AGREEMENT Copyright 2016 – All Rights Reserved
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Seller
Buyer. Buyer. Arrangements for the
Page 1hrs) of 2 Colorado Contracts & Regulations (48 credit
Not for Use Before 1-1-12 46 47 48 49
11. MacIntosh Seller Shall Shall Not maintain and pay the cost of (1) a Seller’s “Renters Policy” covering Real Estate School Colorado Course Seller’s – Chapterpersonal 21 property on the Property and (2) Shall Shall Not maintain and pay the cost of adequate liability insurance in favor of both Seller and Buyer and supply to Buyer evidence of such insurance. Buyer agrees to maintain and shall pay the cost of Homeowner’s Property Insurance Policy (which may be endorsed as a non-owner occupant/Buyer).
50 51 52
12. Seller agrees that a security deposit in the amount of $______________ will be held by Buyer ________________ from Closing until Seller vacates the Property. The security deposit shall be held and disbursed pursuant to Colorado law, generally within one month after the Term of this Agreement.
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13. Anything to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Agreement, prior to or after the Term of this Agreement, the arbitrator or court shall award to the prevailing party all reasonable costs and expenses, including attorney fees, legal fees and expenses.
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14. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Date
Buyer’s Signature
Address:
Address:
Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address:
Seller’s Name:
Seller’s Name:
Seller’s Signature
Date
Seller’s Signature
Address:
Address:
Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address:
Date
Date
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Page 2hrs) of 2 Colorado Contracts & Regulations (48 credit
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (GD31-9-12)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
GREEN DISCLOSURE (Energy) THIS DISCLOSURE SHOULD BE COMPLETED BY SELLER, NOT BY BROKER. Seller states that the information contained in this Disclosure is correct to Seller’s CURRENT ACTUAL KNOWLEDGE as of this Date. Seller hereby receipts for a copy of this Disclosure. Broker may deliver a copy of this Disclosure to prospective buyers. Note:
If an item is not present at the Property, the Seller does not know the answer or if an item is not to be included in the sale, the applicable check box is not checked. The Contract to Buy and Sell Real Estate, not this Disclosure form, determines whether an item is included or excluded; if there is an inconsistency between this form and the Contract, the Contract controls. Date: Property Address: Seller:
Property Address: Street
City
State
Zip
1.
Home Performance Programs
2.
Construction Type:
SIPS Improved Insulation Other
3.
Heating, Cooling and Ventilation:
Ground Source Heat Pump Tankless/On Demand Water Heater Evaporative Cooling High SEER A/C SEER Rating:
High Efficiency Furnace/Boiler (eg. >= 90% AFUE) High Efficiency Water Heater (eg. >=90%, or EF>=.82 for gas) Whole House Fan Ceiling Fans Insulation Air Sealing Upgrades Completed Home Orientation (South Facing Overhangs) Low Flow Fixtures/Shower Heads Hot Water Recirculation Pump/Structured Plumbing Greywater System
(check box for each type)
Home Performance with ENERGY STAR ICF Straw Bale
Material Efficient Framing Earthen Build/Rammed Earth
4.
Water Efficient Features:
Low Flow Toilets Low Water sod Xeriscaping WaterSense by ENERGY STAR
5.
Indoor Air Quality:
Indoor Air Quality Plus by ENERGY STAR Heat Recovery Ventilator/Fresh Air System Green Guard Certified Carpet / Flooring (documentation required) No Formaldehyde Certified Cabinetry (documentation required)
No or Low VOC Paint Radon Mitigation System
6.
Sustainable Materials:
FSC Certified Lumber Reclaimed Flooring
Recycled Content Regionally Harvested
7.
Energy Features:
ENERGY STAR/Low E Windows (documentation required) Orientation/Passive Solar Design ENERGY STAR Rated Roof (documentation required)
Copyright 2016 – All Rights Reserved
GD31-9-12. ENERGY/GREEN FEATURES ADDENDUM
FSC Certified Cabinets Sustainable Flooring
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Automated Lighting Controls High Efficiency Lighting Programmable Thermostat
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8.
MacIntosh Real Estate School
ENERGY STAR Appliances:
Refrigerator
Range/Oven
Dishwasher
Colorado Course – Chapter 21
Clothes Washer
ADDITIONAL COMMENTS:
Seller and Buyer understand that the real estate brokers do not warrant or guarantee the above information on the Property. Property inspection services may be purchased and are advisable. This form is not intended as a substitute for an inspection of the Property.
The information contained in this Disclosure has been furnished by Seller, who certifies to the truth thereof based on Seller’s CURRENT ACTUAL KNOWLEDGE.
Seller
Date
Seller
Date
ADVISORY TO BUYER: 1. Even though Seller has answered the above questions to Seller’s current actual knowledge, Buyer should thoroughly inspect the Property and obtain expert assistance to accurately and fully evaluate the Property to confirm the status of the matters set forth herein. 2. Seller states that the information is correct to “Seller’s current actual knowledge” as of the date of this form. The term “current actual knowledge” is intended to limit Seller’s disclosure only to facts actually known by the Seller and does not include “constructive knowledge” or “common knowledge” or what Seller “should have known” about the Property. The Seller has no duty to inspect the Property when this Disclosure is filled in and signed. 3. Valuable information may be obtained from various local/state/federal agencies, and other experts may assist Buyer by performing more specific evaluations and inspections of the Property. Additional documentation such as receipts or information from manufacturers is also helpful. 4. Whether any item is included or excluded is determined by the contract between Buyer and Seller and not this Green Disclosure. 5. Buyer acknowledges that Seller does not warrant that the Property is fit for Buyer’s intended purposes or use of the Property. Buyer acknowledges that Seller’s indication that an item is “working” is not to be construed as a warranty of its continued operability or as a representation or warranty that such item is fit for Buyer’s intended purposes. 6.
Buyer hereby receipts for a copy of this Disclosure.
Buyer
Date
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Buyer
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Date
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MacIntosh Real Estate School
Colorado Course – Chapter 21
ENERGY&GREEN FEATURES ADDENDUM – GLOSSARY OF TERMS Copyright ©2010 U.S. Green Building Council Colorado
TERM AFUE Automated Lighting Controls Ceiling Fans Earthen Built / Rammed Earth
DEFINITION A central furnace or boiler's efficiency is measured by annual fuel utilization efficiency (AFUE). Automatic controls for lighting range from a simple outdoor light fixture with a built-in photo sensor to whole-house programmable controls that can activate lights for various scenarios. Fans, set to push warm air into living spaces, can reduce winter heating bills, & cut cooling costs when they are used in lieu of air-conditioners. A technique used in the building of walls using the raw materials of earth, chalk, lime & gravel.
ENERGYSTAR® / Low E Windows ENERGYSTAR® Rated Roof ENERGYSTAR® Refrigerator, Dishwasher, Clothes-Washer
In general, Colorado requires a U-factor of 0.35 or less to meet ENERGY STAR guidelines. ENERGY STAR qualified roof products reflect more of the sun's rays. ENERGY STAR qualified refrigerators are 20% more energy efficient than the minimum federal standard. ENERGYSTAR® qualified dishwasher models are, on average, 10% more energy efficient than non-qualified models. ENERGYSTAR® qualified clothes washers use about 30% less energy & use over 50% less water than regular washers.
Evaporative Cooling
AKA swamp cooler. A simple cooling system that operates by moving air across or through a wet pad.
FSC Certified Cabinets
Independent certification & labeling of forest products, such as lumber used for cabinets, administered by the Forest Stewardship Council. Independent certification & labeling of forest products, such as lumber used for framing, administered by the Forest Stewardship Council. Third-party certification program for carpet & flooring.
FSC Certified Lumber Green Guard Certified Carpet/Flooring Grey water System Ground Source Heat Pump (Geothermal heat pumps/geothermal heat exchange) High Efficiency Furnace / Boiler
High Efficiency Lighting (CFLs, LED)
High Efficiency Water Heater High SEER Air Conditioning Home Orientation (South Facing Overhangs)
Home Performance with ENERGY STAR®
Hot Water Recirculation Pump / Structured Plumbing ICF
Indoor air PLUS By ENERGYSTAR® Improved Insulation
Insulation Air Sealing Upgrades
Low Flow Fixtures / Shower Heads
Untreated wastewater resulting from lavatory wash basins, laundry & bathing. Waste water from kitchen sinks is often excluded because of the high food & grease content. Ground source heat pumps (GSHPs) are electrically powered systems that tap the stored energy of the earth. These systems use the earth's relatively constant temperature to provide heating, cooling, & hot water. The Federal Trade Commission requires new furnaces or boilers to display their AFUE so consumers can compare heating efficiencies of various models. AFUE is a measure of how efficient the appliance is in the energy in its fuel over the course of a typical year. New lighting technologies use less energy, last longer, & give off the same amount of light as old incandescent technologies. Compact fluorescent lights (CFLs) use about a quarter of the energy while giving off the same amount of light & lasting up to 10 times longer. Light-emitting Diodes (LEDs)create light without releasing heat, last longer than CFLs & do not contain mercury. High efficiency water heaters use 10 to 50 percent less energy than standard models. Models with an ENERGYSTAR rating are considered highly efficient. Air conditioners manufactured after January 26, 2006 must achieve a Seasonal Energy Efficiency Ratio (SEER) of 13 or higher. The home is located on the property to maximize solar gain in winter, & provide shade in summer. In general, a south-facing orientation, within 30° east or west of true south, will provide around 90% of the maximum static solar collection potential. Home Performance with ENERGYSTAR is a national program administered by the U.S. Environmental Protection Agency (EPA) & the U.S. Department of Energy (DOE). It offers a comprehensive, "whole-house" approach to improving energy efficiency & comfort of existing homes. Hot water recirculation systems use a pump to move hot water through the plumbing system from the water heater to near the fixtures. Structured Plumbing is a method of designing the hot water plumbing layout to minimize hot water delivery times. Rigid plastic foam forms that hold concrete in place during curing & remain in place afterwards to serve as thermal insulation for concrete walls. The foam sections are lightweight & result in energy efficient, durable construction. A variety of construction practices & technologies to decrease the risk of poor indoor air quality. The Environmental Protection Agency administers a builder program called Indoor air PLUS. Building codes typically require a minimum insulation level for each component of the building envelope. Improved Insulation refers to increasing the insulation levels beyond the minimum code requirements. For existing homes, Insulation & Air Sealing upgrades are typically implemented in conjunction with an energy audit. These steps help seal a home from drafts & leakage, & increase the insulation levels of the home. A faucet with aerator installed to reduce the flow of water but not reduce water pressure. Low-flow shower heads use about 2 ½ gallons of water per minute compared to between four & five gallons per minute used by conventional heads.
GD31-9-12. ENERGY/GREEN FEATURES ADDENDUM Copyright 2016 – All Rights Reserved
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TERM
Low Flow Toilets
Low-water Sod No Formaldehyde Certified Cabinetry
No or Low VOC Paint Orientation / Passive Solar Design Programmable Thermostat Radon Mitigation System
Colorado Course – Chapter 21
DEFINITION A toilet that uses less water per flush when compared to the current federal requirements. Such toilets often have the EPA's WaterSense label. In general, low-flow toilets use a maximum of 1.28 gallons of water per flush. Landscaping that has significantly lower watering requirements than conventional turf. Most of these types come with certificates of installation in Colorado. The Kitchen Cabinet Manufacturers Association (KCMA) created the Environmental Stewardship Program (ESP) to help cabinet manufacturers demonstrate their commitment to environmental sustainability & help consumers easily identify environmentally-friendly products. Paints that release no, or minimal Volatile Organic Compound (VOC) pollutants, & are virtually odor free. Solar geometry, window technology & local climate are used to direct building design. Helps reduce or even eliminate the need for mechanical cooling & heating & daytime artificial lighting. A thermostat that can be programmed to increase &decrease a home's temperature setting automatically. A system that detects radon, a naturally occurring gas, colorless &odorless, that causes adverse health effects. Radon gas often enters a structure by seeping through cellar walls & floors.
Reclaimed Flooring
Material that is recovered for reuse or another purpose, such as wood barn siding hat becomes flooring.
Recycled Content
Recycled-content products are made from materials that would otherwise have been discarded. These products are made totally or partially from material contained in recycled products, like aluminum soda cans or newspaper. Harvested within 500 miles of home. The rating & performance standard developed by the U.S. government & equipment manufacturer's to produce an energy consumption rating that is easy to understand by consumers. The lower the SEER rating, the more energy required to produce the desired effect. Panels made from a thick layer of foam sandwiched between two layers of Oriented Strand Board (OSB), plywood or fiber-cement. They are an alternative to the foam core & are available with a core of agriculture fibers (such as wheat straw) thatprovides similar thermal & structural performance.
Regionally Harvested SEER Rating
SIPS
Straw Bale
Sustainable Flooring
Tankless/On Dem & Water Heater
Whole House Fan Xeriscaping
A construction method that uses waste straw left over from crops, such as wheat, oats, barley, rye, rice & flax, after all the food has been extracted. Straw is gathered, baled, compressed & tied together. Bales are placed over a "stemwall" to protect the straw from the ground soil & the straw bales are stuccoed & plastered over for finishing. Sustainable flooring is produced from sustainable materials (& by a sustainable process) that reduces demands on ecosystems during its life-cycle. This includes harvest, production, use & disposal. A system that delivers hot water at a preset temperature when needed, but without requiring the storage of water. The approach reduces or eliminates energy standby losses. Tankless water heaters can be used for supplementary heat, such as a booster to a solar hot water system, or to meet all hot water needs. Tankless water heaters have an electric, gas, or propane heating device that is activated by the flow of water. A whole-house fan is a type of fan installed in a building's ceiling, designed to pull hot air out of the building. A method of landscaping that promotes water conservation.
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Colorado Course – Chapter 21
Common Questions about the Change of Status Form
(For more information, see the discussion on Designated Brokerage - and the “Newer” law of Colorado Agency in Chapter 2 – Agency.)
Designated Brokerage & Change of Status – When do you use the Change of Status form? A Change of Status form is only used when a broker has to actually change his/her status from one form of agency to the either Transaction Broker or Customer.
Example: Broker Brian has a Listing agreement with Seller and Buyer Bob wants Broker Brian to represent him also in the purchase of Seller’s house. If Bob does not want to be treated by Broker Brian merely as a “customer”, Broker Brian must represent Bob as a transaction broker and convince Seller to also switch to Transaction-Broker representation and use the Change of Status form to do so.
According to the Common Law (“Uniform”) of Agency (Chapter 2) it would be Dual Agency if the same agent were to represent both parties in the same transaction. However, in Colorado we have given the broker and parties a choice. Broker Brian, Seller and Buyer Bob must decide who is going to switch to “non-Agency” status: a) transaction broker for seller and transaction broker for buyer; b) single agency for Seller (=listing agent), treating buyer as customer; or c) single agent for buyer (=buyer agency), treating seller as customer. (See also, Ch. 15) Once they make their decision, since at least one of the parties and one of the brokers are changing their “status” - they will use the Change of Status form as an addendum to both of their original agency agreements. What if Seller and the eventual Buyer are represented by two different brokers from the same company. Wouldn’t that be Dual Agency? And how does the Change of Status form come into play in this case? The Change of Status would only be used if one broker is going to be working for both seller and buyer. So it would not come into play in this case. This would also not be Dual Agency because of the (Colorado-only) Designated Brokerage rule. From the same brokerage, Broker A could be Seller’s Designated Broker and Broker B could be Buyer’s Designated Broker without creating Dual Agency. You will see later in this Chapter, for instance, in the Exclusive Right-to-Buy Contract, Section 4: “In-Company Transaction – Different Brokers. When the seller and buyer in a transaction are working with different brokers, those brokers continue to conduct themselves consistent with the brokerage relationships they have established…” What if you are the listing agent and during an open house a buyer without an agent wants to buy the house. How do you know, or decide if you should treat the buyer as a customer; or do a "Change of Status" form and become a transaction broker? In that case, you wouldn't use a Change of Status form at all, because the buyer was unrepresented.
Copyright 2016 – All Rights Reserved
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Colorado Course – Chapter 21
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (CS23-10-06) (Mandatory 1-07)
CHANGE OF STATUS TRANSACTION-BROKERAGE DISCLOSURE [NOTE:
This form is to be used at the time a broker changes the brokerage relationship from an agency relationship to a Transaction-Brokerage relationship.]
For purposes of this disclosure, seller also means landlord (which includes sublandlord) and buyer also means tenant (which includes subtenant). This form discloses to Seller and Buyer the change in brokerage relationship from an agency relationship to a transactionbrokerage relationship. This change is effective only for the transaction between Seller and Buyer for the property described below and does not change the relationship with Broker for other transactions.
Regarding: Street Address
City
State
Zip
Seller: Buyer: As agreed to between Brokerage Firm and the undersigned in the following contract: Exclusive Right-to-Sell Listing Contract, dated Exclusive Right-to-Lease Listing Contract, dated Exclusive Right-to Buy-Contract, dated Exclusive Tenant Contract, dated Other contract titled:
, dated
Broker will be working as a Transaction-Broker with both Buyer and Seller and will assist both parties with communication, advice, negotiation, contracting and closing without being an agent or advocate for either party.
THIS IS NOT A CONTRACT.
Receipt of this Disclosure form is hereby acknowledged on
Seller
(date).
Buyer
On (date), Broker provided Seller Buyer with a copy of this Disclosure form and retained a copy for Broker’s records. Brokerage Firm’s Name:
Broker
CS23-10-06. CHANGE OF STATUS (Transaction-Brokerage Disclosure) Copyright 2016 – All Rights Reserved 66
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (RA33-9-12) (Mandatory 1-13) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
RESIDENTIAL ADDENDUM TO CONTRACT TO BUY AND SELL REAL ESTATE
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Colorado Course – Chapter 21
Date: 1. ADDENDUM TO CONTRACT TO BUY AND SELL REAL ESTATE. This Residential Addendum (Addendum) is made a part of the following contract that is checked: Contract to Buy and Sell Real Estate (Land) between Seller and Buyer (Contract) dated relating to the sale of the Property, or; Contract to Buy and Sell Real Estate (Commercial) between Seller and Buyer (Contract) dated relating to the sale of the Property (Property).
known as Street Address
City
State
Zip
This Addendum shall control in the event of any conflict with the Contract. Except as modified, all other terms and provisions of the Contract shall remain the same. Terms used herein shall have the same meaning as in the Contract. 2.
PURPOSE AND RESIDENTIAL PROVISIONS. 2.1. Purpose of Addendum. The Property contains, in part, one or more residences but the Contract does not contain required provisions that are set forth in this Addendum. 2.2. Residential Provisions. The Contract shall be amended by the addition of the check-marked provisions in this Addendum. 2.3. New Loan. 2.3.1. Buyer to Pay Loan Costs. Buyer, except as provided in § 4.4 of the Contract, if applicable, shall timely pay Buyer’s loan costs, loan discount points, prepaid items and loan origination fees, as required by lender. 2.3.2. Buyer May Select Financing. Buyer may pay in cash or select financing appropriate and acceptable to Buyer, including a different loan than initially sought, except as restricted in § 4.5.3 or § 30 (Additional Provisions) of the Contract. 2.3.3. Loan Limitations. Buyer may purchase the Property using any of the following types of loan: Conventional FHA VA Bond Other . 2.3.4. Good Faith Estimate – Monthly Payment and Loan Costs. Buyer is advised to review the terms, conditions and costs of Buyer’s New Loan carefully. If Buyer is applying for a residential loan, the lender generally must provide Buyer with a good faith estimate of Buyer’s closing costs within three days after Buyer completes a loan application. Buyer should also obtain an estimate of the amount of Buyer’s monthly mortgage payment. If the New Loan is unsatisfactory to Buyer, Buyer has the Right to Terminate under § 25.1, on or before Loan Objection Deadline (§ 3) of the Contract. 2.4. Appraisal Condition. 2.4.1. Lender Property Requirements. If the lender imposes any requirements or repairs (Requirements) to be made to the Property (e.g., roof repair, repainting), beyond those matters already agreed to by Seller in this Contract, Seller has the Right to Terminate under § 25.1, (notwithstanding § 10 of the Contract), on or before three days following Seller’s receipt of the Requirements, based on any unsatisfactory Requirements, in Seller’s sole subjective discretion. Seller’s Right to Terminate in this § 2.4.1 shall not apply if, on or before any termination by Seller pursuant to this § 2.4.1: (1) the parties enter into a written agreement regarding the Requirements; or (2) the Requirements have been completed; or (3) the satisfaction of the Requirements is waived in writing by Buyer. 2.4.2. Appraisal Condition. The applicable Appraisal provision set forth below shall apply to the respective loan type set forth in § 4.5.3 of the Contract, or if a cash transaction, i.e. no financing, § 2.4.3 shall apply. 2.4.3. Conventional/Other. Buyer has the sole option and election to terminate this Contract if the Property’s . valuation is less than the Purchase Price determined by an appraiser engaged by The appraisal shall be received by Buyer or Buyer’s lender on or before Appraisal Deadline (§ 3), if the Property’s valuation is less than the Purchase Price and Seller’s receipt of either a copy of such appraisal or written notice from lender that confirms the Property’s valuation is less than the Purchase Price. This § 2.4.3 is for the sole benefit of Buyer. Copyright 2016 – All Rights Reserved
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Colorado Course – Chapter 21
2.4.4. FHA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the Purchaser (Buyer) shall not be obligated to complete the purchase of the Property described herein or to incur any penalty by forfeiture of Earnest Money deposits or otherwise unless the Purchaser (Buyer) has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct . The Purchaser (Buyer) Endorsement lender, setting forth the appraised value of the Property of not less than $ shall have the privilege and option of proceeding with the consummation of the Contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value nor the condition of the Property. The Purchaser (Buyer) should satisfy himself/herself that the price and condition of the Property are acceptable. 2.4.5. VA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the purchaser (Buyer) shall not incur any penalty by forfeiture of Earnest Money or otherwise or be obligated to complete the purchase of the Property described herein, if the Contract Purchase Price or cost exceeds the reasonable value of the Property established by the Department of Veterans Affairs. The purchaser (Buyer) shall, however, have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs. Note: If FHA or VA Appraisal is checked, the Appraisal Deadline (§ 3) does not apply to FHA or VA guaranteed loans. 2.5. Source of Potable Water (Residential Land and Residential Improvements Only). Buyer Does Does Not acknowledge receipt of a copy of Seller’s Property Disclosure or Source of Water Addendum disclosing the source of potable Does Does Not acknowledge receipt of a copy of the current well permit. There is No water for the Property. Buyer Well. Note to Buyer: SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE GROUND WATER. YOU MAY WISH TO CONTACT YOUR PROVIDER (OR INVESTIGATE THE DESCRIBED SOURCE) TO DETERMINE THE LONG-TERM SUFFICIENCY OF THE PROVIDER’S WATER SUPPLIES. 2.6. Carbon Monoxide Alarms. Note: If the improvements on the Property have a fuel-fired heater or appliance, a fireplace, or an attached garage and include one or more rooms lawfully used for sleeping purposes (Bedroom), the parties acknowledge that Colorado law requires that Seller assure the Property has an operational carbon monoxide alarm installed within fifteen feet of the entrance to each Bedroom or in a location as required by the applicable building code. 2.7. Lead-Based Paint. Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, this Contract shall be void unless (1) a completed Lead-Based Paint Disclosure (Sales) form is signed by Seller, the required real estate licensees and Buyer, and (2) Seller receives the completed and fully executed form prior to the time when the Contract is signed by all parties. Buyer acknowledges timely receipt of a completed Lead-Based Paint Disclosure (Sales) form signed by Seller and the real estate licensees. 2.8. Methamphetamine Disclosure. If Seller knows that methamphetamine was ever manufactured, processed, cooked, disposed of, used or stored at the Property, Seller is required to disclose such fact. No disclosure is required if the Property was remediated in accordance with state standards and other requirements are fulfilled pursuant to § 25-18.5-102, C.R.S. Buyer further acknowledges that Buyer has the right to engage a certified hygienist or industrial hygienist to test whether the Property has ever been used as a methamphetamine laboratory. Buyer has the Right to Terminate under § 25.1, upon Seller’s receipt of Buyer’s written notice to terminate, notwithstanding any other provision of the Contract, based on Buyer’s test results that indicate the Property has been contaminated with methamphetamine, but has not been remediated to meet the standards established by rules of the State Board of Health promulgated pursuant to § 25-18.5-102, C.R.S., Buyer shall promptly give written notice to Seller of the results of the test. 2.9. COLORADO FORECLOSURE PROTECTION ACT. The Colorado Foreclosure Protection Act (Act) generally applies if: (1) the Property is residential, (2) Seller resides in the Property as Seller’s principal residence, (3) Buyer’s purpose in purchase of the Property is not to use the Property as Buyer’s personal residence, (4) the Property is in foreclosure or Buyer has notice that any loan secured by the Property is at least thirty days delinquent or in default. If the transaction is a Short Sale transaction and a Short Sale Addendum is part of this Contract, the Act does not apply. Each party is further advised to consult an attorney. 2.10. Home Warranty. Seller and Buyer are aware of the existence of pre-owned home warranty programs that may be purchased and may cover the repair or replacement of such Inclusions.
Buyer
Date
Buyer
Date
Seller
Date
Seller
Date
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RA33-9-12. RESIDENTIAL ADDENDUM 2 of 2 Copyright 2016 – All Rights ReservedTO CONTRACT TO BUY AND 68 SELL REAL ESTATE Colorado Contracts & Regulations (48Page credit hrs)
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Colorado Course – Chapter 21
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (BC60-8-13) (Mandatory 1-14) THIS IS A BINDING CONTRACT. THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
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Compensation charged by brokerage firms is not set by law. Such charges are established by each real estate brokerage firm.
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DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE BUYER AGENCY, SELLER AGENCY OR TRANSACTION-BROKERAGE.
EXCLUSIVE RIGHT-TO-BUY LISTING CONTRACT
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BUYER AGENCY
Date: 1. AGREEMENT. Buyer and Brokerage Firm enter into this exclusive, irrevocable contract (Buyer Listing Contract) and agree to its provisions. Broker, on behalf of Brokerage Firm, agrees to provide brokerage services to Buyer. Brokerage Firm will receive compensation as set forth in this Buyer Listing Contract.
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2.
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3.
BROKER AND BROKERAGE FIRM. 2.1. Multiple-Person Firm. If this box is checked, the individual designated by Brokerage Firm to serve as the broker of Buyer and to perform the services for Buyer required by this Buyer Listing Contract is called Broker. If more than one individual is so designated, then references in this Buyer Listing Contract to Broker includes all persons so designated, including substitute or additional brokers. The brokerage relationship exists only with Broker and does not extend to the employing broker, Brokerage Firm or to any other brokers employed or engaged by Brokerage Firm who are not so designated. 2.2. One-Person Firm. If this box is checked, Broker is a real estate brokerage firm with only one licensed natural person. References in this Buyer Listing Contract to Broker or Brokerage Firm mean both the licensed natural person and brokerage firm, who serve as the broker of Buyer and perform the services for Buyer required by this Buyer Listing Contract. DEFINED TERMS. 3.1. Buyer: and any other person or entity on whose behalf the named party acts, directly or indirectly, to Purchase the Property.
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3.2.
Brokerage Firm:
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3.3.
Broker:
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TRANSACTION-BROKERAGE
3.4. Property. Property means real estate which substantially meets the following requirements or similar real estate acceptable to Buyer:
3.5.
Purchase; Lease. 3.5.1. Purchase means the acquisition of any interest in the Property or the creation of the right to acquire any interest in the Property, including a contract or lease. It also includes an agreement to acquire any ownership interest in an entity that owns the Property. 3.5.2. If this box is checked, Buyer authorizes Broker to negotiate a lease of the Property. Lease of the Property or Lease means any agreement between a landlord and the Buyer to create a tenancy or leasehold interest in the Property. 3.6. Listing Period. The Listing Period of this Buyer Listing Contract begins on , and continues through the earlier of (1) completion of the Purchase of the Property or Lease of the Property or (2) , and any written extensions (Listing Period). Broker will continue to assist in the completion of any purchase or lease for which compensation is payable to Brokerage Firm under § 7 of this Buyer Listing Contract. 3.7. Applicability of Terms. A check or similar mark in a box means that such provision is applicable. The abbreviation “N/A” or the word “Deleted” means not applicable. The abbreviation “MEC” (mutual execution of this contract) means the date upon which both parties have signed this Buyer Listing Contract. 3.8. Day; Computation of Period of Days, Deadline. 3.8.1. Day. As used in this Buyer Listing Contract, the term “day” means the entire day ending at 11:59 p.m., United States Mountain Time (Standard or Daylight Savings as applicable).
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3.8.2. Computation of Period of Days, Deadline. In computing a period of days, when the ending date is not specified, the first day is excluded and the last day is included, e.g., three days after MEC. If any deadline falls on a Saturday, Sunday or federal or Colorado state holiday (Holiday), such deadline Will Will Not be extended to the next day that is not a Saturday, Sunday or Holiday. Should neither box be checked, the deadline will not be extended.
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4.
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BROKERAGE RELATIONSHIP. 4.1. If the Buyer Agency box at the top of page 1 is checked, Broker represents Buyer as Buyer’s limited agent (Buyer’s Agent). If the Transaction-Brokerage box at the top of page 1 is checked, Broker acts as a Transaction-Broker. 4.2. In-Company Transaction – Different Brokers. When the seller and Buyer in a transaction are working with different brokers, those brokers continue to conduct themselves consistent with the brokerage relationships they have established. Buyer acknowledges that Brokerage Firm is allowed to offer and pay compensation to brokers within Brokerage Firm working with a seller. 4.3. In-Company Transaction – One Broker. If the seller and Buyer are both working with the same Broker, Broker will function as: 4.3.1. Buyer’s Agent. If the Buyer Agency box at the top of page 1 is checked, the parties agree the following applies: 4.3.1.1. Buyer Agency Only. Unless the box in § 4.3.1.2 (Buyer Agency Unless Brokerage Relationship with Both) is checked, Broker represents Buyer as Buyer’s Agent and must treat the seller as a customer. A customer is a party to a transaction with whom Broker has no brokerage relationship. Broker must disclose to such customer Broker’s relationship with Buyer. 4.3.1.2. Buyer Agency Unless Brokerage Relationship with Both. If this box is checked, Broker represents Buyer as Buyer’s Agent and must treat the seller as a customer, unless Broker currently has or enters into an agency or Transaction-Brokerage relationship with the seller, in which case Broker must act as a Transaction-Broker. 4.3.2. Transaction-Broker. If the Transaction-Brokerage box at the top of page 1 is checked, or in the event neither box is checked, Broker must work with Buyer as a Transaction-Broker. A Transaction-Broker must perform the duties described in § 5 and facilitate purchase transactions without being an advocate or agent for either party. If the seller and Buyer are working with the same broker, Broker must continue to function as a Transaction-Broker. 5. BROKERAGE DUTIES. Brokerage Firm, acting through Broker, as either a Transaction-Broker or a Buyer’s Agent, must perform the following Uniform Duties when working with Buyer: 5.1. Broker must exercise reasonable skill and care for Buyer, including but not limited to the following: 5.1.1. Performing the terms of any written or oral agreement with Buyer; 5.1.2. Presenting all offers to and from Buyer in a timely manner regardless of whether Buyer is already a party to a contract to Purchase the Property; 5.1.3. Disclosing to Buyer adverse material facts actually known by Broker; 5.1.4. Advising Buyer regarding the transaction and advising Buyer to obtain expert advice as to material matters about which Broker knows but the specifics of which are beyond the expertise of Broker; 5.1.5. Accounting in a timely manner for all money and property received; and 5.1.6. Keeping Buyer fully informed regarding the transaction. 5.2. Broker must not disclose the following information without the informed consent of Buyer: 5.2.1. That Buyer is willing to pay more than the purchase price offered for the Property; 5.2.2. What Buyer’s motivating factors are; 5.2.3. That Buyer will agree to financing terms other than those offered; or 5.2.4. Any material information about Buyer unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing. 5.3. Buyer consents to Broker’s disclosure of Buyer’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee does not further disclose such information without consent of Buyer, or use such information to the detriment of Buyer. 5.4. Broker may show properties in which Buyer is interested to other prospective buyers without breaching any duty or obligation to Buyer. Broker is not prohibited from showing competing buyers the same property and from assisting competing buyers in attempting to purchase a particular property. 5.5. Broker is not obligated to seek other properties while Buyer is already a party to a contract to purchase property. 5.6. Broker has no duty to conduct an independent inspection of the Property for the benefit of Buyer and has no duty to independently verify the accuracy or completeness of statements made by a seller or independent inspectors. Broker has no duty to conduct an independent investigation of Buyer’s financial condition or to verify the accuracy or completeness of any statement made by Buyer. 5.7. Broker must disclose to any prospective seller all adverse material facts actually known by Broker, including but not limited to adverse material facts concerning Buyer’s financial ability to perform the terms of the transaction and whether Buyer intends to occupy the Property as a principal residence.
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5.8. Buyer understands that Buyer is not liable for Broker’s acts or omissions that have not been approved, directed or ratified by Buyer.
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6. ADDITIONAL DUTIES OF BUYER’S AGENT. If the Buyer Agency box at the top of page 1 is checked, Broker is Buyer’s Agent, with the following additional duties: 6.1. Promoting the interests of Buyer with the utmost good faith, loyalty and fidelity; 6.2. Seeking a price and terms that are acceptable to Buyer; and 6.3. Counseling Buyer as to any material benefits or risks of a transaction that are actually known by Broker.
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7. COMPENSATION TO BROKERAGE FIRM. In consideration of the services to be performed by Broker, Brokerage Firm will be paid as set forth in this section, with no discount or allowance for any efforts made by Buyer or any other person. Brokerage Firm is entitled to receive additional compensation, bonuses, and incentives paid by listing brokerage firm or seller. Broker will inform Buyer of the fee to be paid to Brokerage Firm and, if there is a written agreement, Broker will supply a copy to Buyer, upon written request of Buyer. 7.1. Brokerage Firm’s Fee - Purchase. Check Compensation Arrangement: 7.1.1. Success Fee. Brokerage Firm will be paid as follows: 7.1.1.1. Amount. A fee equal to % of the purchase price, but not less than $ , except as provided in § 7.1.1.2. 7.1.1.2. Adjusted Amount. See § 19 (Additional Provisions) or Other . 7.1.1.3. When Earned; When Payable - Purchase. The Success Fee is earned by Brokerage Firm upon the Purchase of the Property and is payable upon closing of the transaction. If any transaction fails to close as a result of the seller’s default, with no fault on the part of Buyer, the Success Fee will be waived. If any transaction fails to close as a result of Buyer’s default, in whole or in part, the Success Fee will not be waived; such fee is payable upon Buyer’s default, but not later than the date that the closing of the transaction was to have occurred. 7.1.2. Hourly Fee. Brokerage Firm will be paid $ per hour for time spent by Broker pursuant to this Buyer Listing Contract, up to a maximum total fee of $ . This hourly fee is payable to Brokerage Firm upon receipt of an invoice from Brokerage Firm. 7.1.3. Retainer Fee. Buyer will pay Brokerage Firm a nonrefundable retainer fee of $ due and payable upon signing of this Buyer Listing Contract. This amount Will Will Not be credited against other fees payable to Brokerage Firm under this section. 7.1.4. Other Compensation. . 7.2. Brokerage Firm’s Fee - Lease. If the box in § 3.5.2 is checked, Brokerage Firm will be paid a fee as follows, less any amounts paid by the listing brokerage firm or landlord: 7.2.1. Amount. $ per square foot per , or , except as provided in § 7.2.2. 7.2.2. Adjusted Amount. See § 19. (Additional Provisions) or Other . 7.2.3. Other. . 7.2.4. When Earned; When Payable - Lease. This Lease fee is earned upon the mutual execution of the Lease. One-half of this Lease fee is payable upon mutual execution of the Lease and one-half upon possession of the premises by tenant or as follows: . If the Lease, executed after the date of this Buyer Listing Contract, contains an option to extend or renew, or if Buyer expands into additional space within the building or complex where the Property is located, Brokerage Firm Will Will Not be paid a fee upon exercise of such extension or renewal option or expansion. If Brokerage Firm is to be paid a fee for such extension, renewal or expansion, the amount of such fee and its payment are as follows: . 7.3. Who Will Pay Brokerage Firm’s Fee. 7.3.1. Listing Brokerage Firm or Seller May Pay. Buyer IS Obligated to Pay. Broker is authorized and instructed to request payment of Brokerage Firm’s fee from the listing brokerage firm or seller. Buyer is obligated to pay any portion of Brokerage Firm’s fee which is not paid by the listing brokerage firm or seller. 7.3.2. Buyer Will Pay. Buyer is obligated to pay Brokerage Firm’s fee. 7.3.3. Listing Brokerage Firm or Seller May Pay. Buyer is NOT Obligated to Pay. Broker is authorized to obtain payment of Brokerage Firm’s fee from the listing brokerage firm or seller. Provided Buyer has fulfilled Buyer’s obligations in this Buyer Listing Contract, Buyer is not obligated to pay Brokerage Firm’s fee. If no box is checked above, then § 7.3.3 (Buyer is NOT Obligated to Pay) will apply. 7.4. Holdover Period. Brokerage Firm’s fee applies to Property contracted for (or leased if § 3.5.2 is checked) during the Term of this Buyer Listing Contract or any extensions and also applies to Property contracted for or leased within calendar days after the Listing Period expires(Holdover Period) (1) if the Property is one on which Broker negotiated and (2) if Broker submitted its address or other description in writing to Buyer during the Listing Period, (Submitted Property). Provided, however, Buyer Will Will Not owe the compensation under §§ 7.1, 7.2, 7.3.1 and 7.3.2 as indicated, if a commission is earned by BC60-8-13. EXCLUSIVE Copyright 2016 – AllRIGHT-TO-BUY Rights Reserved LISTING CONTRACT
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another real estate brokerage firm acting pursuant to an exclusive agreement with Buyer entered into during the Holdover Period, and a Sale or Lease of the Submitted Property is consummated. If no box is checked in this § 7.4, then Buyer does not owe the commission to Brokerage Firm.
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8. LIMITATION ON THIRD-PARTY COMPENSATION. Neither Broker nor Brokerage Firm, except as set forth in § 7, will accept compensation from any other person or entity in connection with the Property without the written consent of Buyer. Additionally, neither Broker nor Brokerage Firm is permitted to assess and receive mark-ups or other compensation for services performed by any third party or affiliated business entity unless Buyer signs a separate written consent for such services.
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9. BUYER’S OBLIGATIONS TO BROKER. Buyer agrees to conduct all negotiations for the Property only through Broker and to refer to Broker all communications received in any form from real estate brokers, prospective sellers, or any other source during the Term of this Buyer Listing Contract. Buyer represents that Buyer Is Is Not currently a party to any agreement with any other broker to represent or assist Buyer in the location or Purchase of Property.
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10. RIGHT OF PARTIES TO CANCEL. 10.1. Right of Buyer to Cancel. In the event Broker defaults under this Buyer Listing Contract, Buyer has the right to cancel this Buyer Listing Contract, including all rights of Brokerage Firm to any compensation if the Buyer Agency box at the top of page 1 is checked. Examples of a Broker default include, but are not limited to (1) abandonment of Buyer, (2) failure to fulfill all material obligations of Broker and (3) failure to fulfill all material Uniform Duties (§ 5) or, if the Buyer Agency box at the top of page 1 is checked, the failure to fulfill all material Additional Duties Of Buyer’s Agent (§ 6). Any rights of Buyer that accrued prior to cancellation will survive such cancellation. 10.2. Right of Broker to Cancel. Brokerage Firm may cancel this Buyer Listing Contract upon written notice to Buyer if Buyer fails to reasonably cooperate with Broker or Buyer defaults under this Buyer Listing Contract. Any rights of Brokerage Firm that accrued prior to cancellation will survive such cancellation.
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11. COST OF SERVICES OR PRODUCTS OBTAINED FROM OUTSIDE SOURCES. Broker will not obtain or order products or services from outside sources unless Buyer has agreed to pay for them promptly when due (e.g., surveys, radon tests, soil tests, title reports, engineering studies, property inspections). Neither Broker nor Brokerage Firm is obligated to advance funds for Buyer. Buyer must reimburse Brokerage Firm for payments made by Brokerage Firm for such products or services authorized by Buyer.
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12. BROKERAGE SERVICES; SHOWING PROPERTIES. 12.1. Brokerage Services. The following additional tasks will be performed by Broker:
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13. DISCLOSURE OF BUYER’S IDENTITY. Broker Does identity to third parties without prior written consent of Buyer.
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14. DISCLOSURE OF SETTLEMENT SERVICE COSTS. Buyer acknowledges that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies).
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15. NONDISCRIMINATION. The parties agree not to discriminate unlawfully against any prospective seller because of the race, creed, color, sex, sexual orientation, marital status, familial status, physical or mental disability, handicap, religion, national origin or ancestry of such person.
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16. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing this document, Buyer acknowledges that Broker has advised that this document has important legal consequences and has recommended consultation with legal and tax or other counsel before signing this Buyer Listing Contract.
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17. MEDIATION. If a dispute arises relating to this Buyer Listing Contract, prior to or after closing, and is not resolved, the parties must first proceed in good faith to submit the matter to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The
12.2. Showing Properties. Buyer acknowledges that Broker has explained the possible methods used by listing brokers and sellers to show properties, and the limitations (if any) on Buyer and Broker being able to access properties due to such methods. Broker’s limitations on accessing properties are as follows: . Broker, through Brokerage Firm, has access to the following multiple listing services and property information services: .
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parties to the dispute must agree, in writing, before any settlement is binding. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The mediation, unless otherwise agreed, will terminate in the event the entire dispute is not resolved within 30 calendar days of the date written notice requesting mediation is delivered by one party to the other at the other party’s last known address.
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18. ATTORNEY FEES. In the event of any arbitration or litigation relating to this Buyer Listing Contract, the arbitrator or court must award to the prevailing party all reasonable costs and expenses, including attorney and legal fees.
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19. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
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20. ATTACHMENTS. The following are a part of this Buyer Listing Contract:
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21. NOTICE, DELIVERY AND CHOICE OF LAW. 21.1. Physical Delivery. All notices must be in writing, except as provided in § 21.2. Any document, including a signed document or notice, delivered to the other party to this Buyer Listing Contract, is effective upon physical receipt. Delivery to Buyer is effective when physically received by Buyer, any signator on behalf of Buyer, any named individual of Buyer or representative of Buyer. 21.2. Electronic Delivery. As an alternative to physical delivery, any document, including a signed document or written notice may be delivered in electronic form only by the following indicated methods: Facsimile Email Internet. If no box is checked, this § 21.2 is not applicable and § 21.1 governs notice and delivery. Documents with original signatures will be provided upon request of any party. 21.3. Choice of Law. This Buyer Listing Contract and all disputes arising hereunder are governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in this state for property located in Colorado.
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22. MODIFICATION OF THIS CONTRACT. No subsequent modification of any of the terms of this Buyer Listing Contract is valid, binding upon the parties, or enforceable unless in writing and signed by the parties.
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23. COUNTERPARTS. This Buyer Listing Contract may be executed by each of the parties, separately, and when so executed by all the parties, such copies taken together are deemed to be a full and complete contract between the parties.
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24. ENTIRE AGREEMENT. This agreement constitutes the entire contract between the parties and any prior agreements, whether oral or written, have been merged and integrated into this Buyer Listing Contract.
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25. COPY OF CONTRACT. Buyer acknowledges receipt of a copy of this Buyer Listing Contract signed by Broker, including all attachments.
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26. MEGAN’S LAW. If the presence of a registered sex offender is a matter of concern to Buyer, Buyer understands that Buyer must contact local law enforcement officials regarding obtaining such information.
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Brokerage Firm authorizes Broker to execute this Buyer Listing Contract on behalf of Brokerage Firm. Buyer’s Name:
Buyer’s Signature
Broker’s Name:
Date
Broker’s Signature
Address: BC60-8-13. EXCLUSIVE Copyright 2016 – AllRIGHT-TO-BUY Rights Reserved LISTING CONTRACT
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Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address: Brokerage Firm’s Name: Address: Phone No.: Fax No.: Electronic Address:
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EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT In this section, we are dealing with the approved form of the Exclusive Right to Sell listing contract, as required by Rule F. For purposes of fulfilling the broker pre-license educational requirements and preparing for the Colorado Contracts and Regulations (48 hours) final exam and the state license exam, we are concerned with: 1) the specific language of the form; 2) the general nature of the contract and; 3) the type of general terms to be used in the blanks contained in the contract. For this exercise, we are not as concerned with the “real life” terms to be inserted in the contract blanks. (In other words, it is not a big deal if your entry differs from the answer key in some minor way.) Every transaction will differ, and there are truly unlimited ways to write a binding listing contract. You will never be expected to memorize form numbers (i.e., “LC-50-9-12”), page numbers, (i.e., “page 3 of the Listing Agreement”) or section numbers (i.e., “Section 3.1 Defined Terms - Seller”) within a contract. Although it may often seem so, neither the Mac study program nor the state license exam is a trivia contest. What you are expected to know and understand is what the forms say and mean, and how they are properly applied. What follows is a section-by-section analysis of the Listing agreement. Use this to understand the “legalese” you will need to memorize and understand to pass the state license exam. Listing Problem #1 is next, followed by a copy of the actual listing agreement. Use the contract first to follow along with the detailed analysis, and then to complete the blank listing agreement according to the facts presented in Listing Problem #1. Although you will not be required to complete a listing contract on the state license exam, you will be asked very specific questions about the exact wording of this form. The most effective (and painless) way to learn these details is through this kind of simulation - locating the right text and filling in the “blanks”. In addition, it is also good preparation for your new career in real estate. Again, the exact wording you put in the text is not nearly as important as understanding the passage, and what kind of information is typically entered. Complete these contract problems: Yes, they are a lot of work – but it will pay off on the license exam when you pass the first time because you knew the answers to questions that asked about tiny details from the text of these contracts.
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Section-by-Section ANALYSIS of the EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT USE THIS ANALYSIS TOGETHER WITH THE ACTUAL “BLANK” FORM (below)
Rule F (Chs. 15 and 16, and this chapter, above) states that although Rule F and the Conway-Bogue case state that licensees must use the pre-approved forms exactly as printed in this Chapter, Brokers may still add firm name, address, phone, trademark and other identifying data when printing their own forms. Rule C-19(c), (Ch. 15) states that a trade name, like “Century 21”, “Re/Max”, “Metro Brokers” is any name which does not belong to the individual (such as “Bob Douglas, Broker”) or company named after an individual, (such as “Douglas Realty”). Under the Rules of the Commission, the individual company may use a trade name because that brokerage is a franchisee, and has been given permission to use the name. This is a permissible variation of the rule that “no person shall conduct or promote a real estate brokerage business except under the name under which such person or brokerage business is licensed.” In cases where permission has been received to use another’s trade name, the contract must contain the phrase: “Each office independently owned and operated.” (Rule C-19(f), Ch. 15) This symbol will often accompany a licensee’s name or company’s logo on a pre-printed contract. It is the trademark of the National Association of Realtors and may be used only by members of that organization. (In other words, while many candidates say they are getting their “realtor’s license” – you are not: After getting a Colorado broker’s license, you will apply for membership in the Colorado and/or National Association of Realtors.) Rule F, (Ch. 15) requires the use of approved forms by real estate brokers. Rule F allows brokers to print the approved forms, but they must print the Commission statement of approval: “The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission.” The statement, “THIS IS A BINDING CONTRACT. THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING,” simply emphasizes the rule that a
contract is a binding legal document and that legal advice should be sought from a licensed attorney at law.
“Compensation charged by real estate brokerage firms is not set by law. Such charges are established by each real estate brokerage firm.” There is no such thing as a “standard” commission rate, and a rate such as 6% or 7% (for example) is not a commission rate set by law. This statement informs the public that commission rates are negotiable. It also implies that the charges may differ from broker to broker.
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“DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE BUYER AGENCY, SELLER AGENCY OR TRANSACTION-BROKERAGE. This section warns the seller that there are several forms of agency available in Colorado. EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT. This particular heading states that this is a seller’s “exclusive right to sell listing contract” and is a listing on residential property. After reviewing the appropriate “Agency Disclosure” forms, the seller and broker must check the appropriate box for “ SELLER AGENCY” or “TRANSACTION BROKER”. “Date” blank. In this blank should be placed the date and place where the listing contract is signed by the owners of the property and the real estate broker. 1. AGREEMENT. Even though this portion of the contract states that the contract is “irrevocable”, this is not exactly a true statement of law. This contract is an agency contract and like other agency contracts (except those coupled with an interest in land) may be canceled at any time by either of the parties. If unjustly canceled, however, the party at fault may be liable for damages. 2. BROKER AND BROKERAGE FIRM. This section reflects the unique Colorado law that creates the Designated Broker. If the broker designated to be the “designated broker” works for a firm with more than one broker, then the first box “2.1. Multiple-Person Firm” must be checked. If the broker is a singleperson brokerage, then the second box next to “2.2. One-Person Firm” must be checked. In either case, this form explicitly appoints a “designated broker”, or the individual who is to serve as the limited agent (See Ch. 2, page 1) of the Seller, and to perform the services required for Seller under this contract. This means that only the broker so designated owes duties to the Seller; neither the Employing broker nor the brokerage firm is responsible for the acts of the employed broker (other than the general statutory responsibilities of “supervision”, etc. – See Chs. 14, 15 and 16.) Put another way, there is no imputed knowledge of the transaction above the designated broker. 3. DEFINED TERMS. 3.1 Seller. In this blank line, the name or names of the sellers should be set forth. As a matter of practice their names should be written as they took title to their property. If this policy is followed wherever their names are necessary on any document, it may later avoid title problems. 3.2 Brokerage Firm. The name of the Listing Brokerage should be placed here.
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The name of the Designated Broker should be placed
3.4 Property. This blank is where the legal description must be placed. This description can be found in documents in the possession of the sellers, such as an old title insurance policy. 3.5
Sale. This section defines sale of the property as: 1. a voluntary transfer, or; 2. exchange of any interest in the property, or; 3. the voluntary creation of the right to acquire any interest in the property, including a contract or lease the seller may already have. If the box in 3.5.2 is checked, the seller is authorizing broker to lease the property (either instead of selling it, or in a rent-to-own arrangement.)
3.6 Listing Period. The listing period must be specified here. continues from the first through the last day of that time period.
It
3.7 Applicability of Terms. If any box of this contract is “checked” (or otherwise marked), then that item applies to this agreement. If an item is marked “N/A”, then that item does not apply. This is also a reminder to the broker that all items with “choices” (such as boxes to be checked) or “blanks”, must be filled-in with something, either indicating that it applies to this deal or not. Use of “MEC” (mutual execution of contract) indicates that the particular provision is effective as of the date both broker and seller signed together. 3.8 Day; Computation of Days; Deadline. 3.8.1 Day. This provision clears up any possible confusion as to when a “day” starts or ends. When the term is used, a “day” lasts an entire 24 hours – ending at 11:59 p.m. - one minute before midnight. (i.e., “Seller shall maintain possession until June 30…”) 3.8.2 Computation of Days; Deadline. When a number of days is stated in the terms (i.e., “due 3 days from…”), then the first day is not included. The final full day does “count”. It is important to check the box designating whether Saturday, Sunday and holidays should be counted, when using a number of days, or whether the deadline would be extended to the next nonholiday day. 4. BROKERAGE RELATIONSHIP. Section 4.1 describes the vast majority of agency relationships: One broker represents the buyer and another broker – in a different company – represents the seller (by virtue of the Listing agreement.) 4.2 In-Company Transaction – Different Brokers. describes a situation where buyer and seller to the eventual transaction are each represented by a different
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broker – but those brokers both work for the same broker (either in the same office or in two different franchises of the same company.) As we learned in Chapter 2, this does not constitute “dual agency” and is perfectly legal and acceptable. 4.3 In-Company Transaction – One Broker. This is an unusual situation in large metropolitan areas, because of the sheer number and variety of agents and transactions. However, in smaller towns, this could be common. Because of the agency complication of appearing to “represent” the “best interests” of both parties, this situation must be defined, and followed carefully by the one broker involved. If that broker is working for seller, and then someone else with whom the broker already has a buyer agency decides to buy that property, then one or both of those parties must change their agency relationship with the broker. (See Change of Status form, above, and Chapter 2 discussion of dual agency and change of status.) In these situations, if the box in 4.3.1.2 is not checked – then the broker will represent seller, and give up any agency relationship with buyer: Broker will treat buyer as a customer and will owe no agency duties to buyer. If the box in 4.3.1.2 is checked – then broker has agreed to work with buyer under a Transaction Broker relationship. 4.3.2. Transaction-Broker. Finally, neither of these situations will apply, if at the top of this form Seller checked TRANSACTION BROKERAGE, thereby agreeing from the start to forego an agency relationship and instead have a Transaction Broker association with the broker. 5. BROKERAGE DUTIES. Section 5.1 lists the responsibilities of the broker either when representing the seller as a seller’s agent or when working as a Transaction Broker. The student must memorize all six of these affirmative actions (things they will do): 5.1.1 Perform all services previously agreed (verbally or in writing) between the seller and broker. 5.1.2 Broker must present all offers to (and from) Seller in a timely manner. Broker need not pursue additional offers once the property is under contract, but they must present to seller any offers actually made from all potential buyers. 5.1.3 Broker must disclose any adverse material (crucial to the contract or subject of the contract) defects to the seller actually known to the broker. 5.1.4 Advise Seller to obtain a lawyer for legal matters, or any other “expert” (appraiser, inspector, etc.) for matters for which Broker is unqualified. 5.1.5 Follow all Rules regarding timely deposit and accounting or monies (Rule E).
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5.1.6 Keep seller informed about the transaction. (One of the most frequent complaints to the Real Estate Commission – often leading to Commission or legal action against the broker – is that the agent fails to pursue the contract or is “too busy” for the client. This section is official notice to the broker – in writing – that such neglect is unacceptable.) Section 5.2. Broker will not disclose the following information, without Seller’s consent: 5.2.1 That Seller will accept less money; 5.2.2 Seller’s motivation for selling; 5.2.3 That seller will accept other financing arrangements; 5.2.4 Broker won’t reveal any material information about Seller, unless the law requires the Broker to do so, or failure to disclose would be fraud on the Broker’s part. 5.2.5 By law, the Broker would not be liable for failure to reveal to potential buyers that the property is “psychologically-impacted” or “stigmatized” (i.e., a murder occurred there.) Section 5.3. Although the “designated broker” is in charge of this transaction, the Seller consents to their broker disclosing certain information about the transaction to the broker’s supervising broker. Section 5.4. This is notice to the seller that simply because this is an “exclusive” representation, that doesn’t mean that the broker will only work for this seller. The broker may have other listings and market properties for other sellers. Section 5.5. If the property is under a contract for sale, the Broker is not responsible for pursuing other offers. However, if that deal eventually fails during the continued period of this listing contract, the Broker will again be responsible for pursuing new offers. Section 5.6. This puts seller on notice that the broker is not legally responsible for accuracy of seller’s statements. (In other words, the seller could not later use the defense: “Sure, I lied. But the broker should have played detective and found out the truth.”) Section 5.7. authorize.
Seller will not be legally liable for Broker’s acts that seller did not
Section 5.8. Seller must instruct the broker (by checking the appropriate box) whether s/he is allowed to disclose to other buyers or brokers that there are competing offers on the table. 6. ADDITIONAL DUTIES OF SELLER’S AGENT. Under the heading on the front page of the contract (Exclusive Right to Sell – All Types of Properties) if
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seller checked the box for “Seller Agency”, then in addition to the above enumerated duties, the broker will: 6.1. Promote the seller’s interest with good faith, loyalty and fidelity; 6.2 Seek the price and terms stated in this listing contract; 6.3 Counsel seller as to any material (= significant) benefits and risks of which broker actually knows. 7. COMPENSATION TO BROKERAGE FIRM. The first paragraph specifically states that the broker will earn (and presumably get paid) the commission with no credit or discount for the Seller’s own efforts. 7.1. Amount. In consideration of Broker’s services, Seller agrees to pay Broker either: 7.1.1 Sale Commission. The provision for compensation of a specific amount of money. This is used when the broker charges a flat fee, such as $1,000, or a percentage such as 6% or 7% of the gross sales price – whatever the Broker and Seller agree on. 7.1.2 Lease Commission. In case this is a listing for the Broker to lease the property, the compensation is set forth just as in 7.1.1. 7.1.3 Other Compensation. This section allows for notes on any other compensation. Unless specifically prohibited by a Commission Rule, a broker may receive a fee in connection with the sale, if the Broker gets authority from both the Seller and Buyer. This space might be used as advance authorization from the Seller for such compensation. (In contrast, Rule E-28 [Chapter 15] does not allow a broker to receive a fee for a Home Warranty service contract, regardless of any consent.) 7.2 Cooperative Broker Compensation. This section details in advance what the seller is willing to pay (the percentage of sale price) to the broker working with the buyer who eventually purchases the property, whether that is a Buyer Agent or a Transaction Broker. Seller will need to check those boxes for types of brokers that they will allow their broker to negotiate with, t (Buyer Agents and Transaction Brokers) and how much of a commission (split) r they will offer to those brokers. Presumably, if the Seller does not check one or a both of these boxes, they s are refusing authorization to their Broker to negotiate with other brokers. This would make it difficult to sell to any buyer unless they are unrepresented. 7.3. When Earned. When the commission is earned. These are the three circumstances which entitle the broker to a commission: 7.3.1 The sale of the property, or 7.3.2 The broker finds a ready, willing and able buyer on the terms set forth in this contract. This means that the Seller is liable to the Broker for a commission for producing a buyer if the seller terminates the contract. 7.3.3 If the “Will” checkbox is marked, and the property is sold during the holdover period (the number of days set forth in the space provided) after the end
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of this listing agreement, even though Seller has hired a new Broker. This only applies if it is sold to anyone with whom the first broker negotiated, and the name was submitted in writing by Broker to seller during this original listing period. 7.4. When Applicable and Payable. Though earned at the time cited above, the commission is not paid until the closing. However, if the Seller defeated the sale intentionally or through neglect, and the provisions of (b) above are true, the Seller is still liable for the commission. (Collecting it, however, will prove difficult for the Broker.) 8. LIMITATION ON THIRD-PARTY COMPENSATION. Similar to what is stated in the paragraph immediately above, this section states that the Seller’s agent shall not accept compensation from the Buyer, Buyer’s agent or other entity, without written consent of the Seller. 9. OTHER BROKERS ASSISTANCE, MULTIPLE LISTING SERVICES AND MARKETING. The first paragraph is acknowledgment by the Seller that they have been provided the Forms of Agency Disclosure form(s) by Broker, and Seller is aware that their Broker may be encountering these types of brokerage relationships (with the Buyers’ brokers). The Seller is also authorizing their Broker to market and allow access to the property to other brokers. 9.1.1. Seller must check the boxes to indicate whether Broker Will or sh Will Not be authorized to submit the property to either a multiple-listing service, or a property information exchange. 9.1.2. There is also a space for Seller to exclude any methods of marketing. 9.1.3. Seller authorizes broker to publically disclose the terms of the listing on the MLS or other property information exchanges. (This could be an issue to sellers concerned about privacy.) 9.1.4 & 9.1.5. Buyer can specify whether they want the physical address and property Listing to be listed on the internet. (Presumably for safety concerns.) Section 9.2. Property Access. Seller must check the appropriate boxes for type of lock box (mechanical or electronic) and/or check the box and fill in the blank space for any other means of access that is authorized for broker to show the property, and any other instructions. Section 9.3. Broker Marketing. Here is where the broker gets to list all the things s/he will do to market the property. (i.e., newspaper or web ads, signage, open houses, etc.) 10. SELLER’S CONSENT.
OBLIGATIONS
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Section 10.1 Negotiations and Communication. This is Seller’s promise to Broker that the relationship is exclusive and Seller will conduct all business regarding this property and listing only through this Broker. Seller must also check a box to indicate whether s/he already has a listing agreement with another broker. Section 10.2. Advertising. Seller will not advertise or market the property without the broker’s prior approval; Section 10.3. No Existing Listing Agreement. Check whether Seller □ Is □ Is Not a party to any other competing Listing arrangements with another broker. Section 10.4. Ownership of Materials and Consent. This is seller’s representation that any images seller gave to broker for marketing purposes (i.e., the multiple listing service) are actually owned by seller and not copyrighted by anyone else. Seller gives broker the right to use these images without limitation for these marketing purposes. Section 10.5. Colorado Foreclosure Protection Act. This section will legally apply if (1) the Property is residential, (2) Seller resides in the property as Seller’s principal residence, (3) Buyer’s purpose in purchasing the Property is NOT to use the property as Buyer’s personal residence, and (4) the Property is in foreclosure or Buyer has notice that any loan secured by the Property is at least 30 days delinquent or in default. If this is a Short Sale transaction and a Short Sale Addendum is (later) part of the sales contract between Seller and Buyer, then the Foreclosure Protection Act does not apply. In the case of a foreclosure, however, if the Foreclosure Protection Act applies, special provisions must be included in any eventual Sales Contract. This means the broker must use the Foreclosure Protection Act version of the Sales Contract (or seller should hire an attorney to draft the sales contract.) 11.
PRICE AND TERMS. Section 11.1. Price. The first blank is for the total sales price expressed in dollars. The next big space is to set forth the terms on which the seller will sell the property. Remember to be as thorough and precise as possible. If the broker obtains a buyer who complies exactly with any of the terms as set forth in this section, the broker is entitled to the commission even if the seller changes his or her mind about selling. If the buyer’s offer varies only slightly or has additional conditions not mentioned here, you have not necessarily earned your commission unless the seller accepts the different or added conditions. Section 11.2. Terms. There are many ways the property may be sold. Among the most common are: Cash; New Loan (Conventional/FHA insured/VAguaranteed); Assumption; Assumption with cash for the balance and/or a “seller carry-back” promissory note secured by a second deed of trust for all or part of the balance; Installment land contract (“contract for deed”). If there is not enough space to put all of the terms upon which the seller will sell, you may add this information outside the body of the contract in an addendum.
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Section 11.3. Loan Discount Points. The Broker should discuss at the outset with the Seller what fees, such as “Points”, the Seller might be willing to pay for buyer at closing, and what costs the Seller is not willing to pay. Section 11.4. Buyer’s Closing Costs (FHA/VA). FHA and VA do not allow buyer to pay certain closing costs, such as the “Tax Service Fee” charged by the lender. (See the Closings course, following.) This means that if the eventual buyer ends up getting a FHA-insured or VA- guaranteed loan, either the seller or the Broker must pay them. The Broker should cover this possibility with the Seller at the time of negotiations for the listing contract. Otherwise, you – the Broker – may be forced to bear these costs at closing, since the buyer is not legally allowed, and the seller didn’t agree in advance to pay. Section 11.5. Earnest Money. Seller should specify the minimum amount of earnest money they will accept, and in what form (i.e., cash, check, promissory note.) Section 11.6. Seller Proceeds. Seller should specify in what form they are willing to accept their proceeds at closing. Cashier’s check and wire transfers are immediately-available funds (which may be necessary if seller is simultaneously purchasing their own new property). However, Closing Company’s Trust Account Check is the most common and is perfectly acceptable. Section 11.7. Advisory - Tax Withholding. This is notification to the Seller that the closing company must withhold a certain percentage of the sales price for the State Dept. or Revenue or the IRS if the Seller is or will be taking the proceeds from the sale out of the state or the country. 12. DEPOSITS. This clause gives the broker the right to accept and retain earnest money deposits on behalf of the seller, and to deliver it to the Closing Company at or before closing. Regarding this clause, see Rule E (Chapter 15). 13. 13.1
INCLUSIONS AND EXCLUSIONS. Inclusions. The Purchase Price includes the following items: 13.1.1 Fixtures. Items to be included if they are attached to the property (fixtures). While it is true that if they are permanently attached, they become fixtures and go with the property, this section removes all doubt as to these items. The student should memorized these items, as question on the specific items in this Section appear on the exam: lighting, heating, plumbing, ventilating, and air conditioning fixtures, TV antennas, inside telephone wiring and connecting blocks/jacks, plants [they mean like shrubbery outside], mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler systems and controls, built-in vacuum systems (including accessories), garage door openers and _________ (fill in the number of) remote controls. 13.1.2 Personal Property. Items which are not technically fixtures, but are attached in some way to the structure. These items will also automatically go with the property by virtue of this contract. These inclusions are: storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings, curtain and drapery rods (but not necessarily curtains), fireplace
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inserts, screens and grates, heating stoves, storage sheds, and all keys. Several items require boxes to be checked, if the items are to be sold with the property: water softeners, smoke and fire detectors, security systems, and satellite systems. These items are not necessarily fixtures, and the seller would be able to remove them if the boxes are not checked. Transfer of Personal Property: This section specifies that any personal property taxes (applicable only in a few locations in Colorado,) will be paid by closing. Any inclusions mentioned in the previous section will be transferred (and evidenced) by bill of sale. 13.1.3 Trade Fixtures. This defines any items that would normally be fixtures (because they are attached to the property) but if they are used by the seller in the course of a business they can be removed. (See the discussion and definitions of trade fixtures in Chapter 3 and the Glossary at the end of the Instructions Booklet. It will be tested on the state license exam!) 13.1.4 Parking and Storage Facilities. Parking and Storage spaces will not automatically be transferred with the title to the main property, if these spaces are not actually attached to the property. Although it is not necessary to have the strict legal description in this space at the time of forming the listing contract, it is absolutely essential that the broker include it in the eventual sales contract and verify that it is in the deed to the buyer and is correct. 13.1.5 Water Rights. Water rights do not automatically transfer when title is transferred. In fact, they may still be in the possession of a previous grantor from a long time ago, or may have been intentionally transferred to another grantee in the past. If the seller has the water rights and intends to transfer them to the eventual buyer, then mention should be made here. Otherwise, the broker should state “N/A” or “None” to indicate that no water rights are to be transferred. Although leaving the space “blank” would have the same effect – remember that every blank should be filled-in, even if it doesn’t apply – so as to eliminate any future confusion. If the property uses a well, this should be included. Note: Water Rights being transferred - if any - must pass to the buyer by means of a deed (not a bill of sale) since they are Real Property rights, not personal property. 13.1.6 Growing Crops. If this listing involves unimproved land, any growing crops (personal property, remember) that will be included in the sale must be listed here. Otherwise, the broker should type “n/a”. Section 13.2 Exclusions. Remember that items physically attached to the property will automatically pass with title to the property to buyer – even if the seller wants to take some attached item (fixture) with them! Any fixture that seller will want to exclude from the sale (and take with them) must be placed here, and in the corresponding Exclusions section of the sales contract to buyer. 14. TITLE AND ENCUMBRANCES. The seller: represents that title is solely in seller’s name; will deliver to broker true copies of all relevant title materials, leases and surveys in seller’s possession;
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will disclose to broker all easements, liens or other encumbrances of which seller has knowledge; authorizes the holder of any encumbrance to disclose to the broker the amount owing on the encumbrance. The next sentence specifies what type of deed the seller will use to convey title. The type of deed will usually be a general warranty deed, but may be a special warranty deed, bargain and sale deed, or a quit claim deed. The encumbrances shall be paid by seller and released except as seller and purchaser agree. The monetary encumbrances, (such as trust deeds or mortgages) are listed in the next blank. The space following the next sentence is for listing leases and tenancies. The seller agrees that he will be responsible for all local improvements (special assessments) installed and assessed at the time a sales contract is signed. This portion gives the broker the right to terminate this listing if the state of the title is not satisfactory. 15. EVIDENCE OF TITLE. This section obligates the seller, at seller’s expense, to provide a title commitment and a title insurance policy (“owner’s policy”) equal to the sales price. Abstracts have become very uncommon in most parts of Colorado. So if an abstract is to be prepared, the seller must check the box in this section. 16. ASSOCIATION ASSESSMENTS. To avoid legal problems later on for failing to reveal the cost of HOA or Condo Association assessments, seller must detail those assessments here. Seller must reveal the amount of the assessments and how often they are due, as well as any special assessments that may encumber the property. 17. POSSESSION. This space sets forth when the seller is willing to deliver possession to a buyer. Usually, possession will be at the time of delivery of the deed, but may be at a later time. It is especially important to specify the time seller will deliver title if that time is going to be different from the date of transfer. If some other time is not definitely set forth, the presumption is that possession will be delivered at the time the deed is delivered. Possession is subject to leases you have listed in Section 7. 18. MATERIAL DEFECTS, DISCLOSURES and INSPECTION. 18.1 Broker’s Obligations. This section makes mandatory on the broker, the disclosure of any material defects in the property known to the broker. Seller agrees that the buyer may have the property inspected and that the Broker is authorized to disclose facts to buyer (even if it adversely affects Seller.) Seller’s Obligations. 18.2.1. Seller’s Property Disclosure Form. Seller is not required to provide a Property Disclosure (see earlier in this Chapter 21), but they are required by law to disclose known, hidden (latent) defects. 18.2
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18.2.2. Lead-Based Paint. This requires Seller to provide a Lead Paint Disclosure if construction on the house began (=building permit issued) January 1, 1978. Note that this may apply to properties where the building permit was issued in 1977 or earlier, but the house was not completed until after January 1, 1978. In other words, if a building permit was issued in 1977 or earlier, the leadpaint disclosure must be completed and provided to the parties to the transaction. 18.2.3 Carbon Monoxide Alarms. A seller of residential real property containing a fuel-fired heater or appliance, a fireplace, or an attached garage will be responsible for assuring that a carbon monoxide alarm is properly installed within 15 feet of the entrance to each room lawfully used for sleeping. The law covers all existing single-family and multi-family housing units offered for sale, transfer or rent. In addition, all new construction (residential ) must comply. 18.2.4. Condition of Property. The property is conveyed in an “as-is” condition – subject to any written agreements by seller to make any repairs. 19.
RIGHT OF PARTIES TO CANCEL. 19.1 If broker defaults (fails to market properly, for example) Seller may cancel the contract and not owe the Broker any compensation. 19.2 However, this section gives the Broker an “out”, should s/he learn of circumstances that may make the property unmarketable. (i.e., after signing the listing, broker learns that the property is a crack house.) 20. FORFEITURE OF PAYMENTS. If there is a default on the Buyer’s part after a signed contract has been secured, the earnest money is to be split evenly between the Broker and Seller. This is true unless half of that money would exceed the Broker’s contemplated commission had the sale been consummated. In this case, the maximum the broker would receive is that amount equal to his or her commission. 21. COST OF SERVICES, REIMBURSEMENT. Normally, the Broker is responsible for the costs of their marketing efforts, such as advertisement, unless, Broker and Seller have an agreement in writing to the contrary. (This is contrary to the basic agency rule that the agent is to be reimbursed for any expenses disbursed on behalf of his principal.) The Broker is not to order products or services, unless the Seller agrees in writing to pay for them when due. Broker also is not obligated to advance funds in order to complete a closing, (although may do so, in order to “get the deal done.”) 22. DISCLOSURE OF SETTLEMENT SERVICE COSTS. This is notice to – and acknowledgment from – the seller that closing services will be provided by other companies (i.e., title companies) and that the cost, quality and extent of those services will vary.
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23. MAINTENANCE OF THE PROPERTY. This section warns the Seller that the Broker is not responsible for maintenance nor damage to the property during the listing period. This is not true, of course, if the Broker actually causes the damage to the property, either through negligence or affirmative acts. 24. NONDISCRIMINATION. This section reiterates that both Broker and Seller recognize that it is against the law to discriminate in housing because of race, creed, color, sex, sexual orientation, marital status, familial status, physical or mental disability, handicap, religion, national origin or ancestry. (Effective 2009, this is the list of protected classes under the Colorado Fair Housing Act. See Chapter 6.) 25. RECOMMENDATION OF LEGAL COUNSEL. This section states that the Broker recommends that the Seller get legal advice relating to the Listing Contract and Sales Contract, since the Broker is neither legal counsel, nor is allowed to dispense legal advice. 26. MEDIATION. If a dispute arises between the Broker and Seller either before or after closing, and they are unable to resolve their differences together, they agree in advance (by virtue of this paragraph) to submit their dispute to mediation. “Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially.” Note that mediation is not arbitration, where a third party may impose a decision on the parties which may be binding, and the parties may be precluded from settling their dispute in court. With mediation, the parties agree on a mediator and agree to the decision before it is binding. They also share the cost. The mediation process terminates automatically after 30 days after one party requests the mediation in writing. 27. ATTORNEY FEES. In case mediation fails and the dispute between Broker and Seller is litigated or arbitrated, attorney fees shall be awarded to the prevailing party. 28. ADDITIONAL PROVISIONS. Any other matters agreed upon by the Seller and Broker, which haven’t been covered by previous sections, may be placed in this blank space. Note that according to the Commission Position on Rule F, this blank space may be enlarged prior to negotiations, and since they are being included during the negotiations between Seller and Broker – the language of these additional provisions “has not been approved by the Colorado Real Estate Commission.” This means that the Brokerage may place their own provisions in this space, but they are not part of the approved form, and do not specifically comply with the requirements of Rule F. 29. ATTACHMENTS. If the additional provisions space is inadequate, or there are other attachments or addenda (such as Disclosure forms, Transaction Broker addenda, etc.) then they should be listed here.
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30. NO OTHER PARTY OR INTENDED BENEFICIARIES. As the heading indicates, the seller and broker are agreeing that they are the sole parties to this contract, and there are no other parties that could come back later and sue because they were not benefited by the contract as may have been promised. 31. NOTICE, DELIVERY AND CHOICE OF LAW. According to Colorado law, fax or electronic (i.e., email) signatures may now be considered legally binding. The Seller must, however, check the appropriate boxes, ( Facsimile E-mail, None) to indicate their willingness to accept signatures that are not original. Later on, original signatures may be obtained. The “Choice of Law” section determines that any dispute (lawsuit) will be decided under Colorado Law, regardless of in what state the parties actually live. 32. MODIFICATION OF THIS SELLER LISTING CONTRACT. As required by the Parol Evidence Rule in law (See Chapter 1), any later agreement which modifies the terms of this Listing Agreement must be in writing, and signed by both Seller and Broker. 33. COUNTERPARTS. If more than one person is named as seller, both must sign the listing contract. This provision allows the parties to sign separate copies of the contract. If they do, the separate copies constitute a final contract. 34. ENTIRE AGREEMENT. This is a standard contract provision reflecting the principle of the Parol Evidence Rule: the contract contains all the agreements between the parties. (Otherwise, the theory goes, why would they sign it?) 35. COPY OF THE CONTRACT. By signing, Seller acknowledges receipt of a copy of this contract, including all attachments, signed by Broker. The final section of the contract contains blanks for both the Broker (on behalf of their Brokerage) and the Seller to sign. By signing, the Seller and the Broker (on behalf of their Brokerage) have legally bound themselves to the provisions contained within – and are executing a legally-binding contract. As a matter of practice, Brokers are notoriously bad about thoroughly completing this section (and the corresponding signature blocks on the Sales contract.) Every blank should be completed and accurate, as it will eliminate confusion in the negotiation and closing processes.
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LISTING PROBLEM #1 On May 1st of this year, you contact Johnie Swan and his wife Mable at their home at 5643 Marble Street, Denver, Colorado, 80208. They give you (a broker for Awesome Real Estate) a listing for 86 days with the asking price of $110,000. They state that they want all cash for the house, but will agree that any buyer may obtain a new loan if they do not take more than 45 days to obtain and close the loan. After explaining the realities of life to them, they reluctantly agree to allow any buyer to assume their existing loan of approximately $54,500. This V.A. loan will not be paid off until the year 2015. The interest rate is 9% and the monthly payments are $675. They will also accept no less than a $5,000 earnest money deposit. The Swans point out to you the crystal chandelier that hangs in the dining room that is a family heirloom and that they wouldn’t part with it for love nor money. They are also willing to include the Westinghouse washer and dryer and the Kelvinator Refrigerator in the total purchase price of the house. You eventually drag out of them that they have leased out the basement bedroom to a college student, but tell you not to worry about it as it is leased only on a month-to-month basis. The Swans purchased their house from United Airlines and show you the deed they received. It is a Special Warranty Deed and they say they will only give the same type of deed. They also insist that they will need a week to move out of the property after closing. They are willing to pay a 6% commission (and agree to a 2.8% split with any buyer or transaction broker,) and allow you to have the property listed on the MLS. They also insist that you represent them exclusively, and agree to pay you a commission, regardless of who initially contracts with the actual buyer, (subject to a 90-day holdover period.) The Swans consent to the broker submitting the listing to either MLS or a property information exchange. Access to the property will be by means of a lock box. Some other details that must be included in the listing agreement: The Swans will accept a Title Company’s trust account check for their proceeds at closing, in lieu of a cashier’s check or wire transfer; no water rights or well permits are to be conveyed; they are not in a homeowner’s or condominium association, so there are no association dues; Seller will execute both a Seller’s Property Disclosure
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and a Square Foot Disclosure, so [if this were “real life”] both of those Forms will be attached to the Listing Agreement. Note: If a deadline falls on a Saturday, Sunday or Holiday, said deadline shall be extended to the next business day. If the ultimate buyer comes from this broker or another broker in the same company, sellers wish that buyer to be treated as a customer, rather than shifting their own agency relationship to Transaction Broker. Sellers also do not want the broker to disclose to prospective buyers and cooperating brokers the existence of other offers on the property. You agree to use the following resources to market the property: property listing websites, yard signs and open houses.
Various
Use the blank Listing Contract on the following pages to fill in these facts. Answer Key follows at the end of this Chapter.
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (LC50-8-13) (Mandatory 1-14) THIS IS A BINDING CONTRACT. THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
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Compensation charged by brokerage firms is not set by law. Such charges are established by each real estate brokerage firm.
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DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE BUYER AGENCY, SELLER AGENCY, OR TRANSACTION-BROKERAGE.
EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT
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SELLER AGENCY
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TRANSACTION-BROKERAGE Date:
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1. AGREEMENT. Seller and Brokerage Firm enter into this exclusive, irrevocable contract (Seller Listing Contract) and agree to its provisions. Broker, on behalf of Brokerage Firm, agrees to provide brokerage services to Seller. Seller agrees to pay Brokerage Firm as set forth in this Seller Listing Contract.
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2.
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3.
BROKER AND BROKERAGE FIRM. 2.1. Multiple-Person Firm. If this box is checked, the individual designated by Brokerage Firm to serve as the broker of Seller and to perform the services for Seller required by this Seller Listing Contract is called Broker. If more than one individual is so designated, then references in this Seller Listing Contract to Broker include all persons so designated, including substitute or additional brokers. The brokerage relationship exists only with Broker and does not extend to the employing broker, Brokerage Firm or to any other brokers employed or engaged by Brokerage Firm who are not so designated. 2.2. One-Person Firm. If this box is checked, Broker is a real estate brokerage firm with only one licensed natural person. References in this Seller Listing Contract to Broker or Brokerage Firm mean both the licensed natural person and brokerage firm who serve as the broker of Seller and perform the services for Seller required by this Seller Listing Contract. DEFINED TERMS. 3.1. Seller:
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3.2.
Brokerage Firm:
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3.3.
Broker:
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3.4.
Property. The Property is the following legally described real estate in the County of
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, Colorado:
known as No.
, Street Address
City
State
Zip
together with the interests, easements, rights, benefits, improvements and attached fixtures appurtenant thereto, and all interest of Seller in vacated streets and alleys adjacent thereto, except as herein excluded. 3.5. Sale; Lease. 3.5.1. A Sale is the voluntary transfer or exchange of any interest in the Property or the voluntary creation of the obligation to convey any interest in the Property, including a contract or lease. It also includes an agreement to transfer any ownership interest in an entity which owns the Property. 3.5.2. If this box is checked, Seller authorizes Broker to negotiate leasing the Property. Lease of the Property or Lease means any agreement between the Seller and a tenant to create a tenancy or leasehold interest in the Property. 3.6. Listing Period. The Listing Period of this Seller Listing Contract begins on , and continues through the earlier of (1) completion of the Sale of the Property or (2) , and any written extensions (Listing Period). Broker must continue to assist in the completion of any Sale or Lease for which compensation is payable to Brokerage Firm under § 7 of this Seller Listing Contract. 3.7. Applicability of Terms. A check or similar mark in a box means that such provision is applicable. The abbreviation “N/A” or the word “Deleted” means not applicable. The abbreviation “MEC” (mutual execution of this contract) means the date upon which both parties have signed this Seller Listing Contract.
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Day; Computation of Period of Days, Deadline. 3.8.1. Day. As used in this Seller Listing Contract, the term “day” means the entire day ending at 11:59 p.m., United States Mountain Time (Standard or Daylight Savings as applicable). 3.8.2. Computation of Period of Days, Deadline. In computing a period of days, when the ending date is not specified, the first day is excluded and the last day is included, e.g., three days after MEC. If any deadline falls on a Saturday, Sunday or federal or Colorado state holiday (Holiday), such deadline Will Will Not be extended to the next day that is not a Saturday, Sunday or Holiday. Should neither box be checked, the deadline will not be extended.
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4.
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3.8.
BROKERAGE RELATIONSHIP. 4.1. If the Seller Agency box at the top of page 1 is checked, Broker represents Seller as Seller’s limited agent (Seller’s Agent). If the Transaction-Brokerage box at the top of page 1 is checked, Broker acts as a Transaction-Broker. 4.2. In-Company Transaction – Different Brokers. When Seller and buyer in a transaction are working with different brokers, those brokers continue to conduct themselves consistent with the brokerage relationships they have established. Seller acknowledges that Brokerage Firm is allowed to offer and pay compensation to brokers within Brokerage Firm working with a buyer. 4.3. In-Company Transaction – One Broker. If Seller and buyer are both working with the same broker, Broker must function as: 4.3.1. Seller’s Agent. If the Seller Agency box at the top of page 1 is checked, the parties agree the following applies: 4.3.1.1. Seller Agency Only. Unless the box in § 4.3.1.2 (Seller Agency Unless Brokerage Relationship with Both) is checked, Broker represents Seller as Seller’s Agent and must treat the buyer as a customer. A customer is a party to a transaction with whom Broker has no brokerage relationship. Broker must disclose to such customer Broker’s relationship with Seller. 4.3.1.2. Seller Agency Unless Brokerage Relationship with Both. If this box is checked, Broker represents Seller as Seller’s Agent and must treat the buyer as a customer, unless Broker currently has or enters into an agency or Transaction-Brokerage relationship with the buyer, in which case Broker must act as a Transaction-Broker. 4.3.2. Transaction-Broker. If the Transaction-Brokerage box at the top of page 1 is checked, or in the event neither box is checked, Broker must work with Seller as a Transaction-Broker. A Transaction-Broker must perform the duties described in § 5 and facilitate sales transactions without being an advocate or agent for either party. If Seller and buyer are working with the same broker, Broker must continue to function as a Transaction-Broker. 5. BROKERAGE DUTIES. Brokerage Firm, acting through Broker, as either a Transaction-Broker or a Seller’s Agent, must perform the following Uniform Duties when working with Seller: 5.1. Broker must exercise reasonable skill and care for Seller, including, but not limited to the following: 5.1.1. Performing the terms of any written or oral agreement with Seller; 5.1.2. Presenting all offers to and from Seller in a timely manner regardless of whether the Property is subject to a contract for Sale; 5.1.3. Disclosing to Seller adverse material facts actually known by Broker; 5.1.4. Advising Seller regarding the transaction and advising Seller to obtain expert advice as to material matters about which Broker knows but the specifics of which are beyond the expertise of Broker; 5.1.5. Accounting in a timely manner for all money and property received; and 5.1.6. Keeping Seller fully informed regarding the transaction. 5.2. Broker must not disclose the following information without the informed consent of Seller: 5.2.1. That Seller is willing to accept less than the asking price for the Property; 5.2.2. What the motivating factors are for Seller to sell the Property; 5.2.3. That Seller will agree to financing terms other than those offered; 5.2.4. Any material information about Seller unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing; or 5.2.5. Any facts or suspicions regarding circumstances that could psychologically impact or stigmatize the Property. 5.3. Seller consents to Broker’s disclosure of Seller’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee does not further disclose such information without consent of Seller, or use such information to the detriment of Seller. 5.4. Brokerage Firm may have agreements with other sellers to market and sell their property. Broker may show alternative properties not owned by Seller to other prospective buyers and list competing properties for sale. 5.5. Broker is not obligated to seek additional offers to purchase the Property while the Property is subject to a contract for Sale. 5.6. Broker has no duty to conduct an independent inspection of the Property for the benefit of a buyer and has no duty to independently verify the accuracy or completeness of statements made by Seller or independent inspectors. Broker has no duty to conduct an independent investigation of a buyer’s financial condition or to verify the accuracy or completeness of any statement made by a buyer. Copyright 2016 – All Rights Reserved
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5.7. Seller understands that Seller is not liable for Broker’s acts or omissions that have not been approved, directed, or ratified by Seller. 5.8. When asked, Broker Will Will Not disclose to prospective buyers and cooperating brokers the existence of offers on the Property and whether the offers were obtained by Broker, a broker within Brokerage Firm or by another broker.
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6. ADDITIONAL DUTIES OF SELLER’S AGENT. If the Seller Agency box at the top of page 1 is checked, Broker is Seller’s Agent, with the following additional duties: 6.1. Promoting the interests of Seller with the utmost good faith, loyalty and fidelity; 6.2. Seeking a price and terms that are set forth in this Seller Listing Contract; and 6.3. Counseling Seller as to any material benefits or risks of a transaction that are actually known by Broker.
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7. COMPENSATION TO BROKERAGE FIRM; COMPENSATION TO COOPERATIVE BROKER. Seller agrees that any Brokerage Firm compensation that is conditioned upon the Sale of the Property will be earned by Brokerage Firm as set forth herein without any discount or allowance for any efforts made by Seller or by any other person in connection with the Sale of the Property. 7.1. Amount. In consideration of the services to be performed by Broker, Seller agrees to pay Brokerage Firm as follows: 7.1.1. Sale Commission. (1) % of the gross purchase price or (2) , in U.S. dollars. 7.1.2. Lease Commission. If the box in § 3.5.2 is checked, Brokerage Firm will be paid a fee equal to (1) % of the gross rent under the lease, or (2) , in U.S. dollars, payable as follows: . 7.1.3. Other Compensation. 7.2. Cooperative Broker Compensation. Brokerage Firm offers compensation to outside brokerage firms, whose brokers are acting as: Buyer Agents: % of the gross sales price or , in U.S. dollars. Transaction-Brokers: % of the gross sales price or , in U.S. dollars. 7.3. When Earned. Such commission is earned upon the occurrence of any of the following: 7.3.1. Any Sale of the Property within the Listing Period by Seller, by Broker or by any other person; 7.3.2. Broker finding a buyer who is ready, willing and able to complete the Sale or Lease as specified in this Seller Listing Contract; or 7.3.3. Any Sale (or Lease if § 3.5.2 is checked) of the Property within calendar days after the Listing Period expires (Holdover Period) (1) to anyone with whom Broker negotiated and (2) whose name was submitted, in writing, to Seller by Broker during the Listing Period (Submitted Prospect). Provided, however, Seller Will Will Not owe the commission to Brokerage Firm under this § 7.3.3 if a commission is earned by another licensed real estate brokerage firm acting pursuant to an exclusive agreement entered into during the Holdover Period and a Sale or Lease to a Submitted Prospect is consummated. If no box is checked in this § 7.3.3, then Seller does not owe the commission to Brokerage Firm. 7.4. When Applicable and Payable. The commission obligation applies to a Sale made during the Listing Period or any extension of such original or extended term. The commission described in § 7.1.1 is payable at the time of the closing of the Sale, or, if there is no closing (due to the refusal or neglect of Seller) then on the contracted date of closing, as contemplated by § 7.3.1 or § 7.3.3, or upon fulfillment of § 7.3.2 where the offer made by such buyer is not accepted by Seller.
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8. LIMITATION ON THIRD-PARTY COMPENSATION. Neither Broker nor Brokerage Firm, except as set forth in § 7, will accept compensation from any other person or entity in connection with the Property without the written consent of Seller. Additionally, neither Broker nor Brokerage Firm is permitted to assess or receive mark-ups or other compensation for services performed by any third party or affiliated business entity unless Seller signs a separate written consent for such services.
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9. OTHER BROKERS’ ASSISTANCE, MULTIPLE LISTING SERVICES AND MARKETING. Seller has been advised by Broker of the advantages and disadvantages of various marketing methods, including advertising and the use of multiple listing services (MLS) and various methods of making the Property accessible by other brokerage firms (e.g., using lock boxes, byappointment-only showings, etc.) and whether some methods may limit the ability of another broker to show the Property. After having been so advised, Seller has chosen the following: 9.1. MLS/Information Exchange. 9.1.1. The Property Will Will Not be submitted to one or more MLS and Will Will Not be submitted to one or more property information exchanges. If submitted, Seller authorizes Broker to provide timely notice of any status change to such MLS and information exchanges. Upon transfer of deed from Seller to buyer, Seller authorizes Broker to provide sales information to such MLS and information exchanges. 9.1.2. Seller authorizes the use of electronic and all other marketing methods except: . 9.1.3. Seller further authorizes use of the data by MLS and property information exchanges, if any. 9.1.4. The Property Address Will Will Not be displayed on the Internet. Copyright 2016 – All Rights Reserved
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9.2.
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9.1.5. The Property Listing Will Will Not be displayed on the Internet. Property Access. Access to the Property may be by: Manual Lock Box Electronic Lock Box Other instructions: Broker Marketing. The following specific marketing tasks will be performed by Broker:
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10. SELLER’S OBLIGATIONS TO BROKER; DISCLOSURES AND CONSENT. 10.1. Negotiations and Communication. Seller agrees to conduct all negotiations for the Sale of the Property only through Broker, and to refer to Broker all communications received in any form from real estate brokers, prospective buyers, tenants or any other source during the Listing Period of this Seller Listing Contract. 10.2. Advertising. Seller agrees that any advertising of the Property by Seller (e.g., Internet, print and signage) must first be approved by Broker. 10.3. No Existing Listing Agreement. Seller represents that Seller Is Is Not currently a party to any listing agreement with any other broker to sell the Property. 10.4. Ownership of Materials and Consent. Seller represents that all materials (including all photographs, renderings, images or other creative items) supplied to Broker by or on behalf of Seller are owned by Seller, except as Seller has disclosed in writing to Broker. Seller is authorized to and grants to Broker, Brokerage Firm and any MLS (that Broker submits the Property to) a nonexclusive irrevocable, royalty-free license to use such material for marketing of the Property, reporting as required and the publishing, display and reproduction of such material, compilation and data. This license survives the termination of this Seller Listing Contract. 10.5. Colorado Foreclosure Protection Act. The Colorado Foreclosure Protection Act (Act) generally applies if (1) the Property is residential (2) Seller resides in the Property as Seller’s principal residence (3) Buyer’s purpose in purchase of the Property is not to use the Property as Buyer’s personal residence and (4) the Property is in foreclosure or Buyer has notice that any loan secured by the Property is at least thirty days delinquent or in default. If all requirements 1, 2, 3 and 4 are met and the Act otherwise applies, then a contract, between Buyer and Seller for the sale of the Property, that complies with the provisions of the Act is required. If the transaction is a Short Sale transaction and a Short Sale Addendum is part of the Contract between Seller and Buyer, the Act does not apply. It is recommended that Seller consult with an attorney.
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11. PRICE AND TERMS. The following Price and Terms are acceptable to Seller: 11.1. Price. U.S. $ 11.2. Terms. Cash Conventional FHA VA Other: 11.3. Loan Discount Points. 11.4. Buyer’s Closing Costs (FHA/VA). Seller must pay closing costs and fees, not to exceed $ , that Buyer is not allowed by law to pay, for tax service and . 11.5. Earnest Money. Minimum amount of earnest money deposit U.S. $ in the form of 11.6. Seller Proceeds. Seller will receive net proceeds of closing as indicated: Cashier’s Check at Seller’s expense; Funds Electronically Transferred (Wire Transfer) to an account specified by Seller, at Seller’s expense; or Closing Company’s Trust Account Check. 11.7. Advisory: Tax Withholding. The Internal Revenue Service and the Colorado Department of Revenue may require closing company to withhold a substantial portion of the proceeds of this Sale when Seller either (1) is a foreign person or (2) will not be a Colorado resident after closing. Seller should inquire of Seller’s tax advisor to determine if withholding applies or if an exemption exists.
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12. DEPOSITS. Brokerage Firm is authorized to accept earnest money deposits received by Broker pursuant to a proposed Sale contract. Brokerage Firm is authorized to deliver the earnest money deposit to the closing agent, if any, at or before the closing of the Sale contract.
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13. INCLUSIONS AND EXCLUSIONS. 13.1. Inclusions. The Purchase Price includes the following items (Inclusions): 13.1.1. Fixtures. The following items are included if attached to the Property on the date of this Seller Listing Contract, unless excluded under Exclusions (§ 13.2): lighting, heating, plumbing, ventilating, and air conditioning fixtures, TV antennas, inside telephone, network and coaxial (cable) wiring and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler systems and controls, built-in vacuum systems (including accessories), garage door openers including remote controls. Other Fixtures: Copyright 2016 – All Rights Reserved
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If any fixtures are attached to the Property after the date of this Seller Listing Contract, such additional fixtures are also included in the Purchase Price. 13.1.2. Personal Property. The following items are included if on the Property, whether attached or not, on the date of this Seller Listing Contract, unless excluded under Exclusions (§ 13.2): storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings, curtain rods, drapery rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, and all keys. If checked, the following are included: Water Softeners Smoke/Fire Detectors Carbon Monoxide Alarms Security Systems Satellite Systems (including satellite dishes); and
The Personal Property to be conveyed at closing must be conveyed by Seller free and clear of all taxes (except personal property taxes for the year of closing), liens and encumbrances, except . Conveyance will be by bill of sale or other applicable legal instrument. 13.1.3. Trade Fixtures. The following trade fixtures are included: The Trade Fixtures to be conveyed at closing must be conveyed by Seller, free and clear of all taxes (except personal property taxes for the year of closing), liens and encumbrances, except . Conveyance will be by bill of sale or other applicable legal instrument. 13.1.4. Parking and Storage Facilities. Use Only Ownership of the following parking facilities: ; and Use Only Ownership of the following storage facilities: . 13.1.5. Water Rights. The following legally described water rights:
Any water rights must be conveyed by Permit # is . 13.1.6. Growing Crops. The following growing crops:
deed or other applicable legal instrument. The Well
13.2. Exclusions. The following are excluded (Exclusions):
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14. TITLE AND ENCUMBRANCES. Seller represents to Broker that title to the Property is solely in Seller’s name. Seller must deliver to Broker true copies of all relevant title materials, leases, improvement location certificates and surveys in Seller’s possession and must disclose to Broker all easements, liens and other encumbrances, if any, on the Property, of which Seller has knowledge. Seller authorizes the holder of any obligation secured by an encumbrance on the Property to disclose to Broker the amount owing on said encumbrance and the terms thereof. In case of Sale, Seller agrees to convey, by a deed, only that title Seller has in the Property. Property must be conveyed free and clear of all taxes, except the general taxes for the year of closing. All monetary encumbrances (such as mortgages, deeds of trust, liens, financing statements) must be paid by Seller and released except as Seller and buyer may otherwise agree. Existing monetary encumbrances are as follows: . The Property is subject to the following leases and tenancies: . If the Property has been or will be subject to any governmental liens for special improvements installed at the time of signing a Sale contract, Seller is responsible for payment of same, unless otherwise agreed.
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15. EVIDENCE OF TITLE. Seller agrees to furnish buyer, at Seller’s expense, unless the parties agree in writing to a different arrangement, a current commitment and an owner’s title insurance policy in an amount equal to the Purchase Price as specified in the Sale contract, or if this box is checked, An Abstract of Title certified to a current date.
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16. ASSOCIATION ASSESSMENTS. Seller represents that the amount of the regular owners’ association assessment is currently payable at approximately $ per and that there are no unpaid regular or special assessments against the Property except the current regular assessments and except . Seller agrees to promptly request the owners’ association to deliver to buyer before date of closing a current statement of assessments against the Property.
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17. POSSESSION. Possession of the Property will be delivered to buyer as follows: subject to leases and tenancies as described in § 14.
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18. MATERIAL DEFECTS, DISCLOSURES AND INSPECTION. Copyright 2016 – All Rights Reserved
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18.1. Broker’s Obligations. Colorado law requires a broker to disclose to any prospective buyer all adverse material facts actually known by such broker including but not limited to adverse material facts pertaining to the title to the Property and the physical condition of the Property, any material defects in the Property, and any environmental hazards affecting the Property which are required by law to be disclosed. These types of disclosures may include such matters as structural defects, soil conditions, violations of health, zoning or building laws, and nonconforming uses and zoning variances. Seller agrees that any buyer may have the Property and Inclusions inspected and authorizes Broker to disclose any facts actually known by Broker about the Property. 18.2. Seller’s Obligations. 18.2.1. Seller’s Property Disclosure Form. Disclosure of known material latent (not obvious) defects is required by law. Seller Agrees Does Not Agree to provide a Seller’s Property Disclosure form completed to Seller’s current, actual knowledge. 18.2.2. Lead-Based Paint. Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, a completed Lead-Based Paint Disclosure (Sales) form must be signed by Seller and the real estate licensees, and given to any potential buyer in a timely manner. 18.2.3. Carbon Monoxide Alarms. Note: If the improvements on the Property have a fuel-fired heater or appliance, a fireplace, or an attached garage and one or more rooms lawfully used for sleeping purposes (Bedroom), Seller understands that Colorado law requires that Seller assure the Property has an operational carbon monoxide alarm installed within fifteen feet of the entrance to each Bedroom or in a location as required by the applicable building code, prior to offering the Property for sale or lease. 18.2.4. Condition of Property. The Property will be conveyed in the condition existing as of the date of the sales contract or lease, ordinary wear and tear excepted, unless Seller, at Seller’s sole option, agrees in writing to any repairs or other work to be performed by Seller.
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20. FORFEITURE OF PAYMENTS. In the event of a forfeiture of payments made by a buyer, the sums received will be divided between Brokerage Firm and Seller, one-half thereof to Brokerage Firm but not to exceed the Brokerage Firm compensation agreed upon herein, and the balance to Seller. Any forfeiture of payment under this section will not reduce any Brokerage Firm compensation owed, earned and payable under § 7.
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21. COST OF SERVICES AND REIMBURSEMENT. Unless otherwise agreed upon in writing, Brokerage Firm must bear all expenses incurred by Brokerage Firm, if any, to market the Property and to compensate cooperating brokerage firms, if any. Neither Broker nor Brokerage Firm will obtain or order any other products or services unless Seller agrees in writing to pay for them promptly when due (examples: surveys, radon tests, soil tests, title reports, engineering studies, property inspections). Unless otherwise agreed, neither Broker nor Brokerage Firm is obligated to advance funds for Seller. Seller must reimburse Brokerage Firm for payments made by Brokerage Firm for such products or services authorized by Seller.
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22. DISCLOSURE OF SETTLEMENT COSTS. Seller acknowledges that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies).
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23. MAINTENANCE OF THE PROPERTY. Neither Broker nor Brokerage Firm is responsible for maintenance of the Property nor are they liable for damage of any kind occurring to the Property, unless such damage is caused by their negligence or intentional misconduct.
19. RIGHT OF PARTIES TO CANCEL. 19.1. Right of Seller to Cancel. In the event Broker defaults under this Seller Listing Contract, Seller has the right to cancel this Seller Listing Contract, including all rights of Brokerage Firm to any compensation if the Seller Agency box is checked. Examples of a Broker default include, but are not limited to (1) abandonment of Seller, (2) failure to fulfill all material obligations of Broker and (3) failure to fulfill all material Uniform Duties (§ 5) or, if the Seller Agency box at the top of page 1 is checked, the failure to fulfill all material Additional Duties Of Seller’s Agent (§ 6). Any rights of Seller that accrued prior to cancellation will survive such cancellation. 19.2. Right of Broker to Cancel. Brokerage Firm may cancel this Seller Listing Contract upon written notice to Seller that title is not satisfactory to Brokerage Firm. Although Broker has no obligation to investigate or inspect the Property, and no duty to verify statements made, Brokerage Firm has the right to cancel this Seller Listing Contract if any of the following are unsatisfactory (1) the physical condition of the Property or Inclusions, (2) any proposed or existing transportation project, road, street or highway, (3) any other activity, odor or noise (whether on or off the Property) and its effect or expected effect on the Property or its occupants, or (4) any facts or suspicions regarding circumstances that could psychologically impact or stigmatize the Property. Additionally, Brokerage Firm has the right to cancel this Seller Listing Contract if Seller or occupant of the Property fails to reasonably cooperate with Broker or Seller defaults under this Seller Listing Contract. Any rights of Brokerage Firm that accrued prior to cancellation will survive such cancellation.
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24. NONDISCRIMINATION. The parties agree not to discriminate unlawfully against any prospective buyer because of the race, creed, color, sex, sexual orientation, marital status, familial status, physical or mental disability, handicap, religion, national origin or ancestry of such person.
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25. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing this document, Seller acknowledges that Broker has advised that this document has important legal consequences and has recommended consultation with legal and tax or other counsel before signing this Seller Listing Contract.
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26. MEDIATION. If a dispute arises relating to this Seller Listing Contract, prior to or after closing, and is not resolved, the parties must first proceed in good faith to submit the matter to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The parties to the dispute must agree, in writing, before any settlement is binding. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The mediation, unless otherwise agreed, will terminate in the event the entire dispute is not resolved within 30 calendar days of the date written notice requesting mediation is delivered by one party to the other at the other party’s last known address.
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27. ATTORNEY FEES. In the event of any arbitration or litigation relating to this Seller Listing Contract, the arbitrator or court must award to the prevailing party all reasonable costs and expenses, including attorney and legal fees.
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28. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
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29. ATTACHMENTS. The following are a part of this Seller Listing Contract:
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30. NO OTHER PARTY OR INTENDED BENEFICIARIES. Nothing in this Seller Listing Contract is deemed to inure to the benefit of any person other than Seller, Broker and Brokerage Firm.
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31. NOTICE, DELIVERY AND CHOICE OF LAW. 31.1. Physical Delivery. All notices must be in writing, except as provided in § 31.2. Any document, including a signed document or notice, delivered to the other party to this Seller Listing Contract, is effective upon physical receipt. Delivery to Seller is effective when physically received by Seller, any signator on behalf of Seller, any named individual of Seller or representative of Seller. 31.2. Electronic Delivery. As an alternative to physical delivery, any document, including a signed document or written notice, may be delivered in electronic form only by the following indicated methods: Facsimile Email Internet. If no box is checked, this § 31.2 is not applicable and § 31.1 governs notice and delivery. Documents with original signatures will be provided upon request of any party. 31.3. Choice of Law. This Seller Listing Contract and all disputes arising hereunder are governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in this state for property located in Colorado.
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32. MODIFICATION OF THIS SELLER LISTING CONTRACT. No subsequent modification of any of the terms of this Seller Listing Contract is valid, binding upon the parties, or enforceable unless made in writing and signed by the parties.
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33. COUNTERPARTS. This Seller Listing Contract may be executed by each of the parties, separately, and when so executed by all the parties, such copies taken together are deemed to be a full and complete contract between the parties.
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34. ENTIRE AGREEMENT. This agreement constitutes the entire contract between the parties, and any prior agreements, whether oral or written, have been merged and integrated into this Seller Listing Contract.
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35. COPY OF CONTRACT. Seller acknowledges receipt of a copy of this Seller Listing Contract signed by Broker, including all attachments.
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Brokerage Firm authorizes Broker to execute this Seller Listing Contract on behalf of Brokerage Firm. Copyright 2016 – All Rights Reserved
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Seller’s Name:
Seller’s Signature
Broker’s Name:
Date
Broker’s Signature
Address:
Address:
Phone No.: Fax No.: Electronic Address:
Phone No.: Fax No.: Electronic Address:
Date
Brokerage Firm’s Name: Address: Phone No.: Fax No.: Electronic Address: 370
Clear Form
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INTRODUCTION TO CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIAL) In this section, we are dealing with the approved form of a Sales contract, as required by Rule F-2.
We are concerned with the general nature of the contract and the type of general terms to be used in the blanks contained in the contract. However, we are not concerned with the exact wording you insert in the contract blanks. The reason for this is that each case will differ, and there are truly unlimited ways to write a binding listing contract. In other words: Don’t worry that the words you put in the blanks aren’t exactly the same as the Answer Keys at the end of the Chapter. Focus on the terminology of the actual contract form, what it means, and how the Real Estate Commission wants it to be applied. It is extremely important to remember the following things detailed in the Rule F (earlier in this Chapter 21) as they apply to this Sales Contract: F-1. Permitted and Prohibited Form Modifications (a) No modifications shall be made to a Commission-approved form by a broker except as provided in rules promulgated by the Commission and as set forth in this Rule F-1 through F-7. For purposes of Rule F-1 through F-7, the term “Commission-approved form” means any form promulgated by the Commission; the term “broker” shall also include brokerage firm. (b) A broker may add its firm name, address, telephone, e-mail, trademark or other identifying information on a Commission-approved form. (c) A broker may add initial lines at the bottom of a page of any Commissionapproved form. (d) Any deletion to the printed body of a Commission-approved form, or any “Additional Provision” or “Addenda” which by its terms serves to amend or delete portions of the approved language, must result from negotiations or the instruction(s) of a party to the transaction and must be made directly on the printed body of the form by striking through the amended or deleted portion in a legible manner that does not obscure the deletion that has been made. (e) Blank spaces on a Commission-approved form may be lengthened or shortened to accommodate the applicable data or information.
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(f) Provisions that are inserted into blank spaces must be printed in a style or type that clearly differentiates such insertions from the style or type used for the Commission-approved form language. (g) A broker may omit part or all of the following provisions of a Commissionapproved ( changed font ) “Contract to Buy and Sell Real Estate” (even if the provision is identified by a different Section number), or corresponding provisions in other Commission-approved forms, if such provisions do not apply to the transaction. In the event any provision is omitted, the provision’s caption or heading must remain unaltered on the form followed by the word “OMITTED” . 1. Section 2.5 Inclusions in its entirety or any of its subsections 2. Section 2.6 Exclusions 3. Section 4.4 Seller Concessions 4. Section 4.5 New Loan in its entirety or any of its subsections 5. Section 4.6 Assumption 6. Section 4.7 Seller or Private Financing 7. Section 5 Financing Conditions and Obligations in its entirety or any of its sections 8. Section 6 Appraisal Provisions in its entirety or any of its subsections 9. Section 7.3 Homeowners’ Association Documents in its entirety or any of its subsections 10. Section 8.4 Special Taxing Districts 11. Section 8.5 Right of First Refusal or Contract Approval 12. Section 10.6 Due Diligence Documents 13. Section 10.7 Due Diligence Documents Conditions in its entirety or any of its subsections 14. Section 10.8 Due Diligence-Environmental, ADA (CBS2, CBS3, CBS4) 15. Section 10.7.3 Source of Potable Water (CBS4) 16. Section 10.9 Existing Leases; Modification of Existing Leases; New Leases (CBS3, CBS4) 17. Section 10.15 Existing Leases; Modification of Existing Leases; New Leases (CBS2) 18. Section 11 Tenant Estoppel Statements in its entirety or any of its subsections (CBS2, CBS3, CBS4) 19. Section 15.3 Status and Transfer Letter Fees 20. Section 15.4 Local Transfer Tax 21. Section 15.6 Sales and Use Tax 22. Section 16.2 Rents 23. Section 16.3 Association Assessments (h) A broker may add an additional page to the “Contract to Buy and Sell Real Estate” , “Counterproposal” and the “Agreement to Amend/Extend Contract” , following such document, that contains the dates and deadlines information set forth in § 3, arranged in chronological date sequence.
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(i) A broker may omit part or all of the following provisions of the “Counterproposal” and the “Agreement to Amend/Extend Contract” if such provisions do not apply to the transaction. In the event any provision is omitted, the provision’s caption or heading must remain unaltered on the form followed by the words “OMITTED” . 1. 2.
Section 3 Dates and Deadlines table Section 4 Purchase Price and Terms [in the Counterproposal only]
(j) A broker may substitute the term “Landlord” for the term “Seller” and the term “Tenant” for the term “Buyer” in the Brokerage Disclosure to Buyer form, in the Brokerage Disclosure to Seller and Definitions of Working Relationships form when making disclosures in a lease transaction (or use the separate Brokerage Disclosure To Tenant form) . (k) A broker may add signature lines and identifying labels for the parties signatures on a Commission-approved form. (l) A broker may modify, strike or delete such language on a Commissionapproved form as the Commission may from time to time authorize to be modified, stricken or deleted. F-2. Additional Provisions (a) The “Additional Provisions” section of a Commission-approved form must contain only those transaction-specific terms or acknowledgments that result from negotiations or the instruction(s) of the party(ies) to the transaction. (b) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in the “Additional Provisions” section of a Commission-approved form. F-3 Addenda (a) If a broker originates or initiates the use of a preprinted or prepared addendum that modifies or adds to the terms of a Commission-approved contract form which does not result from the negotiations of the parties, such addendum must be prepared by: (1) an attorney representing the broker or brokerage firm; or (2) a principal party to the transaction; or (3) an attorney representing a principal party. (b) An addendum permitted by the Rule F-3(a), shall not be included within the body of, or in the “Additional Provisions” section of, a Commissionapproved form. (c) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in an addendum.
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(d) If an addendum is prepared by a broker’s attorney, the following disclosure must appear on each page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm’s) legal counsel.” (e) If an addendum to a listing, tenant or right to buy contract, is prepared by a broker or brokerage firm, the following disclosure must appear on the first page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm).” F-4 Prohibited Provisions No contract provision, including modifications permitted by Rules F-1 through F-3, shall relieve a broker from compliance with the real estate license law, section 1261-101, et. seq., or the Rules of the Commission. Pursuant to Rule E-12, when a written agreement contains a provision entitling the broker to a commission on a sale or purchase made after the expiration of the agreement, such provision must refer only to those person or properties with whom or on which the broker negotiated during the term of the agreement, and whose names or addresses, were submitted in writing to the seller or buyer during the term of the agreement, including any extension thereof. F-5 Explanation of Permitted Modifications The broker shall explain all permitted modifications, deletions, omissions, insertions, additional provisions and addenda to the principal party and must recommend that the parties obtain expert advice as to the material matters that are beyond the expertise of the broker. F-6 Commission-Approved Form Reproduction (a) Commission-approved forms used by a broker, including permitted modification made by a broker, shall be legible. (b) Brokers generating Commission-approved forms through the use of a computer shall ensure that a security software program is utilized that prevents inadvertent change or prohibited modification of Commission-approved forms by the broker or other computer user. F-7 Forms Promulgated by the Commission Real Estate brokers are required to use Commission-approved forms as appropriate to a transaction or circumstance to which a relevant form is applicable…. In instances when the Commission has not developed an approved form within the purview of this rule, and other forms are used, they are not governed by Rule F. Other forms used by a broker shall not be prepared by a broker, unless otherwise permitted by law.
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What follows is a line-by-line summary of the Sales Contract. This will aid you in understanding the “legalese” inherent in every legal contract, and will assist you in memorizing the various passages in preparation for the state license exam. Following the explanation is a copy of the actual sales contract which you may use to follow along with the explanation. Complete that blank Sales Contract according to the scenario presented in Sales Contract problem #1. The Sales Contract scenario continues along the same fact situation as did the Listing Contract, so much of the same information will be used.
Please note that - on the state license exam - you will not be required or expected to complete a sales contract. However, you will be asked very specific questions about the exact wording of this form. The process of completing a form by finding the appropriate passages and “blanks” to fill-in, is the most effective (and most painless) manner to accomplish this task. In addition, it is also good practice for your eventual career in real estate.
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ANALYSIS OF CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIAL) USE THIS ANALYSIS TOGETHER WITH THE ACTUAL FORM (Below)
Brokerage identification and company logos are common in Colorado sales contracts, but these are not shown on this example. Although Rule F (and the Conway-Bogue case, discussed in Chapter 16) states that licensees must use the pre-approved forms exactly as printed in this chapter, (and the Closings course), brokers may nevertheless add firm name, address, phone, trademark and other identifying data when printing their own forms. Rule C-19(c), (Chapter 15): Company names like "Century 21", "ReMax", and "Metro Brokers" are trade names that do not belong to the individual company, such as “Awesome Realty.” The individual company may use a trade name such as “Century 21”, because the individual company is a franchisee, and has been given permission to use the name. This is a permissible variation of the rule that "no person shall conduct or promote a real estate brokerage business except under the name under which such person or brokerage business is licensed." In cases where permission has been received to use another's trade name, the contract must contain the phrase: "Each office independently owned and operated." (Rule C-19(f)) This symbol will often accompany a licensee’s name or company’s logo on a pre-printed contract. It is the trademark of the National Association of Realtors and may be used only by members of that organization. (In other words, while many candidates say they are getting their “realtor’s license” – you are not: After getting a Colorado broker’s license, you will apply for membership in the Colorado and/or National Association of Realtors.) Rule F requires the use of approved forms by real estate brokers. This Rule F allows brokers to fill out and print the approved forms from computers, but they must then print the Commission statement of approval: "The printed portions of this form, except differentiated additions, have been approved by the Real Estate Commission." The statement, "THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING" simply emphasizes the rule that a contract is a legal document and that legal advice should be sought from a licensed attorney at law. (Rule E-14: "A real estate licensee shall recommend, before the closing of a real estate transaction, the examination of title and shall advise the use of legal counsel.") The heading, CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIAL). In 2011, the Real Estate Commission expanded the number of Sales contracts from one, standard version (for use by all
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licensees for any real estate transactions for which they act as broker) to five. These course materials will concentrate only on the Sales contract for Residential purchases, but will point out some major differences that you may encounter on the license exam. The other four variations on this particular form are: a) CONTRACT TO BUY AND SELL REAL ESTATE (INCOMERESIDENTIAL) b) CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) c) CONTRACT TO BUY AND SELL REAL ESTATE (LAND) d) CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIALColorado Foreclosure Protection Act) The contents of these variations are virtually identical and therefore we will focus only on this “standard”, and most widely-used version. Although – as stressed above – the student must know the complete list of contract forms for the License Exam, you will not need to know the exact wording of the few passages that may vary from this standard version. It is sufficient to understand, for example, that the “LAND” version deals with raw land and will therefore delete passages regarding “Improvements” or “Homeowner Association Dues”, the “Colorado Foreclosure Protection Act” version deals with properties in Foreclosure, etc.) (Note that only those who fit the following description are exempt from the Commission Rule that licensees must use the standard, approved contracts: 1) Builders of new residential properties, and 2) Sellers of commercial properties who use an attorney to draft the sales contract.) The Colorado Real Estate Exam will ask about the exact wording of many passages of this form (as well as the Licensee Buy-Out and Listing agreements). Unfortunately, it will not be sufficient to know just the “basics” and even real estate or closing experience will not be enough to pass the detailed questions on the license exam. Again, as stressed several times throughout the chapter, you are likely to get a question about which forms are “Rule F” (commission-approved) forms – so you will need to thoroughly absorb the first pages of this Chapter 21, which contain the list of all current (2013) forms. "Date" blank. In this blank should be placed the date the offer is drawn up. This date could turn out to be significant, because in Section 3 the offer gives the seller only a certain length of time to accept this offer (Acceptance Deadline Date). If not accepted within that period of time, the offer is, of course, terminated by an expiration of time.
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1. AGREEMENT - This specifies that this is a binding contract on both parties, and that only the terms contained within apply. 2. PARTIES AND PROPERTY: 2.1 Buyer - The name or names of the purchaser will appear here. The names should be written exactly as they intend to take title. If they are going to take title as "John P. Jones and Mary A. Jones," the names should appear in that fashion, not as "John and Mary Jones." In fact, in all documents pertaining to the transactions you should always write the names exactly as they are going to take title. (Joint Tenants/Tenants In Common/Other): The boxes for one of the two choices will normally be checked, as the parties must decide whether they will take title as either joint tenancy or tenants in common. The “Other” box and line generally will only be used for Tenancy in Severalty. (As you know from Chapter 3, Tenancy in Severalty has not been created by law in Colorado – but it is perfectly acceptable to use. Furthermore, “severalty” does not mean “several” or “a few” or “more than one”. In fact, “Tenancy in Severalty” means a form of taking title that is “unable to be severed” or “cannot be divided”. In other words, there is only one person taking title.) Remember, the rule that while you may explain the difference between the two, you may not give advice as to which way they should take title. You must advise them that they should consult an attorney. [Rule E-14, Chapter 15] The most common way that two parties (especially husband and wife) will take title is Joint Tenancy. You should always bear in mind that joint tenancy carries the right of survivorship. The parties may not wish the remaining Joint Tenant(s) to “take over” their “share” of title. This may be particularly true if they have children from another marriage or if the parties taking title are not themselves married. There is also the possibility that joint tenancy can cause tax problems. If only one person is going to take title, you should check “Other” and indicate in the blank that title will be taken in severalty. Remember that when you cross out or delete anything from the contract, you must cross it out so that the printing is not obliterated and the parties can still ascertain what has been deleted. [Rule F] 2.2. No Assignability. This section states that the Contract is not assignable to anyone else without seller's written consent, which must be written in the Additional Provisions section. This means that if the Buyer wants to get out of the contract, they can’t just find someone else to take it over. 2.3 Seller – The Seller or Sellers is named here.
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2.4 Property - The legal description of the property should be inserted. If the legal description for any reason is not available at the time the offer is drawn up, it is permissible to put in this blank the words "to be inserted at a later date." If the legal description is too lengthy to fit in the space, it is permissible to attach the description to the contract as an addendum. In the blank line after “known as No. ______” place the street address. The contract must have the legal description, the street address, or at least some description sufficient to identify the property that is the subject of the contract. 2.5. Inclusions. This section pertains to the items that are to go with the real estate. There are seven sub-categories included under this subsection: 2.5.1 Inclusions - Attached – Otherwise known as “Fixtures”. These are items of personal property that are attached to the property, and are therefore automatically transferred with the deed (unless, of course, excluded under Section 2.6, below); It is absolutely essential that the student memorize the list of items, because they will be tested on the state license exam: - lighting - heating - plumbing - ventilating and air conditioning units - TV antennas - Inside telephone, network and cable wiring and connecting blocks/jacks - plants - mirrors - floor coverings - intercom systems - built-in kitchen appliances - sprinkler systems and controls - built-in vacuum systems (including accessories) - garage door openers and _ remote controls (Add #, not “any” or “all”.) Next, an itemization of things owned by the Seller, but still included in the sale. (Note that any leased items should be listed under Due Diligence Documents) Checkboxes for: None; Solar Panels; Water Softeners; Security Systems (including _______ remote controls); Satellite Systems (including satellite dishes). If any additional items are attached to the Property after the date of the Contract, then they will also be included with the sale, at no addition to the price. 2.5.2 Inclusions – Not Attached (Normally known as “Personal Property”) – These are items that may not be attached, but will be included in the sale,
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anyway; Memorize this list as well, because these items will be tested on the state license exam: - storm windows and doors - window and porch shades - awnings - blinds - screens - window coverings and treatments - curtain and drapery rods - fireplace inserts, screens and grates - heating stoves - storage sheds - and carbon monoxide alarms - smoke detectors - and all keys 2.5.3 Personal Property Conveyance: This states that the inclusions shall be lien-free, other than those exceptions detailed in the blank. At the time of closing, the items of personal property are normally to be conveyed by a bill of sale. (Examples might be such items as a refrigerator, washer and dryer, etc.) 2.5.4 Other Inclusions: Other personal property items that will be included in this particular sale – including fixtures – but were not automatically listed in the previous subsections. (Note: The Commercial Sales Contract will include here a section for Trade Fixtures – As you know from Chapter 3 (Interests in Land), any item of “Personal property installed by a tenant to carry on a trade or business; remains personal property and can be removed by the tenant any time prior to the lease expiration.” [Definition from the Glossary in the first, Instructions booklet.] Therefore, if this is a sale of a Commercial piece of real property, any trade fixtures would be listed in this section.) 2.5.5 Parking and Storage Facilities – if applicable, insert the proper information and the proper boxes should be checked. Otherwise, insert "N/A". 2.6 Exclusions: If there are fixtures that the seller is going to remove and take away, these items must be listed here. Of course, fixtures will stay with the real estate if not excepted from the contract. If, by some strange chance the items are too extensive to fit in this space, it is acceptable to list them on another addendum. If you know that the seller does not intend to transfer any one or more of these items, the easiest time to delete them from the contract is at the time the offer is drawn up. Remember that if they are not deleted and the seller
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signs this offer, the seller must transfer them to the buyer at the time of closing. 2.7 Water Rights, Well Rights, Water and Sewer Taps – Remember that Water (and Mineral Rights) do not automatically transfer at closing with the deed for the real property. Therefore, if the parties contract for either to be included as part of the sale, it should be detailed in this section. (This will most likely be an issue with Developers and vacant land. So, in almost all residential sales, a “n/a” will be placed in the blank space.) If water rights are specifically being transferred with the sale, you must state the specific deed being used to effect that water right transfer, (i.e., Quit Claim Deed.) 2.7.1. Deeded Water Rights and 2.7.2 Other Rights Relating to Water. If water rights are to be included, they should be specifically described here, and the type of deed (i.e., General Warranty, Quit Claim, etc.) should be specified in the blank line. 2.7.3. Well Rights. Check this box if there is an existing well on the property. In that case, this Subsection requires that a Change in Ownership Form be completed. For greatest accuracy and protection, a water rights attorney should always be employed to research the water rights and to prepare the deed conveying such rights. This Subsection states, “If an existing well has not been registered with the Colorado Division of Water Resources in the Department of Natural Resources (Division), Buyer must complete a registration of existing well form for the well and pay the cost of registration.” The Well Permit Number must also be specified. The closing company is responsible for the filing of the form with the Colorado Division of Water resources in the Division of Natural Resources. If there is no closing service in connection with the transaction, the Buyer is then responsible for filing the form within 60 days after closing. 2.7.4. Water Stock Certificates Although rare in transactions for urban properties, brokers in rural areas will also need to account for Water Stock Certificates, Water Taps and Sewer Taps, in each transaction. They must specify any amounts remaining to be paid at the time of the sale, as notice to the buyer that s/he will be responsible for paying these amounts at some time in the future. 2.7.5. Conveyance. Seller agrees to execute the proper deed to convey title to any Water or Well Rights, or Water Stock Certificate. (Note: The “Land” version of this contract will include a section here for “Growing Crops”. Naturally, this will only be an issue with vacant/unimproved farm land, and never with strictly residential sales.) 3. DATES AND DEADLINES. Exact deadlines for completion of each event contained within the contract must be placed here. If an event is not applicable in the particular transaction, it is acceptable to place a line or "N/A" in the blank space.
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According to Rule F, if certain portions of the contract are inapplicable in each particular transaction, and the broker is using a computer program, the broker may delete those inapplicable sections. However, if the broker omits a provision, he or she must leave that section's heading or caption, as well as the words "OMITTED AS INAPPLICABLE." 3.1. Applicability of Terms - Within the contract, if a box is "checked", this means that the provision applies to the particular transaction. If the provision is not applicable, then the box or blank space should be marked "N/A". If a provision is marked with “MEC”, that means that the terms of the contract are valid as of the latest date it was signed both parties. Note: FHA or VA… The Appraisal Deadline lines of the matrix do not apply if the transaction involves an FHA insured or VA guaranteed loan. FHA and VA have their own deadlines which must be followed, so any party- or brokerincluded deadlines will not control. 4. PURCHASE PRICE AND TERMS - The full purchase price, as well as earnest money and anticipated loan amounts are placed in the blanks of this matrix. On line 10 of matrix, the purchase price should equal the total of the Earnest Money plus any New Loan(s) plus any loan Buyer is assuming from Seller, plus any Seller Carry-back financing, and line 9 indicates the approximate amount of cash (after all earnest money and financing) that buyer could expect to bring to closing. 4.2 Seller Concession. (Down Payment Assistance, Seller Paid Costs). This section should detail money contributed by seller towards buyer’s closing costs and seller’s contributions towards items that are normally paid by buyer, including loan costs such as loan discount points, loan origination fees, or prepaid items. 4.3 Earnest Money. This Subsection concerns the earnest money tendered with the offer. The earnest money will be given to the selling broker (the one who is helping the buyer, remember) who must in turn give it to the listing broker, if this is not the same person. Whatever the form of the earnest money, the listing broker is responsible for the earnest money until the closing. If the earnest money is not in the form of cash, this must be clearly stated because the law will presume it to be cash unless otherwise stated. Rules E-1, E-15, and F should be read in full, in connection with this portion of the contract. Rule E-1 - sets forth the requirements for handling earnest money. Rule E-15 - deals with the situation where the sale is defeated by the actions of the seller. Briefly, the Rule requires the broker to return the earnest money to the buyer and look only to the seller for the broker's compensation. Rule F: If the earnest money is an unsecured promissory note, the broker is required to use the required Commission form in drawing up this type of note.
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This Subsection 4.3 stipulates that “if the Earnest Money Holder is other than the Brokerage Firm … Closing Instructions signed by the Buyer, Seller, and Earnest Money Holder must be obtained upon or before delivery of earnest money to Earnest Money Holder.” This is an important change in practice. The title (closing) company can only accept delivery of the Earnest Money if the Earnest Money is accompanied by the executed Closing Instructions. It is imperative that the title company receive written closing instructions signed by both buyers and sellers before or at the time the Earnest Money is delivered. The seller’s and buyer’s agents should ensure that the Closing Instructions are executed when the Contract is signed by the parties. This will ensure that the Closing Instructions accompany the earnest money when delivered. 4.3.1 Alternative Earnest Money Deadline. If the buyer is not going to tender (give) the Earnest Money at the same time as the (contract) offer is given to the seller, then it must be given by the date set in this field of the matrix. 4.3.2 Return of Earnest Money. If buyer is entitled to terminate (for example, finds an unfavorable condition in the property and gives notice through the Inspection Notice) and chooses to terminate in a timely manner (= not in breach, and according to the time-limits set out in the matrix), s/he must do so by means of the “Notice to Terminate” form through buyer’s broker. The seller must then return the Earnest Money to the Buyer. If the Buyer has not already received the return of the Earnest Money, the Seller is required to sign the Earnest Money Release form and return it to the Buyer within 3 days of receipt of the form. The brokers must forward the form to the Earnest Money Holder (usually the Title/Closing Company – pursuant to Section 32, 33 below, or the Closing Instructions), who must release the funds within 5 days of receipt of that Release form from the brokers. If there is a “dispute” over the Earnest Money Deposit, Section 24, below (“Earnest Money Dispute”) will “pre-empt” the return of the Earnest Money, and the Earnest Money Holder must continue to hold the Earnest Money until the matter is resolved. 4.4 Form of Funds; Time of Payment; Funds Available. 4.4.1 Good Funds. This is the Good Funds law. (See Rule E-36, Chapter 15 and the entire Record Keeping course to follow.) The “bottom line” funds that buyer must produce at closing (the purchase price less the new loan, earnest money and all other credits) must be in good funds: (Includes cash, electronic transfer [wire] funds, certified and cashier’s checks,
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or savings and loan teller’s checks. No other payment form is considered good funds, not even Money Orders!) If the Cash at Closing is not “Good Funds” and in the Closing Company’s account by the time of closing, the buyer will be considered in default of the contract. This could have serious consequences and void the transaction, so the brokers must ensure that 1) buyer’s own sale is proceeding properly; and 2) buyer’s loan application is being processed in a timely manner and the loan proceeds will be available by closing. If any of these things are in danger of not occurring, the brokers should consider postponing the closing and extending the contract with an Agreement to Extend. 4.4.2 Available Funds. The buyer’s funds must be paid to the closing (title) company in a timely manner – to allow the closing company to have the funds in their accounts, so they may be properly disbursed at closing. The buyer and brokers must also check the appropriate box at the time of executing the contract, disclosing whether buyer already has on hand the anticipated “cash at closing”. 4.5 New Loan. This portion of the contract is used only if a new loan is being obtained to finance the purchase of the property. 4.5.1 Buyer to Pay Loan Costs. Except any seller-paid costs (4.4) this Subsection clarifies that the buyer is always responsible for paying his or her own loan fees (i.e., origination, points, credit report, etc.) Remember this when completing the Closing worksheets for that course’s final exam! 4.5.2 Buyer May Select Financing. This states that buyer may pursue any loan financing that will get the deal done, even if it is not the loan originally anticipated. Such alternate financing will not void the contract. 4.5.3 Loan Limitations. This paragraph lists three different types of loans that the purchaser may obtain – “Conventional”, “FHA”, or “VA” - plus a checkbox for “Bond” (highly unusual), and a space for "Other" if none of the other categories apply. 4.5.4 Good Faith Estimate – Monthly Payment and Loan Costs. This states that prior to closing the buyer should review the lender-provided good faith estimate. If the Buyer – in good faith – does not approve of the loan terms, s/he may terminate the contract, as long as it is done by the Loan Objection Deadline in Section 3. (Failure to do so will not later be considered good cause for setting aside the purchase.) 4.6 Assumption. Subsection 4.6 is to be used if the purchaser is going to pay all or part of the purchase price by assuming an existing loan. The items to be filled in or checked, include: - Amount to be assumed (Line 4 in the matrix at the beginning of Section 4); - Monthly payment including interest and interest rate; - Tax and mortgage insurance escrows, if any; - Maximum Transfer fee to be paid by purchaser;
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- New interest rate if different from the former rate, along with the new monthly payment; - The buyer and broker must also set a limit on the amount of extra cash the buyer is willing to bring in if the seller underestimates the balance of the VA loan that buyer is going to assume. There is a box to be checked if the buyer wants the ability to terminate the contract upon written notice to the seller, or a box and a blank to be filled in for any other contingency. - One of the boxes needs to be checked to show whether the seller is to be released from liability on the existing loan. This section also concerns whether or not the seller's VA eligibility is to be reinstated and who is to bear the cost of reinstatement, and the amount. 4.7 Seller or Private (Third-Party) Financing - This section will be used only when all or part of the sales price is to be carried back by the seller or private (not a commercial lender) financing is to be obtained. If this is the situation, the broker may only use one of the approved forms. [Rule F] The promissory note to be used will be either a note containing a default rate or one with no default rate allowed. The no default rate note grants the right to cure any default within the 20 days after notice of the exercise of the acceleration clause. The default can be cured by bringing the payments up to date and tendering all sums due at the date of acceleration. If this is done, it cancels the acceleration of payment provisions and the borrower can go back and make the payments as before. This note should be read in full and understood, as you will be tested on the various clauses contained therein. The Promissory Note for Deed of Trust (in the Closings course) does not contain the 20-day right to cure clause. It also allows a rate of interest on defaults that will generally be higher than the normal rate of interest the borrower has been paying. When the seller carries back a promissory note for all or part of the purchase price, it will usually be secured by a deed of trust on the property sold. It is essential for the examinee to know the three types of approved deeds of trust for use in this situation. The first of these is TD 72-8-10 - Strict Due on Sale Deed of Trust. The essence of this deed of trust is that the deed of trust is not assumable on the transfer of the property. If the property is sold, the note and deed of trust must be paid off in full. The second type of approved deed of trust is TD 73-8-10 Creditworthy Deed of Trust. This deed of trust does not automatically give the lender the right to foreclose on transfer. It gives the lender the right to approve of the new purchaser's credit. If the lender determines the new purchaser is incapable of performing the requirements of the note and deed of trust, the lender may call the entire balance due and payable immediately and foreclose if the property is sold. The decision as to whether the new buyer is creditworthy is solely at the discretion of the holder of the note and deed of trust (lender). The provisions that relate to creditworthiness and assumability are found in paragraph 24 of this deed of trust. This deed of trust
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must be used for FHA and VA loans, which may be assumed when our buyer eventually sells the property. The third type of deed of trust does not contain a due-on-sale clause, and the loan and deed of trust are fully assumable on transfer of the property. TD 74-8-10 - Assumable-Not Due-on Sale Deed of Trust. This D.O.T. is rarely used. The term in years or months must be filled in and checked, as well as monthly payment amount and interest rate, when the payments begin and are due, and when the loan comes due. Boxes must also be checked for whether the monthly payments shall or shall not include a property tax or mortgage insurance escrow. The late charge rate and the disbursement rate (if the private lender makes periodic disbursements for a construction loan instead of a lump sum disbursement at the beginning of the loan.) must be filled in if applicable. This Subsection allows prepayment of the loan at any time unless restrictions are written out on the blank line. If there are no restrictions, it is wise to avoid any future ambiguities by simply writing the words "no restrictions" in the blank. Boxes must be checked as to whether buyer shall or shall not be required by the seller/private lender to execute a security agreement (UCC-1) for personal property as well. This would only be used if the loan amount specifically includes financing for personal (unattached) property, such as building materials for a house that is yet to be constructed. Finally, boxes must be checked as to whether a mortgagee's title policy will be required for this private loan, payable by the buyer. TRANSACTION PROVISIONS 5. FINANCING CONDITIONS AND OBLIGATIONS. 5.1 Loan Application - applies only if the purchaser is going to pay for the property by obtaining a new loan. Buyer will be required to verify a good-faith application (“reasonable efforts to obtain such a loan”) if buyer later tries to terminate the contract on the basis of failure to obtain a loan. (In other words, if the buyer gets cold feet, they cannot simply “sit on” the loan application or fail to follow loan-approval conditions to trigger this section.) 5.2 Loan Objection - This contract is conditional on Buyer’s SOLE DISCRETION and approval of the loan terms. If buyer applies for a loan, and a loan is approved – but the loan is not satisfactory to buyer, they may terminate the contract with written notice to the seller by the Loan Objection Deadline. However, Buyer waives the right to terminate the contract if they don't give seller timely written notice – even if the loan terms are not satisfactory. In that case, this section stresses that they will be in default (breach of contract) if they don't accept said financing and fail to close. This will trigger the loss of the earnest money - Liquidated Damages remedy. (Or other provisions, if Specific Performance was chosen in Section 21, below.)
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5.3 Credit Information and Buyer’s New Senior Loan - This contract will be conditional on seller's approval if buyer is to pay all or part of the purchase price by assuming seller’s loan, or the seller is carrying back a loan for part of the purchase price. Buyer must provide the necessary credit information by the time specified in this section. If seller does not give written disapproval (by means of a Notice to Terminate form) by the time specified in “Disapproval of Buyer’s Credit Information Deadline” set out in the Section 3 matrix, seller will be deemed to have accepted the buyer’s credit. It is extremely important to remember that in the case of an assumption or seller carry-back, approval (based, ostensibly, on the purchaser's financial ability and creditworthiness,) is at the seller's sole and absolute discretion. 5.4 Existing Loan Review - If an existing loan is not to be released (= Buyer Assumption of Seller’s current loan) the contract is conditional upon Buyer's review and acceptance of the terms contained in the loan documents. Approval is completely based on Buyer’s sole discretion. After all, this is the loan that buyer will be paying on for years to come, so if buyer doesn’t like the terms of the loan buyer may terminate the agreement at will. (As long, of course, that buyer does so with a properly executed Notice to Terminate, by the Objection Deadline.) The contract is also conditioned on: - If approval of the lender is required and is not received, the contract may be terminated by the buyer; - If seller is to be released from liability under the loan or if the seller's VA eligibility is to be reinstated and the purchaser does not obtain such compliance, the seller may terminate this contract. 6. APPRAISAL PROVISIONS 6.1 Appraisal Definition. “Appraisal” is defined here as an opinion of value prepared by a licensed or certified appraiser, hired on behalf of Buyer or Buyer’s lender, to determine the Property’s market value (Appraised Value). Note that the Appraisal may also set forth certain lender requirements, replacements, removals or repairs necessary on or to the Property as a condition for the Property to be valued at the Appraised Value. 6.2 Appraisal Conditions: Depending on the type of loan specified above in Section 4, the following Appraisal conditions will apply. (If there is no loan, it is acceptable to mark out this entire Section 6 with a box and/or “X”. It is also acceptable to delete the inapplicable sections. For example, if it is a Conventional loan, then the FHA and VA sections may be deleted.) 6.2.1 Conventional/Other. – The buyer has the right to get an appraisal. 6.2.1.1. Notice to Terminate; 6.2.1.2 Appraisal Objection; 6.2.1.3. Appraisal Resolution. – The buyer has the right to terminate the contract if the appraisal value is less than the purchase price. Buyer may nevertheless go through with the closing no matter what the amount of the appraisal. If
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closing occurs, then buyer has waived any objections over the amount of the appraisal. If Buyer gives Seller a written Appraisal Objection on or before Appraisal Objection Deadline, and if they haven’t otherwise agreed in writing to a settlement before the Appraisal Resolution Deadline, the Contract will terminate on the Appraisal Resolution Deadline. Buyer also has the option to withdraw the Appraisal Objection in writing before the Appraisal Resolution Deadline, and go through with the sale and loan. Note that this Section only applies if Conventional financing is being sought, not if an FHA or VA loan is involved. 6.2.2 FHA – If Buyer is receiving an FHA-insured loan, Buyer has the Right to Terminate if the formal appraisal states a value lower than the agreed-upon purchase price. The buyer will not be required to forfeit the earnest money deposit in this case. 6.2.3 VA – Just like the above FHA provision, this section allows the Buyer to Terminate this contract if the purchase price exceeds the VA appraised price. This appraisal is known as a Certificate of Reasonable Value (CRV). The purchaser also has the option of proceeding with the contract in any event. Although it is not contained in the contract, it is essential to note that the excess over the appraised price may not be paid with borrowed money. 6.3 Lender Property Requirements. Seller has the right to terminate the contract if the buyer’s lender – upon review of the appraisal – requires repairs beyond those already specified by the parties in this contract. (It is up to the Seller’s sole subjective discretion whether these requirements are “unsatisfactory”.) However, the Seller will not have the right to terminate, if: 1) the parties have a written agreement regarding repair requirements; or 2) those requirements have already been completed; or 3) Buyer waives (in writing) the satisfaction of those Requirements. 6.4 Cost of Appraisal - the parties must designate who bears the cost of the appraisal, by checking the appropriate box. Buyer Seller Note that if buyer’s loan is FHA or VA, then the Appraisal Deadline in the Section 3 matrix does not apply. (FHA and VA say seller is not required to sell if the appraisal amount is not reached by closing.) 7. OWNERS’ ASSOCIATION. If the property is in an HOA or Common Interest Community - such as a condominium complex or covenant-controlled subdivision (HOA) - then this Section 7 will apply. (If the property is not part of an HOA, this section simply does not apply. In that case, it is acceptable – but not required – to mark out the entire section with an “X”.) 7.1. Common Interest Community Disclosure. Notice in ALL CAPS that the property is in a CIC, the buyer/owner will be required to be a member of the Owners’ Association and subject to the rules and regulations of the
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Association, pay HOA Dues (“Assessments”), so they’d better consider the financial impact of those payments to their budget. Failure to pay the Dues, it could cause a lien on the property and lead to a forced sale to pay the back dues. The owner will be required to submit plans for approval before making any changes to the property. 7.2.1 through 7.2.4, and 7.3 Association Documents to Buyer. If the property is in a "Common Interest Community", then this section specifies the range of different documents that the seller must provide to buyer. Examples include Association declarations, bylaws, Rules and Regulations, and financial documents. 7.4. Conditional on Buyer's Review – Buyer has the right to review all of the community's bylaws, declarations, etc., as well as financial information. If the buyer deems any of the provisions in these documents as unacceptable, and gives the seller written notification of such by the CIC Documents Objection Deadline in Section 3 (by means of the Notice to Terminate) then the contract terminates. If buyer fails to object by the deadline, then they waive the right to object, and the contract remains in effect. 8. TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE. 8.1. Evidence Of Record Title. This Section pertains to the title evidence that the seller must furnish to the purchaser. The parties must decide wither Seller or Buyer will pay for the Owner’s Title Policy, by checking the box. 8.1.1. Seller Selects Title Insurance Company. The seller has the option of choosing the title company, and paying for either a title policy commitment or an abstract of title, certified to the current date. (Abstracts are becoming increasingly rare, so if this is required, the parties must check the appropriate Abstract box.) 8.1.2. Buyer Selects Title Insurance Company. The buyer has the option of choosing the title company, and paying for the title policy. 8.1.3. Owner’s Extended Coverage (OEC). Boxes must be checked whether the title insurance policy will or will not contain OEC, or Owner’s Extended Coverage. OEC deletes or insures over “standard exceptions”. (These are things that the title insurance policy would normally not cover – pay for – these title problems.) In a title insurance policy, these are the standard exceptions to insuring: 1) parties in possession; 2) unrecorded easements; 3) survey matters; 4) any unrecorded mechanics' liens; 5) gap period (the time between the date of commitment to the date the deed is recorded); and 6) unpaid taxes, assessments and unredeemed tax sales prior to the year of closing. Boxes must be checked, depending on whether the cost for insuring any additional coverages, are to be paid by Buyers or Sellers, or OneHalf by Buyer and One-Half by Seller. (For an example of the title commitment and the exceptions, please refer to Problem #2 in the Closings course. Further explanation of these exceptions is contained in the online Closings Q&A.) The Title Company may require a New Survey, to determine
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the exact status of title; if Buyer finds the new Survey unsatisfactory, they may object under the section labeled “Right to Object to Title, Resolution”. 8.1.4. Title Documents; 8.1.5. Copies of Title Documents; 8.1.6. Existing Abstracts of Title. “Title Documents” include: 1) copies of any plats, declarations, covenants, conditions and restrictions burdening the Property, and (2) copies of any other documents (or, if illegible, summaries of such documents) listed in the schedule of exceptions (Exceptions) in the Title Commitment furnished to Buyer. Buyer must receive these by the Record Title Deadline. 8.2 Record Title. (Items affecting title that are recorded and part of the public records.) The purchaser has the right to review the title commitment, abstracts of instruments and any endorsements subsequently furnished. If the state of title is unacceptable, the buyer must give seller the formal Notice of Objection by the Title Objection Deadline set forth in the matrix for Section 3. If buyer fails to give notice by this date (assuming seller provided documentation in a timely manner) buyer waives the right to object, and the contract remains in effect. 8.3. Off-Record Title. (Items affecting title that are not recorded and therefore cannot be found in the public records.) This section requires the seller to furnish to the buyer copies of all leases and surveys in the seller's possession and reveal all easements, liens or title matters not shown of record. The buyer also has the right to inspect the property. The buyer must complain of any unsatisfactory condition by the date set forth in the OffRecord Title Objection Deadline in the matrix for Section 3. If the Seller discloses nothing in writing, they warrant (legally promise) that there are no title problems that are not already disclosed in the record. 8.4. Right to Object to Title, Resolution. Buyer may object to any title matters and terminate the contract – at his or her sole discretion. The buyer may either Object and Seller must remedy the matter by the 8.4.1 Title Resolution deadline, or 8.4.2 Right to Terminate: The contract will terminate as long as Buyer objects by the appropriate deadline. 8.5. Special Taxing Districts. This section warns the buyer that the property may be subject to special assessment bonds, and the payments may suddenly come due in the taxing district in which the property lies. The last paragraph states that the buyer may terminate this contract because of the special taxing district. The buyer must give written Notice to Terminate to the seller by the deadline specified in the Off-Record Title Objection Deadline. Buyer is advised to contact the County Treasurer to obtain a Certificate of Taxes Due. (In the vast majority or residential sales transactions, however,
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this will be provided by the title company with the Preliminary Title Commitment.) 8.6. Right of First Refusal or Contract Approval. If the property is subject to the rules of a Governing Association, (i.e., Homeowner's Association,) and those rules state that the Association must approve of the purchase or has the right of first refusal to purchase the property itself, then the seller must first submit this contract to the Association for approval. If the Right of First Refusal Deadline is not met, then this contract terminates. Buyer also agrees to cooperate with the Seller and the Association in obtaining approval. 8.7. Title Advisory. This provision advises the buyer to consult legal counsel because they may be affected by title matters of which they are unaware, and are which are un-insurable by the title policy. These matters include: encroachment; public and private restrictions; and mineral or water rights held by third parties (which is normal, since as we know, Mineral and Water Rights do not pass automatically in the transfer deed. They must be acquired separately – by separate deed – from whomever actually holds those rights.) 8.7.1. OIL, GAS, WATER AND MINERAL DISCLOSURE. This subsection details what we already know from Chapters 7 & 10: When you buy a property, you are normally only getting the “surface rights”; unless mineral, water, oil or gas rights are specifically included in the deed, they do not transfer with title. Put another way, these “subsurface” rights do not “run with the land”, and in fact may still be held by a mining or rail company from an original deed from the U.S. Government (called a “patent”) over a century earlier. Buyer should research any mining or oil extraction activity nearby, as that may affect their use and enjoyment of the property. 8.7.5. Title Insurance Exclusions. Notice to the parties that matters in this Section may be excepted, excluded from, or not covered by the owner’s title insurance policy, so advice is given in Section 8.8. to Consult an Attorney. 9. NEW ILC, NEW SURVEY 9.1. New ILC or New Survey. If a box is checked, either a survey or Improvement Location Certificate is required. (Note: “Survey” is defined in the Glossary in the first, Instructions book as a “location or verification of property lines by a surveyor.” All the different types of Surveys and ILC are further defined and detailed in Chapter 8, and the student will be tested on these differences on the license exams.) 9.1.1. Ordering of New ILC or New Survey. A box must be checked if Seller or Buyer will require a survey and provide it to the Title Company (or provider of the Opinion of Title if an Abstract is being provided.) 9.1.2 Ordering of New ILC or New Survey. A box must be checked if Seller or Buyer will pay for the survey or ILC.
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9.2. Buyer’s Right to Waive or Change New ILC or New Survey Selection. Buyer may select a different ILC or Survey, as long as there is no additional cost to Seller. Buyer may also waive a New ILC or Survey, prior to any additional cost to Seller. 9.3. New ILC or New Survey Objection. Buyer has the right to review and object to the Survey. Buyer may terminate the contract if s/he objects to the Survey or does not receive it in a timely manner. This is accomplished by means of the written Notice to Terminate provided to Seller by the date of New Survey Objection Deadline. If the New ILC or New Survey Resolution Deadline passes with no objection (9.3.1. Notice to Terminate) from buyer, then the Survey is deemed acceptable - including any survey problems (i.e., encroachments, property line error) that may have been indicated. 10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY, INSURABILITY, DUE DILIGENCE, BUYER DISCLOSURE AND SOURCE OF WATER. Section 10 pertains to buyer's right to inspect the property. 10.1 Seller’s Property Disclosure. Seller will furnish a Seller’s Property Disclosure form by the specified date in the matrix of Section 3; 10.2 Disclosure of Latent Defects; Present Condition. Buyer acknowledges that the house is being sold in an “as is” condition, and the Seller must disclose any latent (“hidden”) defects of which seller knows. 10.3 Inspection. Nevertheless, Buyer still has the right to inspect the premises (and/or hire a professional inspection company). Buyer has the right to inspect the roof, walls, structural integrity, and electrical, plumbing, heating and air conditioning systems of the Property. (In other words, a deep inspection of systems normally hidden behind walls.) If buyer finds any unsatisfactory conditions (of course, all the while, Buyer must be doing so in ”good faith”), Buyer must furnish notice of unsatisfactory condition before the Inspection Objection Deadline. This Notice could either take the form of… 10.3.1 Notice to Terminate – in which case, the contract is terminated; or 10.3.2 Inspection Objection – in which case, the seller has a certain amount of time to remedy the defects. The unsatisfactory condition is at Buyer’s sole subjective discretion. This means that Buyer need not even justify their objection. 10.3.3 Inspection Resolution. If Buyer sends Notice to Correct and Seller and Buyer can’t agree to a solution by the Inspection Resolution Deadline, and the buyer does not formally withdraw the demands of the Notice to Correct, the contract terminates automatically on that date; 10.4 Damage, Liens and Indemnity. Buyer is responsible for any damage caused by the inspection.
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10.5 Insurability This Section states that if buyer is not satisfied with the “insurability” (by the Hazard Insurance company) of the property, then the contract will terminate upon Buyer providing Seller (by the Property Insurance Objection Deadline) with written Notice to Terminate, indicating that the property insurance is unacceptable. (An example would be the Hazard Insurance company refusing to insure the soil conditions, which occasionally happens in Colorado. If the Buyer finds this unacceptable, s/he may elect to terminate the contract.) 10.6 Due Diligence 10.6.1. Documents. Seller agrees to deliver any documents requested that are in the Seller’s possession, by the Due Diligence Documents Delivery Deadline (Section 3 matrix). List all documents in the blank space. Examples of Documents anticipated by this section would be Warranties and Instruction Manuals for appliances. The alternate versions of the Contract to Buy and Sell – Income/Residential; Commercial; and Land – contain an expanded section 10.6 to account for inspection and governmental documents (reproduced here).
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This section simply says that for Property Management purposes (both commercial and residential), the seller will be expected to provide all documents normally required by the Americans for Disabilities Act and for Environmental compliance. (For purposes of the state license exam, this – and the Seller’s Property Disclosure (reproduced earlier in this chapter) - are the only mentions of the word “asbestos” in any Commission forms.) The Commercial versions of the Sales contract also include a section for Due Diligence – Environmental/ADA (pictured here). This section states that for Commercial properties (such as a gas station), government regulations and environmental concerns will be relevant to the buyer. Therefore, buyer has the right to order a Phase I (relatively inexpensive) or Phase II (extensive and expensive) EPA inspection.
This passage requires the parties to determine in advance (by checking the appropriate box) whether Buyer, or Seller will pay for the inspection. (Of course, the subsequent passage gives buyer the right to Terminate the Contract if the property fails the inspection.) 10.6.2 Due Diligence Documents Review and Objection and 10.6.3 Due Diligence Documents Resolution. Buyer may object (at their sole, subjective discretion) to any unsatisfactory conditions in the Due Diligence Documents provided by Seller. If the conditions are so objectionable to buyer, they may terminate the contract (by means of the Notice to Terminate, provided to seller by the Due Diligence Documents Objection Deadline, in the Section 3 matrix). 10.7. Conditional Upon Sale of Property. Buyer gets to sell their property first. If it doesn’t sell by the Conditional Sale Deadline in the Section 3 Deadlines matrix, and buyer gives seller the Notice to Terminate by that date, then the contract is terminated. (Note: If this sale is not conditioned on Buyer’s having to sell their property, then the parties should omit this section. 10.8. Source of Potable Water (Residential Land and Residential Improvements Only). If well water is at issue (residential land only), then the Seller’s Property Disclosure must use the Source of Water Addendum.
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These addenda must disclose whether the water is potable (drinkable), and buyer may need to determine if the water supply will be sufficient for their needs. A recent issue addressed by this passage (IN BOLD) is that some Water Providers provide Nonrenewable Ground Water. Therefore, the buyer is advised in this passage that they are responsible for contacting said provider (or conducting an independent investigation) and determining the provider’s water supplies will be sufficient in the long-term. 10.9. Carbon Monoxide Alarms. Effective July 2009, all sellers (new or pre-owned residential properties) must install Carbon Monoxide Alarms within 15 feet of each bedroom. 10.10. Lead Based Paint. This contract will be void if the house began construction on or before December 31, 1977 (= “prior to 1978”), and seller does not provide a signed Lead Based Paint Disclosure. 10.12 Methamphetamine Disclosure. Sellers are required to disclose if the property has ever been used in the manufacture of methamphetamine, or meth, a nasty substance with highly toxic ingredients that can linger and are an environment hazard. However, Seller is not required to disclose that the property was previously used as a methamphetamine laboratory if it was properly remediated (“fixed”) according to state standards and approvals. If the property was previously used as a methamphetamine laboratory and it was not remediated, and seller discloses this, then the buyer may terminate the contract without penalty. 11. COLORADO FORECLOSURE PROTECTION ACT. The “normal” Sales Contract (CBS-1-6-15, which we are analyzing here) omits the provisions of the Colorado Foreclosure Protection Act. However, a parallel contract must be used in the case of Foreclosure purchases. (CBSF1-6-15) The Colorado Foreclosure Protection Act was passed by the Colorado Legislature to protect homeowners facing foreclosure from scams and unethical practices. This specific provision of the contract prohibits any offer on a property in default not being used as a primary residence by the buyer. In other words, if the buyer wishes to purchase a foreclosure property for investment purposes (not as a primary residence), then they must hire an attorney to draft the Sales Contract. The specific conditions triggering the CFPA and requiring an attorney drafting the Sales Contract (offer), are as follows: 1) It’s residential property; 2) Seller resides in the property and it’s their personal residence; 3) Buyer’s purpose in buying the property is not to use it as their personal residence (= investment property); 4) Seller’s loan is in foreclosure and the lender has given the seller written notice that the loan is at least 30 days delinquent or in default. If this is, instead, a “Short Sale” transaction – this provision does not apply. (In other words, if the seller’s lender has agreed in writing not to foreclose and upon the sale will take less than the amount owed – then the CFPA does not apply and buyer can purchase the property as an investment.)
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12. CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING. 12.1 Closing Documents and Closing Information. The parties shall sign or furnish all (loan) documents to the Closing Company by the Closing Documents Delivery Deadline (Section 3). 12.2 Closing Instructions. The buyer and seller agree to execute the Real Estate Commission’s Closing Instructions form and undertake to deliver the Closing Instructions to the title company. This is important in view of the requirement in Section 4.3 that the Closing Instructions must accompany the delivery of the earnest money if the title company is to hold the earnest money. 12.3 Closing. This Section sets a definite date for the closing, based on that specified in the matrix in Section 3. Note that “Closing” means the same thing as the date set for transfer of title (delivery of the deed). A space is provided for who shall designate the hour and place of closing. (In practice, this will usually be set by the listing broker or the closing/title.) 12.4. Disclosure of Settlement Costs. The parties agree that different settlement providers are available (i.e., attorneys, lenders or title companies) and provide different services. 13. TRANSFER OF TITLE. Requires the seller to deliver to the buyer the type of deed set forth in this Section. The type of deed to be used is written into the blank provided. While the type of deed will usually be a general warranty deed, any of the other types of deed may be specified by the seller if the purchaser will accept them. The types of deed provided by Colorado law are: Special Warranty deed, Bargain and Sale deed, and Quit Claim deed. If the property is being sold through an estate or on behalf of a person that is not legally competent, some type of a Personal Representative's deed will be used, such as an Executor's, Administrator's, Guardian or Conservator's deed. If this situation arises, it is probably necessary for you (your clients) to consult an attorney. Except for encumbrances specifically set forth in the title commitment, the property must be delivered free and clear of encumbrances such as taxes for years previous to the closing, and taxes for special improvements. This section also lists a number of things that may remain against the property when title is transferred. These are: 13.1 Matters in the Title Commitment as listed in Sec. 8.1 of this contract; 13.2 Distribution utility easements. including cable TV; 13.3 Rights of third parties not shown in public records; 13.4 Inclusion of the property in a Special Taxing District;
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13.5 Any special assessment if the improvements were not installed as of the date of Buyer’s signature on this Contract, whether assessed prior to or after Closing, and 13.6 Other (i.e., Declarations and party wall easements.) 14. PAYMENT OF ENCUMBRANCES. Section 14 simply states that any encumbrances that are required to be paid may be paid from the proceeds of the transactions at closing or from other sources. An example is the existing first deed of trust if it is to be paid. 15. CLOSING COSTS, CLOSING FEE, (HOA) ASSOCIATION FEES AND TAXES. This section designates who is to pay the closing costs. 15.1 Closing Costs. All money due at closing from buyer will be paid in “Good Funds”. (Know this term – from the Glossary/Dictionary in the Instructions booklet, Rule E-36 in Chapter 15, and a separate article in Chapter 16.) 15.2 Closing Services Fee. Boxes must be checked as to who is to pay the closing fee ( Buyer Seller One-Half by Buyer and One-Half by Seller or Other - Someone else, entirely). In the vast majority of closings, the parties split the closing fee, so the “One-Half” box would be checked. 15.3 Status Letter and Record Change Fees. If there are HOA Status Letter charges, boxes must be checked to indicate which party should be paying for this at closing. 15.4 Local Transfer Tax. If there is a local transfer tax (only a couple of places in Colorado, such as Summit County) a percentage rate of the purchase price must be included in the appropriate blank, and the box checked as to which party will pay this amount. 15.5 Private Transfer Fee. Which party will pay for any Developer or Community Fee. 15.6 Water Transfer Fees. This is notice by seller of the amounts of water transfer fees (if any). 15.7 Sales and Use Tax. If any, the box must be checked as to who is to pay. 16. PRORATIONS. This Section provides for the items that are to be prorated to the date of closing, such as annual property taxes and interest on existing encumbrances, rents, and association dues. Check boxes require a decision as to: 16.1 Taxes. Whether this year's taxes are to be prorated based on:
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Taxes for the Calendar Year Immediately Preceding Closing (Last year's taxes. This is common, but watch out: They may now be drastically different, if for instance the house is newly constructed;) or Most Recent Mill Levy and Most Recent Assessed Valuation (The most recent assessed value and tax rate. This is also common, and will be more accurate if the property has been recently re-assessed by the county for property tax purposes.) 16.2 Rents. If all or part of the property is being rented, a box must be checked as to whether the proration between buyer and seller will be based on Rents Actually Received or Accrued. 16.3 Association Assessments. If the property is in a Homeowner’s Association, this Subsection applies. Dues paid in advance by seller shall be prorated, and any dues paid before closing, but due after closing shall be credited to the seller on the settlement sheet. Remember that the buyer is responsible for the day of closing. (Note: This will be important on the Closing worksheet for that course’s final exam!) If the Association imposes a Special Assessment for improvements done prior to this sale, Seller shall be responsible for payment. The appropriate box must be checked as to whether Buyer or Seller is responsible for paying any Special Assessments. Seller must fill out the Current Amount of HOA Dues, and the amounts of Special Assessments. If there is no HOA or Association Dues (as in our Contract Example, to follow), this Section may be omitted, with a big “X” box. 16.4. Other Prorations. This brief section puts buyer on notice that Water and Sewer charges (usually bi-monthly or quarterly) will also be prorated – and they will be responsible for a portion of any charges that are normally billed in advance. Of course, if buyer is assuming a (“continuing”) loan, they will be charged for interest from the date of closing to the end of the month (after which they will make the first full monthly payment.) 16.5. Final Settlement. This subsection specifies that all these prorations (at closing) are final, unless otherwise agreed in writing. 17. POSSESSION. Section 17 stresses the date specifically in the Section 3 matrix, when the purchaser will receive actual physical possession of the property. This generally occurs "upon delivery of the deed" (closing). In other circumstances, it might be something like, "three days after transfer of title." In rare cases, possession may even be delivered to the buyer prior to closing. This has certain dangers, such as a failure to close because of loan problems or title difficulties.
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You must list any existing leases (tenants occupying the property) because these will often prevent the purchaser from being able to take physical possession of the property. If the parties agree that the seller may legally hold possession for a certain length of time after closing, this should be indicated in a different part of the contract, such as the "Additional Provisions" space of Section 29. The last sentence of this clause must be checked to make clear whether or not the purchaser intends to occupy the premises as his principal residence. (This has important tax and loan implications, as well as whether the sale will qualify under the Colorado Foreclosure Protection Act.) 18. DAY; COMPUTATION OF PERIOD OF DAYS; DEADLINE – So that there is no confusion, this provision specifies that “day” means one entire day, and ends one minute before midnight, Mountain Time. If the date is not specified and number of days is used (i.e., “3 days after MEC”) then the day of MEC does not “count”, but the last day is included. Check boxes are given to allow the parties to specify whether weekends or holidays are to be included in these deadlines. 19. CAUSES OF LOSS; INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH. Section 19 relates to the property's condition when possession is delivered. It provides that the property is to be delivered in its condition at the time of contracting, less ordinary wear and tear that has occurred during the executory period; 19.1 Causes of Loss, Insurance. If the property is damaged by any casualty loss prior to closing in an amount not exceeding 10% of the purchase price, the seller must repair the damage before Closing. If not repaired before closing, or the damages exceed 10%, the purchaser may back out of the contract. (As always, by means of the Notice to Terminate.) If the purchaser elects to continue to the closing, the purchaser will receive the insurance proceeds, but only in an amount not to exceed the purchase price. 19.2 Damage, Inclusions and Services. If for any reason, any service (such as utilities or cable/satellite) or contract inclusion fails prior to the closing or transfer of possession, the seller must either repair or replace with a unit of similar nature. An example of this would be a failed water heater. If the repair or replacement is not made before closing, the buyer may terminate the contract, or accept a credit for the amount of the repair/replacement. 19.3 Condemnation. Remember from the Glossary/Dictionary and Chapter 3 in the Uniform course, condemnation does not mean what you might think. It simply means that a governmental entity (such as city or county) “takes over” private property for the “public good” (such as a highway or public building), and pays the owner “fair market value”. If this occurs prior to closing with the property that is the subject of this contract, then buyer has the
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option to terminate the contract, or continue with the purchase and receive the proceeds from the condemnation payment. 19.4 Walk-Through and Verification of Condition. Buyer also has the right to inspect prior to closing, to verify that the condition of the property is unchanged. 20. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing the contract, both seller and buyer acknowledge that they have been advised to obtain legal counsel. 21. TIME IS OF THE ESSENCE, DEFAULT AND REMEDIES. This simply means that all payments must be made and all agreements must be performed within the times set forth in the contract or the parties may exercise the following remedies: 21.1.1 Specific Performance. If buyer is in default or in breach of contract for failing to purchase on the terms as set forth in the contract, and this box is checked, the seller's remedies are: Seller keeps the earnest money and may sue the buyer for damages, and/or hold the buyer to the terms of the contract (= “Specific performance”). 21.1.2 Liquidated Damages. (No check box!) If the Specific Performance box is not checked and buyer is in default, seller may cancel the contract, and their only remedy is Liquidated Damages. (Seller waives specific performance and additional damages.) Liquidated damages is all sums of money and things of value, (usually only the earnest money deposit) previously given by the buyer to the seller through seller’s agents. 21.2 If seller is in default, purchaser's remedies are: - Cancel the contract and have returned all sums previously paid; or - Specific Performance (Seller is forced to sell); or - Both Specific Performance and damages; 22. LEGAL FEES; COST AND EXPENSES. If there are any lawsuits or arbitration involving this transaction, the prevailing party will be awarded court costs, expenses and attorney fees. 23. MEDIATION. This provision requires the parties to submit to mediation, prior to litigating any dispute. "Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially." The mediator's decision is not binding and in order to be effective, must be agreed-upon in writing by the parties. The parties share in the choice of mediator, as well as cost. The mediation will terminate if the dispute is not resolved within 30 days. 24. EARNEST MONEY DISPUTE. If a dispute arises over who should get the earnest money deposit, the Earnest Money Holder (which – in any given
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transaction – may be the listing broker, buyer’s broker, or the title/closing company): 1. Need not take any action. The Earnest Money Holder could just hold it in their trust account, awaiting instruction; or 2. Must first wait to receive written instructions agreed upon by both the buyer and the seller, and then the Earnest Money Holder may start a court action and interplead the parties and hopefully be awarded costs and attorney fees. (Warning: You very well could be asked this on the State License exam.) 3. If the Earnest Money Holder provides Notice to the parties and does not receive notice of a lawsuit within 120 days, the Earnest Money Holder may return the funds to the buyer, without fear of reprisal. If Earnest Money Holder has received notice of a lawsuit between the parties and has not interpled the money with a court, and if the Earnest Money Holder is one of the Brokerage Firms signing below, then the Earnest Money Holder shall (must) disburse the funds according to order of the mediator or (lawsuit) court. 25. TERMINATION. 25.1 Right to Terminate. If either party has the right to terminate according to a provision in this contract, they must give written notice with the Commission-approved Notice to Terminate form. (Earlier in this chapter.) 25.2 Effect of Termination. If the contract is terminated (and there is not an earnest money dispute) then the earnest money is returned to the buyer. 26. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL, SUCCESSORS. This section states that this contract constitutes the entire contract and all oral and previous agreements have been merged into this contract. 27. NOTICE, DELIVERY AND CHOICE OF LAW. This section states that notice (of any condition, objection or acceptance) must always be in writing to be effective. 27.1 Physical Delivery and Notice. Notice to Buyer will always be effected by Personal Delivery to Buyer or Selling Brokerage Firm, or any other person named in the contract. Notice to Seller will be effective to Seller or Listing Brokerage Firm. Any notice after Closing must be delivered directly to the party, not the Broker, Brokerage or third party. 27.2 Electronic Notice. The parties may also elect that other forms of “Electronic Delivery” will be acceptable, by checking the appropriate box: Facsimile, E-mail, or Internet. (If the parties do not want notice by either form, this box should be checked: No Electronic Delivery.) 27.3 Electronic Delivery. Electronic Delivery of documents and notice may be delivered by: (1) email at the email address of the recipient, (2) a link or access to a website where the recipient receives access to the documents, or (3) fax at the Fax No. of the recipient.
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27.4. Choice of Law. This states that this contract will be governed by Colorado law and any lawsuits that arise will be tried in a Colorado court. (This is true, even if one or both parties are from another state or country.) 28. NOTICE OF ACCEPTANCE; COUNTERPARTS. This sets the Acceptance Deadline Date and Time (given in the Section 3 matrix) for acceptance of the contract and also states that separate copies may be signed by each party and together will be considered a complete contract. If the buyer and seller sign in the spaces provided, both parties are deemed to accept the terms of the agreement and a valid contract is formed. If either party desires to object to the contract or any of its terms, that party should not sign it. 29. GOOD FAITH. This is where the seller and buyer are put on notice that this is to be an arms-length transaction, and each “side” is acting in “good faith”. In other words, the seller is not misrepresenting the condition of the house, the buyer isn’t misrepresenting their financial situation to their lender or seller, both parties are not fraudulently “Dual Contracting”. (See Chapters 1 and 5.) 30. ADDITIONAL PROVISIONS. This Section is for any additional provisions that have not been covered in any other portion of this contract. If these provisions are too extensive to fit in the space provided they may be added outside this space in an addendum attached to the contract. 31. ATTACHMENTS. 31.1 In the first blank space list any attachments that are to be made part of the contract. For instance, this is where you would list any contractual agreements that are on Commission-approved forms. (i.e., Short Sale Addendum, Closing Instructions, Disclosures, etc.) 31.1.1. Post-Closing Occupancy Agreement. If the PostClosing Occupancy Agreement box is checked in §17 the Post-Closing Occupancy Agreement should be attached. 31.2 In the second blank space, you would list any documents that are relevant to the transaction, but are not contractual agreements between the parties. (i.e., a long legal description, survey, pest or soils reports, etc.) Please see Rule F-3, regarding: 1) who may prepare an addendum to a contract; and 2) the exact language that must appear at the top of such addenda. SIGNATURE LINE BLANKS. The first series of Signature lines are for the offeror – the party(-ies) making the offer. (Initially it would be the buyer). The second series of lines are for the offeree – the party(-ies) to whom the offer is made. (Initially it would be the seller.) If the seller does not accept the offer exactly as made (wants to make a counteroffer, which means any changes to the offer) the seller should not sign!
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32. COUNTER; REJECTION. If Buyer or Seller desire to counter-offer this offer they should mark the appropriate box Countered (Because, remember that until both parties have signed, it is not a binding contract, but merely an offer by one party to the other.) If the seller does not accept the buyer’s offer at all, and doesn’t even want to make a counteroffer, then the contract (offer) goes no farther than that. They should check the box Rejected. Deal is over. END OF CONTRACT. This means that the preceding sections are binding upon the parties – Buyer and Seller. The following section is not part of the contractual agreement, but is merely acknowledgment of earnest money and agency status by the brokers involved in the transaction. 33. BROKERS ACKNOWLEDGMENTS and COMPENSATION DISCLOSURE. Section 33 is to be completed by the Broker working with the Buyer. By signing here, the broker is not becoming a party to the contract, nor being bound to sale in any way. The Broker is merely indicating whether s/he has received the earnest money, and agrees to cooperate in any mediation (Section 23) that might arise in the event of a dispute between the parties. In the event of a Notice to Terminate and this brokerage is holding the earnest money, this section binds this brokerage to follow the written (mutual) instructions of the parties as to who gets the earnest money. The Earnest Money must be delivered within five days following receipt of the instructions (provided the Earnest Money check has cleared.) This section also requires that the selling company agent (the broker who is actually dealing with the buyer) check which agency relationship they have with the buyer: Buyer Agent or Seller’s Agent or TransactionBroker, and if this is a Change of Status from the initial agency relationship with buyer. (See the discussion of Colorado’s Agency relationships in Chapter 2, and earlier in this Chapter regarding the Change of Status form.) These boxes also require boxes to be checked detailing who is paying the Selling Company's and the Listing Company's compensation. It does not specify the amounts to be paid. (That was already done in the Listing Agreement and Closing Instructions.) Section 34 mirrors the previous Section, but specifies the form of agency for the broker working with the seller, and who will pay his or her commission.
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ADDITIONAL PROVISIONS of the OTHER Commission-Approved SALES CONTRACTS NOTE: All of the Sales Contract variations (listed at the beginning of this chapter) are not reproduced and analyzed herein. This is because they are identical in content – save for a few passages – and are used only in specialized situations. The following is a summary of the differences in the other Commission-approved Sales Contracts: CONTRACT TO BUY AND SELL - FORECLOSURE PROTECTION ACT This contract is only to be used in the case of a buyer who is purchasing a home in foreclosure as an Investment Property – not as a primary residence. Section 11.1 – The parties represent that all five of the following conditions exist in the transaction: 1) Buyer will not assume Seller’s financial obligations (the defaulted mortgage loan or any other liens against the property); 2) There are no leases between Buyer and Seller; 3) Seller does not have an option to repurchase the property; 4) The “Notice to Cancellation” and “Seller Warning – Equity Skimming” forms are attached and are a part of the contract; 5) No consideration was paid to Seller prior to Seller’s Right to Cancel date. Section 11.2 – Seller’s principal language is __________________. (If the buyer – who is presenting this offer, initially – does not know the language Seller speaks, enter “English”, and let them submit a counteroffer to correct, if necessary.) Section 11.3 – If any of the above conditions change prior to closing, the contract is void. Section 31 – No one can force the Seller to sign the deed transferring title, until the Cancellation Date has fully passed. CONTRACT TO BUY AND SELL – INCOME-RESIDENTIAL Section 2.5.3-Trade Fixtures – Is added to the Inclusions section, as this contract might be used in the sale of apartment buildings or other multi-unit residential properties. Section 10.6 includes a list of documents that will be required from Seller to Buyer, such as management agreements and tax bills. Section 10.7 allows Buyer to cancel the contract if Zoning requirements are not acceptable. Section 10.-Environmental Inspections Since multi-unit apartment buildings are much larger and are subject to governmental restrictions, the Inspections process is much more complicated. Expensive and timeconsuming Environmental Site Assessments are often required, requiring much more paperwork. This Section includes checkboxes and additional Deadlines are incorporated in the Section 3 Matrix to accommodate these lengthy processes.
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Section 10.15 prohibits Seller from giving rent concessions to tenants prior to the sale, absent Buyer’s consent. (Seller might do this to fill the vacant apartments, to make it more appealing for sale – but painting a misleading picture to buyer about the profitability of the property. Rent concessions, therefore, must not be hidden by seller.) Section 11 requires to obtain certifications (“Estoppel”) from all tenants, and provide such to Buyer, as to the specifics of their leases. This is standard for large, multi-unit apartment buildings, but will be deleted in the case of a Duplex being sold. Note: Tenant Estoppel Certificate is a signed statement by a tenant that a lease exists, that there are no defaults, and that rent is paid to a certain date. A party’s delivery of this statement estops (prevents) them from later claiming a different state of facts. There are two purposes to an estoppel statement: (1) to assure the purchaser or lender that the tenant at a later date will not make claims that are inconsistent with the statements contained in the estoppel, and (2) to give a prospective buyer or lender information about the lease. CONTRACT TO BUY AND SELL – COMMERCIAL Section 10.6-Physical Inspection. Adds Buyer’s right to obtain EPA PHASE I and PHASE II Inspections, and specifies which party will pay for the hugely-expensive process. Due Diligence Documents are even more extensive than Income-Residential. Section 11 – Estoppel Statements must also be obtained from all tenants. CONTRACT TO BUY AND SELL – LAND Checkboxes are included at the top to specify whether the land is completely vacant (“Property with No Residences”), or whether there are also residences on the land. This contract also adds the same Environmental Protection, Tenant Estoppel sections as the Commercial contract, even though the property is usually just raw land or platted lots with no structures. In these cases, the provisions should be omitted.
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SALES CONTRACT PROBLEM #1 On June 6th of this year, the brokerage assisting the buyer, Douglas Realty (who does NOT represent buyers as either a buyer broker, or a seller's agent) fills out an offer on the house at 5643 Marble Street, Denver, CO 80208. This offer is presented on June 7th to the sellers, John A. Swan and Mabel B. Swan. The buyers' names are Robert R. Hopper and Ruth C. Hopper. This house is not in a Homeowner's Association Legal Description: Lot 8, Block 13, Summers Subdivision, 2nd Filing, City and County of Denver. Douglas Realty gives you Buyer’s earnest money deposit of $5,000 in the form of a personal check. Sales Price: $104,500 Balance of the loan to be assumed is about $54,000 Interest Rate: 9% Monthly Payment: $675 Payment Date: 1st of Month Loan Transfer Fee: Not to exceed $50.00 Seller agrees to provide copies of the existing loan documents to buyer within 8 days from contract acceptance. Buyer has a 3-day deadline to object to these documents. Buyer may also terminate the contract if the actual balance of the assumed loan is less than the anticipated $54,000, causing the buyer to bring in more than $500; or the Interest Rate will be greater than 10%; or the payment will be greater than $725. Sellers shall be released from liability from the VA loan and their VA eligibility shall be reinstated. Commitment letter of reinstatement to be provided by VA, paid by seller, in an amount not to exceed $50. Sellers will carry back the amount of $20,000, to be secured by a second deed of trust and the UCCC promissory note (no default rate) to bear 10% interest. The Deed of Trust is to be Strict-Due on Transfer, no prepayment penalty (except that prepayments shall be in not more than $100 increments,) with a 10% late fee after 5 days from due, and an 18% lender disbursement penalty. The note will be amortized over 15 years and will have a monthly payment of $200 principal and interest, (with a balloon payment of any balance
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at the end of the 15-year period.) Payments will not include escrows for property taxes or insurance. Buyer to supply credit information by 6/18; Seller has three days to object. There will be no UCC Financing Statement, as there is no personal property being financed. There will be an 18% default interest rate. There will be no other financing; buyers will pay the balance in cash, as long as no more than $500 additional cash is required (over and above the expected $25,500 due at closing.) No appraisal nor survey will be required. Seller's Agent must order a title insurance policy, deliverable no later than June 15, and Buyer must request copies of title documents, and must object to any title issues within 3 days. Seller shall commit to insure over standard exceptions, and any additional cost for insuring these exceptions will be borne by seller and shall not exceed $250. Closing is to be conducted at a Title Company specified by the Seller. Buyers and sellers will split the closing fee. Buyers have insisted that if possession is not delivered by 5pm on the day of closing they want $75 per day rent. Title is to be transferred with a deed which seller grants buyer all warranties available, and the Hoppers want to take title so that if one of them dies, the other may retain title to the property without going through the probate process. Property tax proration will be based on last year's taxes. The contract is to be one where if the buyer defaults, the seller's only remedy will be to retain those things of value already received (the earnest money deposit.) As per the listing contract, the washer and dryer are included in the sale. Any notice to buyer is effective when received by Douglas Realty. Buyer's current address is 20305 N. Isabel Way, Arvada, CO 80009. Offer expires before midnight, June 10. The following are the Dates and Deadlines that should be placed in the Section 3 matrix (on the second page of the contract). Any dates inapplicable to this example should be indicated by “n/a”. Note: These dates are in no way “standard”, nor are they indicative
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in any way of those that might be found in a “real life” transaction. Every transaction is different. So, for example, one contract (such as this) may leave only three days – while another gives a full three weeks – between each of the Title deadline, the Title Exceptions Request deadline, and the Title Objections deadline. Title Deadline - 6/15 Title Exceptions Request Deadline - 6/18 Title Objections Deadline - 6/21 Off-Record Matters Deadline - 6/15 Off-Record Matters Objections Deadline - 6/18 Seller’s Property Disclosure Deadline - 6/15 Buyer’s Credit Information Deadline - 6/15 Disapproval of Buyer’s Credit Information Deadline - 6/20 Existing Loan Documents Deadline - 6/15 Existing Loan Documents Objection Deadline - 6/20 Loan Transfer Approval Deadline - 6/21 Inspection Objection Deadline - 6/15 Inspection Resolution Deadline - 6/20 Property Insurance Objection Deadline - 6/15 Due Diligence Documents Delivery Deadline - 6/18 Due Diligence Documents Objection Deadline - 6/20 Closing Date - 6/28 Closing Documents Delivery Deadline - 6/28 Possession Date & Time - 6/28, 5pm Acceptance Deadline - 6/10, 11:59pm
Use the blank Sales Contract on the following pages to fill in these facts. Answer Key follows at the end of this Chapter.
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Not for Use Before 1-1-16
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The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (CBS1-6-15) (Mandatory 1-16) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
6
CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIAL)
7 8 9
Date:
10
AGREEMENT
11 12
1. AGREEMENT. Buyer agrees to buy and Seller agrees to sell, the Property described below on the terms and conditions set forth in this contract (Contract).
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2.
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together with the interests, easements, rights, benefits, improvements and attached fixtures appurtenant thereto, and all interest of Seller in vacated streets and alleys adjacent thereto, except as herein excluded (Property).
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PARTIES AND PROPERTY. 2.1. Buyer. Buyer, , will take title to the Property described below as Joint Tenants Tenants In Common Other . 2.2. No Assignability. This Contract Is Not assignable by Buyer unless otherwise specified in Additional Provisions. 2.3. Seller. Seller, the current owner of the Property described below. 2.4. Property. The Property is the following legally described real estate in the County of
,
is
, Colorado:
known as No.
, Street Address
City
State
Zip
2.5.
Inclusions. The Purchase Price includes the following items (Inclusions): 2.5.1. Inclusions - Attached. The following items are included unless excluded under Exclusions: lighting, heating, plumbing, ventilating and air conditioning units, TV antennas, inside telephone, network and coaxial (cable) wiring and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler systems and controls, built-in vacuum systems (including accessories), garage door openers (including _______ remote controls). If checked, the following are owned by the Seller and included (leased items should be listed under Due Diligence Documents): None Solar Panels Water Softeners Security Systems Satellite Systems (including satellite dishes). If any additional items are attached to the Property after the date of this Contract, such additional items are also included in the Purchase Price. 2.5.2. Inclusions – Not Attached. If on the Property, whether attached or not, on the date of this Contract, the following items are included unless excluded under Exclusions: storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings and treatments, curtain rods, drapery rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, carbon monoxide alarms, smoke/fire detectors and all keys. 2.5.3. Personal Property - Conveyance. Any personal property must be conveyed at Closing by Seller free and clear of all taxes (except personal property taxes for the year of Closing), liens and encumbrances, except . Conveyance of all personal property will be by bill of sale or other applicable legal instrument. 2.5.4. Other Inclusions. The following items, whether fixtures or personal property, are also included in the Purchase Price:
2.5.5.
Parking and Storage Facilities.
Use Only
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Ownership of the following parking facilities: Page Colorado Contracts & Regulations (48 credit hrs)1 of 17
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2.6.
2.7.
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; and Use Only Ownership of the following storage facilities: Exclusions. The following items are excluded (Exclusions):
.
Water Rights, Well Rights, Water and Sewer Taps. 2.7.1. Deeded Water Rights. The following legally described water rights:
Any deeded water rights will be conveyed by a good and sufficient deed at Closing. 2.7.2. Other Rights Relating to Water. The following rights relating to water not included in §§ 2.7.1, 2.7.3, 2.7.4 and 2.7.5, will be transferred to Buyer at Closing:
2.7.3. Well Rights. Seller agrees to supply required information to Buyer about the well. Buyer understands that if the well to be transferred is a “Small Capacity Well” or a “Domestic Exempt Water Well,” used for ordinary household purposes, Buyer must, prior to or at Closing, complete a Change in Ownership form for the well. If an existing well has not been registered with the Colorado Division of Water Resources in the Department of Natural Resources (Division), Buyer must complete a registration of existing well form for the well and pay the cost of registration. If no person will be providing a closing service in connection with the transaction, Buyer must file the form with the Division within sixty days after Closing. The Well Permit # is . 2.7.4. Water Stock Certificates. The water stock certificates to be transferred at Closing are as follows:
2.7.5. Conveyance. If Buyer is to receive any rights to water pursuant to § 2.7.2 (Other Rights Relating to Water), § 2.7.3 (Well Rights), or § 2.7.4 (Water Stock Certificates), Seller agrees to convey such rights to Buyer by executing the applicable legal instrument at Closing. 3.
DATES AND DEADLINES.
Item No. 1
Reference § 4.3
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§ 8.1 § 8.2 § 8.3 § 8.3 § 8.4 § 8.6
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§ 7.3 § 7.4
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§ 10.1
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§ 5.1 § 5.2 § 5.3 § 5.3 § 5.4 § 5.4 § 5.4 § 4.7
Event Alternative Earnest Money Deadline Title Record Title Deadline Record Title Objection Deadline Off-Record Title Deadline Off-Record Title Objection Deadline Title Resolution Deadline Right of First Refusal Deadline Owners’ Association Association Documents Deadline Association Documents Objection Deadline Seller’s Property Disclosure Seller’s Property Disclosure Deadline Loan and Credit Loan Application Deadline Loan Objection Deadline Buyer’s Credit Information Deadline Disapproval of Buyer’s Credit Information Deadline Existing Loan Documents Deadline Existing Loan Documents Objection Deadline Loan Transfer Approval Deadline Seller or Private Financing Deadline
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Date or Deadline
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§ 6.2 § 6.2 § 6.2
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§ 9.1 § 9.3 § 9.4
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§ 10.3 § 10.3 § 10.5 § 10.6 § 10.6 § 10.6 § 10.7
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§ 12.3 § 17 § 17 § 28 § 28
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Appraisal Appraisal Deadline Appraisal Objection Deadline Appraisal Resolution Deadline Survey New ILC or New Survey Deadline New ILC or New Survey Objection Deadline New ILC or New Survey Resolution Deadline Inspection and Due Diligence Inspection Objection Deadline Inspection Resolution Deadline Property Insurance Objection Deadline Due Diligence Documents Delivery Deadline Due Diligence Documents Objection Deadline Due Diligence Documents Resolution Deadline Conditional Sale Deadline Closing and Possession Closing Date Possession Date Possession Time Acceptance Deadline Date Acceptance Deadline Time
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Note: If FHA or VA loan boxes are checked in § 4.5.3 (Loan Limitations), the Appraisal deadlines do Not apply to FHA insured or VA guaranteed loans.
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3.1. Applicability of Terms. Any box checked in this Contract means the corresponding provision applies. Any box, blank or line in this Contract left blank or completed with the abbreviation “N/A”, or the word “Deleted” means such provision, including any deadline, is not applicable and the corresponding provision of this Contract to which reference is made is deleted. If no box is checked in a provision that contains a selection of “None”, such provision means that “None” applies.
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The abbreviation “MEC” (mutual execution of this Contract) means the date upon which both parties have signed this Contract. 4.
PURCHASE PRICE AND TERMS. 4.1. Price and Terms. The Purchase Price set forth below is payable in U.S. Dollars by Buyer as follows:
Item No. 1 2 3 4 5 6 7 8 9 10 95 96 97 98 99 100 101 102 103 104
Reference § 4.1 § 4.3 § 4.5 § 4.6 § 4.7 § 4.7
§ 4.4
Item Purchase Price Earnest Money New Loan Assumption Balance Private Financing Seller Financing
Cash at Closing TOTAL
Amount
Amount
$ $ $ $ $ $
$
$ $
4.2. Seller Concession. At Closing, Seller will credit to Buyer $______________ (Seller Concession). The Seller Concession may be used for any Buyer fee, cost, charge or expenditure to the extent the amount is allowed by the Buyer’s lender and is included in the Closing Statement or Closing Disclosure, at Closing. Examples of allowable items to be paid for by the Seller Concession include, but are not limited to: Buyer’s closing costs, loan discount points, loan origination fees, prepaid items and any other fee, cost, charge, expense or expenditure. Seller Concession is in addition to any sum Seller has agreed to pay or credit Buyer elsewhere in this Contract. 4.3. Earnest Money. The Earnest Money set forth in this section, in the form of a ______________________, will be payable to and held by ________________________________________ (Earnest Money Holder), in its trust account, on behalf of both Seller and Buyer. The Earnest Money deposit must be tendered, by Buyer, with this Contract unless the parties mutually agree to an Alternative Earnest Money Deadline for its payment. The parties authorize delivery of the Earnest Money deposit to CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 141
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the company conducting the Closing (Closing Company), if any, at or before Closing. In the event Earnest Money Holder has agreed to have interest on Earnest Money deposits transferred to a fund established for the purpose of providing affordable housing to Colorado residents, Seller and Buyer acknowledge and agree that any interest accruing on the Earnest Money deposited with the Earnest Money Holder in this transaction will be transferred to such fund. 4.3.1. Alternative Earnest Money Deadline. The deadline for delivering the Earnest Money, if other than at the time of tender of this Contract, is as set forth as the Alternative Earnest Money Deadline. 4.3.2. Return of Earnest Money. If Buyer has a Right to Terminate and timely terminates, Buyer is entitled to the return of Earnest Money as provided in this Contract. If this Contract is terminated as set forth in § 25 and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate, Seller agrees to execute and return to Buyer or Broker working with Buyer, written mutual instructions (e.g., Earnest Money Release form), within three days of Seller’s receipt of such form. 4.4. Form of Funds; Time of Payment; Available Funds. 4.4.1. Good Funds. All amounts payable by the parties at Closing, including any loan proceeds, Cash at Closing and closing costs, must be in funds that comply with all applicable Colorado laws, including electronic transfer funds, certified check, savings and loan teller’s check and cashier’s check (Good Funds). 4.4.2. Time of Payment; Available Funds. All funds, including the Purchase Price to be paid by Buyer, must be paid before or at Closing or as otherwise agreed in writing between the parties to allow disbursement by Closing Company at Closing OR SUCH NONPAYING PARTY WILL BE IN DEFAULT. Buyer represents that Buyer, as of the date of this Contract, Does Does Not have funds that are immediately verifiable and available in an amount not less than the amount stated as Cash at Closing in § 4.1. 4.5. New Loan. 4.5.1. Buyer to Pay Loan Costs. Buyer, except as provided in § 4.2, if applicable, must timely pay Buyer’s loan costs, loan discount points, prepaid items and loan origination fees, as required by lender. 4.5.2. Buyer May Select Financing. Buyer may pay in cash or select financing appropriate and acceptable to Buyer, including a different loan than initially sought, except as restricted in § 4.5.3 or § 30 (Additional Provisions). 4.5.3. Loan Limitations. Buyer may purchase the Property using any of the following types of loans: Conventional FHA VA Bond Other . 4.5.4. Good Faith Estimate – Monthly Payment and Loan Costs. Buyer is advised to review the terms, conditions and costs of Buyer’s New Loan carefully. If Buyer is applying for a residential loan, the lender generally must provide Buyer with a good faith estimate of Buyer’s closing costs within three days after Buyer completes a loan application. Buyer also should obtain an estimate of the amount of Buyer’s monthly mortgage payment. 4.6. Assumption. Buyer agrees to assume and pay an existing loan in the approximate amount of the Assumption Balance set forth in § 4.1, presently payable at $______________ per ________________ including principal and interest Real Estate Taxes presently at the rate of ________% per annum, and also including escrow for the following as indicated: Property Insurance Premium Mortgage Insurance Premium and . Buyer agrees to pay a loan transfer fee not to exceed $_____________. At the time of assumption, the new interest rate will not exceed ________% per annum and the new payment will not exceed $_____________ per ________________ principal and interest, plus escrow, if any. If the actual principal balance of the existing loan at Closing is less than the Assumption Balance, which causes the amount of cash required from Buyer at Closing to be increased by more than $_____________, then Buyer has the Right to Terminate under § 25.1, on or before Closing Date, based on the reduced amount of the actual principal balance. Seller Will Will Not be released from liability on said loan. If applicable, compliance with the requirements for release from liability will be evidenced by delivery on or before Loan Transfer Approval Deadline at Closing of an appropriate letter of commitment from lender. Any cost payable for release of liability will be paid by in an amount not to exceed $_____________. 4.7. Seller or Private Financing. WARNING: Unless the transaction is exempt, federal and state laws impose licensing, other requirements and restrictions on sellers and private financiers. Contract provisions on financing and financing documents, unless exempt, should be prepared by a licensed Colorado attorney or licensed mortgage loan originator. Brokers should not prepare or advise the parties on the specifics of financing, including whether or not a party is exempt from the law. 4.7.1. Seller Financing. If Buyer is to pay all or any portion of the Purchase Price with Seller financing, Buyer Seller will deliver the proposed Seller financing documents to the other party on or before _________ days before Seller or Private Financing Deadline. 4.7.1.1. Seller May Terminate. If Seller is to provide Seller financing, this Contract is conditional upon Seller determining whether such financing is satisfactory to the Seller, including its payments, interest rate, terms, conditions, cost and compliance with the law. Seller has the Right to Terminate under § 25.1, on or before Seller or Private Financing Deadline, if such Seller financing is not satisfactory to the Seller, in Seller’s sole subjective discretion. 4.7.2. Buyer May Terminate. If Buyer is to pay all or any portion of the Purchase Price with Seller or private financing, this Contract is conditional upon Buyer determining whether such financing is satisfactory to the Buyer, including its availability, payments, interest rate, terms, conditions and cost. Buyer has the Right to Terminate under § 25.1, on or before Seller CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 142
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or Private Financing Deadline, if such Seller or private financing is not satisfactory to Buyer, in Buyer’s sole subjective discretion.
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TRANSACTION PROVISIONS
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5.
FINANCING CONDITIONS AND OBLIGATIONS. 5.1. Loan Application. If Buyer is to pay all or part of the Purchase Price by obtaining one or more new loans (New Loan), or if an existing loan is not to be released at Closing, Buyer, if required by such lender, must make an application verifiable by such lender, on or before Loan Application Deadline and exercise reasonable efforts to obtain such loan or approval. 5.2. Loan Objection. If Buyer is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer’s sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan. This condition is for the sole benefit of Buyer. Buyer has the Right to Terminate under § 25.1, on or before Loan Objection Deadline, if the New Loan is not satisfactory to Buyer, in Buyer’s sole subjective discretion. IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER’S WRITTEN NOTICE TO TERMINATE, BUYER’S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey). 5.3. Credit Information. If an existing loan is not to be released at Closing, this Contract is conditional (for the sole benefit of Seller) upon Seller’s approval of Buyer’s financial ability and creditworthiness, which approval will be at Seller’s sole subjective discretion. Accordingly: (1) Buyer must supply to Seller by Buyer’s Credit Information Deadline, at Buyer’s expense, information and documents (including a current credit report) concerning Buyer’s financial, employment and credit condition; (2) Buyer consents that Seller may verify Buyer’s financial ability and creditworthiness; and (3) any such information and documents received by Seller must be held by Seller in confidence, and not released to others except to protect Seller’s interest in this transaction. If the Cash at Closing is less than as set forth in § 4.1 of this Contract, Seller has the Right to Terminate under § 25.1, on or before Closing. If Seller disapproves of Buyer’s financial ability or creditworthiness, in Seller’s sole subjective discretion, Seller has the Right to Terminate under § 25.1, on or before Disapproval of Buyer’s Credit Information Deadline. 5.4. Existing Loan Review. If an existing loan is not to be released at Closing, Seller must deliver copies of the loan documents (including note, deed of trust, and any modifications) to Buyer by Existing Loan Documents Deadline. For the sole benefit of Buyer, this Contract is conditional upon Buyer’s review and approval of the provisions of such loan documents. Buyer has the Right to Terminate under § 25.1, on or before Existing Loan Documents Objection Deadline, based on any unsatisfactory provision of such loan documents, in Buyer’s sole subjective discretion. If the lender’s approval of a transfer of the Property is required, this Contract is conditional upon Buyer’s obtaining such approval without change in the terms of such loan, except as set forth in § 4.6. If lender’s approval is not obtained by Loan Transfer Approval Deadline, this Contract will terminate on such deadline. Seller has the Right to Terminate under § 25.1, on or before Closing, in Seller’s sole subjective discretion, if Seller is to be released from liability under such existing loan and Buyer does not obtain such compliance as set forth in § 4.6.
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6.
APPRAISAL PROVISIONS. 6.1. Appraisal Definition. An “Appraisal” is an opinion of value prepared by a licensed or certified appraiser, engaged on behalf of Buyer or Buyer’s lender, to determine the Property’s market value (Appraised Value). The Appraisal may also set forth certain lender requirements, replacements, removals or repairs necessary on or to the Property as a condition for the Property to be valued at the Appraised Value. 6.2. Appraisal Condition. The applicable appraisal provision set forth below applies to the respective loan type set forth in § 4.5.3, or if a cash transaction (i.e. no financing), § 6.2.1 applies. 6.2.1. Conventional/Other. Buyer has the right to obtain an Appraisal. If the Appraised Value is less than the Purchase Price, or if the Appraisal is not received by Buyer on or before Appraisal Deadline Buyer may, on or before Appraisal Objection Deadline, notwithstanding § 8.3 or § 13: 6.2.1.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or 6.2.1.2. Appraisal Objection. Deliver to Seller a written objection accompanied by either a copy of the Appraisal or written notice from lender that confirms the Appraisal Value is less than the Purchase Price. 6.2.1.3. Appraisal Resolution. If an Appraisal Objection is received by Seller, on or before Appraisal Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Appraisal Resolution Deadline (§ 3), this Contract will terminate on the Appraisal Resolution Deadline, unless Seller receives Buyer’s written withdrawal of the Appraisal Objection before such termination, i.e., on or before expiration of Appraisal Resolution Deadline. 6.2.2. FHA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the purchaser (Buyer) shall not be obligated to complete the purchase of the Property described herein or to incur any penalty by forfeiture of Earnest Money deposits or otherwise unless the purchaser (Buyer) has been given, in accordance with HUD/FHA or VA requirements, a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender, setting forth the appraised value of the Property of not less than $______________. The purchaser (Buyer) shall have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 143
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appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value nor the condition of the Property. The purchaser (Buyer) should satisfy himself/herself that the price and condition of the Property are acceptable. 6.2.3. VA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the purchaser (Buyer) shall not incur any penalty by forfeiture of Earnest Money or otherwise or be obligated to complete the purchase of the Property described herein, if the Contract Purchase Price or cost exceeds the reasonable value of the Property established by the Department of Veterans Affairs. The purchaser (Buyer) shall, however, have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs. 6.3. Lender Property Requirements. If the lender imposes any requirements, replacements, removals or repairs, including any specified in the Appraisal (Lender Requirements) to be made to the Property (e.g., roof repair, repainting), beyond those matters already agreed to by Seller in this Contract, Seller has the Right to Terminate under § 25.1, (notwithstanding § 10 of this Contract), on or before three days following Seller’s receipt of the Lender Requirements, in Seller’s sole subjective discretion. Seller’s Right to Terminate in this § 6.3 does not apply if, on or before any termination by Seller pursuant to this § 6.3: (1) the parties enter into a written agreement regarding the Lender Requirements; or (2) the Lender Requirements have been completed; or (3) the satisfaction of the Lender Requirements is waived in writing by Buyer. 6.4. Cost of Appraisal. Cost of the Appraisal to be obtained after the date of this Contract must be timely paid by Buyer Seller. The cost of the Appraisal may include any and all fees paid to the appraiser, appraisal management company, lender's agent or all three. 7. OWNERS’ ASSOCIATION. This Section is applicable if the Property is located within a Common Interest Community and subject to such declaration. 7.1. Common Interest Community Disclosure. THE PROPERTY IS LOCATED WITHIN A COMMON INTEREST COMMUNITY AND IS SUBJECT TO THE DECLARATION FOR THE COMMUNITY. THE OWNER OF THE PROPERTY WILL BE REQUIRED TO BE A MEMBER OF THE OWNERS’ ASSOCIATION FOR THE COMMUNITY AND WILL BE SUBJECT TO THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS WILL IMPOSE FINANCIAL OBLIGATIONS UPON THE OWNER OF THE PROPERTY, INCLUDING AN OBLIGATION TO PAY ASSESSMENTS OF THE ASSOCIATION. IF THE OWNER DOES NOT PAY THESE ASSESSMENTS, THE ASSOCIATION COULD PLACE A LIEN ON THE PROPERTY AND POSSIBLY SELL IT TO PAY THE DEBT. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS OF THE COMMUNITY MAY PROHIBIT THE OWNER FROM MAKING CHANGES TO THE PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE ASSOCIATION (OR A COMMITTEE OF THE ASSOCIATION) AND THE APPROVAL OF THE ASSOCIATION. PURCHASERS OF PROPERTY WITHIN THE COMMON INTEREST COMMUNITY SHOULD INVESTIGATE THE FINANCIAL OBLIGATIONS OF MEMBERS OF THE ASSOCIATION. PURCHASERS SHOULD CAREFULLY READ THE DECLARATION FOR THE COMMUNITY AND THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION. 7.2. Owners’ Association Documents. Owners’ Association Documents (Association Documents) consist of the following: 7.2.1. All Owners’ Association declarations, articles of incorporation, bylaws, articles of organization, operating agreements, rules and regulations, party wall agreements; 7.2.2. Minutes of most recent annual owners’ meeting; 7.2.3. Minutes of any directors’ or managers’ meetings during the six-month period immediately preceding the date of this Contract. If none of the preceding minutes exist, then the most recent minutes, if any (§§ 7.2.1, 7.2.2 and 7.2.3, collectively, Governing Documents); and 7.2.4. The most recent financial documents which consist of: (1) annual and most recent balance sheet, (2) annual and most recent income and expenditures statement, (3) annual budget, (4) reserve study, and (5) notice of unpaid assessments, if any (collectively, Financial Documents). 7.3. Association Documents to Buyer. 7.3.1. Seller to Provide Association Documents. Seller is obligated to provide to Buyer the Association Documents, at Seller’s expense, on or before Association Documents Deadline. Seller authorizes the Association to provide the Association Documents to Buyer, at Seller’s expense. Seller’s obligation to provide the Association Documents is fulfilled upon Buyer’s receipt of the Association Documents, regardless of who provides such documents. 7.4. Conditional on Buyer’s Review. Buyer has the right to review the Association Documents. Buyer has the Right to Terminate under § 25.1, on or before Association Documents Objection Deadline, based on any unsatisfactory provision in any of the Association Documents, in Buyer’s sole subjective discretion. Should Buyer receive the Association Documents after Association Documents Deadline, Buyer, at Buyer’s option, has the Right to Terminate under § 25.1 by Buyer’s Notice to Terminate received by Seller on or before ten days after Buyer’s receipt of the Association Documents. If Buyer does not receive the Association Documents, or if Buyer’s Notice to Terminate would otherwise be required to be received by Seller after Closing Date, Buyer’s Notice to Terminate must be received by Seller on or before Closing. If Seller does not receive Buyer’s Notice to CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 144
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Terminate within such time, Buyer accepts the provisions of the Association Documents as satisfactory, and Buyer waives any Right to Terminate under this provision, notwithstanding the provisions of § 8.6 (Right of First Refusal or Contract Approval).
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8.
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8.1.3. Owner's Extended Coverage (OEC). The Title Commitment Will Will Not contain Owner’s Extended Coverage (OEC). If the Title Commitment is to contain OEC, it will commit to delete or insure over the standard exceptions which relate to: (1) parties in possession, (2) unrecorded easements, (3) survey matters, (4) unrecorded mechanics’ liens, (5) gap period (period between the effective date and time of commitment to the date and time the deed is recorded), and (6) unpaid taxes, assessments and unredeemed tax sales prior to the year of Closing. Any additional premium expense to obtain OEC will be paid by Buyer Seller One-Half by Buyer and One-Half by Seller Other__________________________. Regardless of whether the Contract requires OEC, the Title Insurance Commitment may not provide OEC or delete or insure over any or all of the standard exceptions for OEC. The Title Insurance Company may require a New Survey or New ILC, defined below, among other requirements for OEC. If the Title Insurance Commitment is not satisfactory to Buyer, Buyer has a right to object under § 8.4 (Right to Object to Title, Resolution). 8.1.4. Title Documents. Title Documents consist of the following: (1) copies of any plats, declarations, covenants, conditions and restrictions burdening the Property, and (2) copies of any other documents (or, if illegible, summaries of such documents) listed in the schedule of exceptions (Exceptions) in the Title Commitment furnished to Buyer (collectively, Title Documents). 8.1.5. Copies of Title Documents. Buyer must receive, on or before Record Title Deadline, copies of all Title Documents. This requirement pertains only to documents as shown of record in the office of the clerk and recorder in the county where the Property is located. The cost of furnishing copies of the documents required in this Section will be at the expense of the party or parties obligated to pay for the owner’s title insurance policy. 8.1.6. Existing Abstracts of Title. Seller must deliver to Buyer copies of any abstracts of title covering all or any portion of the Property (Abstract of Title) in Seller’s possession on or before Record Title Deadline. 8.2. Record Title. Buyer has the right to review and object to the Abstract of Title or Title Commitment and any of the Title Documents as set forth in § 8.4 (Right to Object to Title, Resolution) on or before Record Title Objection Deadline. Buyer’s objection may be based on any unsatisfactory form or content of Title Commitment or Abstract of Title, notwithstanding § 13, or any other unsatisfactory title condition, in Buyer’s sole subjective discretion. If the Abstract of Title, Title Commitment or Title Documents are not received by Buyer on or before the Record Title Deadline, or if there is an endorsement to the Title Commitment that adds a new Exception to title, a copy of the new Exception to title and the modified Title Commitment will be delivered to Buyer. Buyer has until the earlier of Closing or ten days after receipt of such documents by Buyer to review and object to: (1) any required Title Document not timely received by Buyer, (2) any change to the Abstract of Title, Title Commitment or Title Documents, or (3) any endorsement to the Title Commitment. If Seller receives Buyer’s Notice to Terminate or Notice of Title Objection, pursuant to this § 8.2 (Record Title), any title objection by Buyer is governed by the provisions set forth in § 8.4 (Right to Object to Title, Resolution). If Seller has fulfilled all Seller's obligations, if any, to deliver to Buyer all documents required by § 8.1 (Evidence of Record Title) and Seller does not receive Buyer’s Notice to Terminate or Notice of Title Objection by the applicable deadline specified above, Buyer accepts the condition of title as disclosed by the Abstract of Title, Title Commitment and Title Documents as satisfactory. 8.3. Off-Record Title. Seller must deliver to Buyer, on or before Off-Record Title Deadline, true copies of all existing surveys in Seller’s possession pertaining to the Property and must disclose to Buyer all easements, liens (including, without limitation, governmental improvements approved, but not yet installed) or other title matters (including, without limitation, rights of first refusal and options) not shown by public records, of which Seller has actual knowledge (Off-Record Matters). Buyer has the right to inspect the Property to investigate if any third party has any right in the Property not shown by public records (e.g., unrecorded easement, boundary line discrepancy or water rights). Buyer’s Notice to Terminate or Notice of Title Objection of any unsatisfactory condition (whether disclosed by Seller or revealed by such inspection, notwithstanding § 8.2 and § 13), in Buyer’s sole subjective discretion, must be received by Seller on or before Off-Record Title Objection Deadline. If an Off-Record Matter is received by Buyer after the Off-Record Title Deadline, Buyer has until the earlier of Closing or ten days after receipt by Buyer
TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE. 8.1. Evidence of Record Title. 8.1.1. Seller Selects Title Insurance Company. If this box is checked, Seller will select the title insurance company to furnish the owner’s title insurance policy at Seller’s expense. On or before Record Title Deadline, Seller must furnish to Buyer, a current commitment for an owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price, or if this box is checked, an Abstract of Title certified to a current date. Seller will cause the title insurance policy to be issued and delivered to Buyer as soon as practicable at or after Closing. 8.1.2. Buyer Selects Title Insurance Company. If this box is checked, Buyer will select the title insurance company to furnish the owner’s title insurance policy at Buyer’s expense. On or before Record Title Deadline, Buyer must furnish to Seller, a current commitment for owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price. If neither box in § 8.1.1 or § 8.1.2 is checked, § 8.1.1 applies.
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to review and object to such Off-Record Matter. If Seller receives Buyer’s Notice to Terminate or Notice of Title Objection pursuant to this § 8.3 (Off-Record Title), any title objection by Buyer and this Contract are governed by the provisions set forth in § 8.4 (Right to Object to Title, Resolution). If Seller does not receive Buyer’s Notice to Terminate or Notice of Title Objection by the applicable deadline specified above, Buyer accepts title subject to such rights, if any, of third parties of which Buyer has actual knowledge. 8.4. Right to Object to Title, Resolution. Buyer’s right to object to any title matters includes, but is not limited to those matters set forth in §§ 8.2 (Record Title), 8.3 (Off-Record Title) and 13 (Transfer of Title), in Buyer’s sole subjective discretion. If Buyer objects to any title matter, on or before the applicable deadline, Buyer has the following options: 8.4.1. Title Objection, Resolution. If Seller receives Buyer’s written notice objecting to any title matter (Notice of Title Objection) on or before the applicable deadline, and if Buyer and Seller have not agreed to a written settlement thereof on or before Title Resolution Deadline, this Contract will terminate on the expiration of Title Resolution Deadline, unless Seller receives Buyer’s written withdrawal of Buyer’s Notice of Title Objection (i.e., Buyer’s written notice to waive objection to such items and waives the Right to Terminate for that reason), on or before expiration of Title Resolution Deadline. If either the Record Title Deadline or the Off-Record Title Deadline, or both, are extended to the earlier of Closing or ten days after receipt of the applicable documents by Buyer, pursuant to § 8.2 (Record Title) or § 8.3 (Off-Record Title), the Title Resolution Deadline also will be automatically extended to the earlier of Closing or fifteen days after Buyer's receipt of the applicable documents; or 8.4.2. Title Objection, Right to Terminate. Buyer may exercise the Right to Terminate under § 25.1, on or before the applicable deadline, based on any unsatisfactory title matter, in Buyer’s sole subjective discretion. 8.5. Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND TAX TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYERS SHOULD INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH THE PROPERTY IS LOCATED BY CONTACTING THE COUNTY TREASURER, BY REVIEWING THE CERTIFICATE OF TAXES DUE FOR THE PROPERTY, AND BY OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY ASSESSOR. Buyer has the Right to Terminate under § 25.1, on or before Off-Record Title Objection Deadline, based on any unsatisfactory effect of the Property being located within a special taxing district, in Buyer’s sole subjective discretion. 8.6. Right of First Refusal or Contract Approval. If there is a right of first refusal on the Property or a right to approve this Contract, Seller must promptly submit this Contract according to the terms and conditions of such right. If the holder of the right of first refusal exercises such right or the holder of a right to approve disapproves this Contract, this Contract will terminate. If the right of first refusal is waived explicitly or expires, or the Contract is approved, this Contract will remain in full force and effect. Seller must promptly notify Buyer in writing of the foregoing. If expiration or waiver of the right of first refusal or approval of this Contract has not occurred on or before Right of First Refusal Deadline, this Contract will then terminate. 8.7. Title Advisory. The Title Documents affect the title, ownership and use of the Property and should be reviewed carefully. Additionally, other matters not reflected in the Title Documents may affect the title, ownership and use of the Property, including, without limitation, boundary lines and encroachments, set-back requirements, area, zoning, building code violations, unrecorded easements and claims of easements, leases and other unrecorded agreements, water on or under the Property, and various laws and governmental regulations concerning land use, development and environmental matters. 8.7.1. OIL, GAS, WATER AND MINERAL DISCLOSURE. THE SURFACE ESTATE OF THE PROPERTY MAY BE OWNED SEPARATELY FROM THE UNDERLYING MINERAL ESTATE, AND TRANSFER OF THE SURFACE ESTATE MAY NOT NECESSARILY INCLUDE TRANSFER OF THE MINERAL ESTATE OR WATER RIGHTS. THIRD PARTIES MAY OWN OR LEASE INTERESTS IN OIL, GAS, OTHER MINERALS, GEOTHERMAL ENERGY OR WATER ON OR UNDER THE SURFACE OF THE PROPERTY, WHICH INTERESTS MAY GIVE THEM RIGHTS TO ENTER AND USE THE SURFACE OF THE PROPERTY TO ACCESS THE MINERAL ESTATE, OIL, GAS OR WATER. 8.7.2. SURFACE USE AGREEMENT. THE USE OF THE SURFACE ESTATE OF THE PROPERTY TO ACCESS THE OIL, GAS OR MINERALS MAY BE GOVERNED BY A SURFACE USE AGREEMENT, A MEMORANDUM OR OTHER NOTICE OF WHICH MAY BE RECORDED WITH THE COUNTY CLERK AND RECORDER. 8.7.3. OIL AND GAS ACTIVITY. OIL AND GAS ACTIVITY THAT MAY OCCUR ON OR ADJACENT TO THE PROPERTY MAY INCLUDE, BUT IS NOT LIMITED TO, SURVEYING, DRILLING, WELL COMPLETION OPERATIONS, STORAGE, OIL AND GAS, OR PRODUCTION FACILITIES, PRODUCING WELLS, REWORKING OF CURRENT WELLS, AND GAS GATHERING AND PROCESSING FACILITIES. 8.7.4. ADDITIONAL INFORMATION. BUYER IS ENCOURAGED TO SEEK ADDITIONAL INFORMATION REGARDING OIL AND GAS ACTIVITY ON OR ADJACENT TO THE PROPERTY, INCLUDING
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DRILLING PERMIT APPLICATIONS. THIS INFORMATION MAY BE AVAILABLE FROM THE COLORADO OIL AND GAS CONSERVATION COMMISSION. 8.7.5. Title Insurance Exclusions. Matters set forth in this Section, and others, may be excepted, excluded from, or not covered by the owner’s title insurance policy. 8.8. Consult an Attorney. Buyer is advised to timely consult legal counsel with respect to all such matters as there are strict time limits provided in this Contract (e.g., Record Title Objection Deadline and Off-Record Title Objection Deadline).
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9.
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NEW ILC, NEW SURVEY. 9.1. New ILC or New Survey. If the box is checked, a New Improvement Location Certificate (New ILC) New Survey in the form of ___________________________________________ is required and the following will apply: 9.1.1. Ordering of New ILC or New Survey. Seller Buyer will order the New ILC or New Survey. The New ILC or New Survey may also be a previous ILC or survey that is in the above-required form, certified and updated as of a date after the date of this Contract. 9.1.2. Payment for New ILC or New Survey. The cost of the New ILC or New Survey will be paid, on or before Closing, by: Seller Buyer or:
9.1.3. Delivery of New ILC or New Survey. Buyer, Seller, the issuer of the Title Commitment (or the provider of the opinion of title if an Abstract of Title), and _____________________ will receive a New ILC or New Survey on or before New ILC or New Survey Deadline. 9.1.4. Certification of New ILC or New Survey. The New ILC or New Survey will be certified by the surveyor to all those who are to receive the New ILC or New Survey. 9.2. Buyer’s Right to Waive or Change New ILC or New Survey Selection. Buyer may select a New ILC or New Survey different than initially specified in this Contract if there is no additional cost to Seller or change to the New ILC or New Survey Objection Deadline. Buyer may, in Buyer’s sole subjective discretion, waive a New ILC or New Survey if done prior to Seller incurring any cost for the same. 9.3. New ILC or New Survey Objection. Buyer has the right to review and object to the New ILC or New Survey. If the New ILC or New Survey is not timely received by Buyer or is unsatisfactory to Buyer, in Buyer’s sole subjective discretion, Buyer may, on or before New ILC or New Survey Objection Deadline, notwithstanding § 8.3 or § 13: 9.3.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or 9.3.2. New ILC or New Survey Objection. Deliver to Seller a written description of any matter that was to be shown or is shown in the New ILC or New Survey that is unsatisfactory and that Buyer requires Seller to correct. 9.3.3. New ILC or New Survey Resolution. If a New ILC or New Survey Objection is received by Seller, on or before New ILC or New Survey Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before New ILC or New Survey Resolution Deadline, this Contract will terminate on expiration of the New ILC or New Survey Resolution Deadline, unless Seller receives Buyer’s written withdrawal of the New ILC or New Survey Objection before such termination, i.e., on or before expiration of New ILC or New Survey Resolution Deadline. DISCLOSURE, INSPECTION AND DUE DILIGENCE 10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY, INSURABILITY, DUE DILIGENCE, BUYER DISCLOSURE AND SOURCE OF WATER. 10.1. Seller’s Property Disclosure. On or before Seller’s Property Disclosure Deadline, Seller agrees to deliver to Buyer the most current version of the applicable Colorado Real Estate Commission’s Seller’s Property Disclosure form completed by Seller to Seller’s actual knowledge, current as of the date of this Contract. 10.2. Disclosure of Latent Defects; Present Condition. Seller must disclose to Buyer any latent defects actually known by Seller. Seller agrees that disclosure of latent defects will be in writing. Except as otherwise provided in this Contract, Buyer acknowledges that Seller is conveying the Property to Buyer in an “As Is” condition, “Where Is” and “With All Faults.” 10.3. Inspection. Unless otherwise provided in this Contract, Buyer, acting in good faith, has the right to have inspections (by one or more third parties, personally or both) of the Property and Inclusions (Inspection), at Buyer’s expense. If (1) the physical condition of the Property, including, but not limited to, the roof, walls, structural integrity of the Property, the electrical, plumbing, HVAC and other mechanical systems of the Property, (2) the physical condition of the Inclusions, (3) service to the Property (including utilities and communication services), systems and components of the Property (e.g., heating and plumbing), (4) any proposed or existing transportation project, road, street or highway, or (5) any other activity, odor or noise (whether on or off the Property) and its effect or expected effect on the Property or its occupants is unsatisfactory, in Buyer’s sole subjective discretion, Buyer may, on or before Inspection Objection Deadline: 10.3.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or
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10.3.2. Inspection Objection. Deliver to Seller a written description of any unsatisfactory physical condition that Buyer requires Seller to correct. 10.3.3. Inspection Resolution. If an Inspection Objection is received by Seller, on or before Inspection Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Inspection Resolution Deadline, this Contract will terminate on Inspection Resolution Deadline unless Seller receives Buyer’s written withdrawal of the Inspection Objection before such termination, i.e., on or before expiration of Inspection Resolution Deadline. 10.4. Damage, Liens and Indemnity. Buyer, except as otherwise provided in this Contract or other written agreement between the parties, is responsible for payment for all inspections, tests, surveys, engineering reports, or other reports performed at Buyer’s request (Work) and must pay for any damage that occurs to the Property and Inclusions as a result of such Work. Buyer must not permit claims or liens of any kind against the Property for Work performed on the Property. Buyer agrees to indemnify, protect and hold Seller harmless from and against any liability, damage, cost or expense incurred by Seller and caused by any such Work, claim, or lien. This indemnity includes Seller’s right to recover all costs and expenses incurred by Seller to defend against any such liability, damage, cost or expense, or to enforce this section, including Seller’s reasonable attorney fees, legal fees and expenses. The provisions of this section survive the termination of this Contract. This § 10.4 does not apply to items performed pursuant to an Inspection Resolution. 10.5. Insurability. Buyer has the right to review and object to the availability, terms and conditions of and premium for property insurance (Property Insurance). Buyer has the Right to Terminate under § 25.1, on or before Property Insurance Objection Deadline, based on any unsatisfactory provision of the Property Insurance, in Buyer’s sole subjective discretion. 10.6. Due Diligence. 10.6.1. Due Diligence Documents. If the respective box is checked, Seller agrees to deliver copies of the following documents and information pertaining to the Property (Due Diligence Documents) to Buyer on or before Due Diligence Documents Delivery Deadline: 10.6.1.1. All current leases, including any amendments or other occupancy agreements, pertaining to the Property. Those leases or other occupancy agreements pertaining to the Property that survive Closing are as follows (Leases):
10.6.1.2.
Other documents and information:
10.6.2. Due Diligence Documents Review and Objection. Buyer has the right to review and object to Due Diligence Documents. If the Due Diligence Documents are not supplied to Buyer or are unsatisfactory in Buyer’s sole subjective discretion, Buyer may, on or before Due Diligence Documents Objection Deadline: 10.6.2.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or 10.6.2.2. Due Diligence Documents Objection. Deliver to Seller a written description of any unsatisfactory Due Diligence Documents that Buyer requires Seller to correct. 10.6.3. Due Diligence Documents Resolution. If a Due Diligence Documents Objection is received by Seller, on or before Due Diligence Documents Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Due Diligence Documents Resolution Deadline, this Contract will terminate on Due Diligence Documents Resolution Deadline unless Seller receives Buyer’s written withdrawal of the Due Diligence Documents Objection before such termination, i.e., on or before expiration of Due Diligence Documents Resolution Deadline. 10.7. Conditional Upon Sale of Property. This Contract is conditional upon the sale and closing of that certain property owned by Buyer and commonly known as ___________________________________________. Buyer has the Right to Terminate under § 25.1 effective upon Seller's receipt of Buyer’s Notice to Terminate on or before Conditional Sale Deadline if such property is not sold and closed by such deadline. This § 10.7 is for the sole benefit of Buyer. If Seller does not receive Buyer’s Notice to Terminate on or before Conditional Sale Deadline, Buyer waives any Right to Terminate under this provision. 10.8. Source of Potable Water (Residential Land and Residential Improvements Only). Buyer Does Does Not acknowledge receipt of a copy of Seller’s Property Disclosure or Source of Water Addendum disclosing the source of potable water for the Property. There is No Well. Buyer Does Does Not acknowledge receipt of a copy of the current well permit. Note to Buyer: SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE GROUND WATER. YOU MAY WISH TO CONTACT YOUR PROVIDER (OR INVESTIGATE THE DESCRIBED SOURCE) TO DETERMINE THE LONG-TERM SUFFICIENCY OF THE PROVIDER’S WATER SUPPLIES. 10.9. Carbon Monoxide Alarms. Note: If the improvements on the Property have a fuel-fired heater or appliance, a fireplace, or an attached garage and include one or more rooms lawfully used for sleeping purposes (Bedroom), the parties acknowledge that Colorado law requires that Seller assure the Property has an operational carbon monoxide alarm installed within fifteen feet of the entrance to each Bedroom or in a location as required by the applicable building code. 10.10. Lead-Based Paint. Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, this Contract is void unless (1) a completed Lead-Based Paint CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 148
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Disclosure (Sales) form is signed by Seller, the required real estate licensees and Buyer, and (2) Seller receives the completed and fully executed form prior to the time when this Contract is signed by all parties. Buyer acknowledges timely receipt of a completed Lead-Based Paint Disclosure (Sales) form signed by Seller and the real estate licensees. 10.11. Methamphetamine Disclosure. If Seller knows that methamphetamine was ever manufactured, processed, cooked, disposed of, used or stored at the Property, Seller is required to disclose such fact. No disclosure is required if the Property was remediated in accordance with state standards and other requirements are fulfilled pursuant to § 25-18.5-102, C.R.S. Buyer further acknowledges that Buyer has the right to engage a certified hygienist or industrial hygienist to test whether the Property has ever been used as a methamphetamine laboratory. Buyer has the Right to Terminate under § 25.1, upon Seller’s receipt of Buyer’s written Notice to Terminate, notwithstanding any other provision of this Contract, based on Buyer’s test results that indicate the Property has been contaminated with methamphetamine, but has not been remediated to meet the standards established by rules of the State Board of Health promulgated pursuant to § 25-18.5-102, C.R.S. Buyer must promptly give written notice to Seller of the results of the test.
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11.
TENANT ESTOPPEL STATEMENTS. [Intentionally Deleted] CLOSING PROVISIONS
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12.
CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING. 12.1. Closing Documents and Closing Information. Seller and Buyer will cooperate with the Closing Company to enable the Closing Company to prepare and deliver documents required for Closing to Buyer and Seller and their designees. If Buyer is obtaining a new loan to purchase the Property, Buyer acknowledges Buyer’s lender is required to provide the Closing Company, in a timely manner, all required loan documents and financial information concerning Buyer’s new loan. Buyer and Seller will furnish any additional information and documents required by Closing Company that will be necessary to complete this transaction. Buyer and Seller will sign and complete all customary or reasonably required documents at or before Closing. 12.2. Closing Instructions. Colorado Real Estate Commission’s Closing Instructions Are Are Not executed with this Contract. 12.3. Closing. Delivery of deed from Seller to Buyer will be at closing (Closing). Closing will be on the date specified as the Closing Date or by mutual agreement at an earlier date. The hour and place of Closing will be as designated by ________________________________________. 12.4. Disclosure of Settlement Costs. Buyer and Seller acknowledge that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies).
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13. TRANSFER OF TITLE. Subject to tender of payment at Closing as required herein and compliance by Buyer with the other terms and provisions hereof, Seller must execute and deliver a good and sufficient ______________________________ deed to Buyer, at Closing, conveying the Property free and clear of all taxes except the general taxes for the year of Closing. Except as provided herein, title will be conveyed free and clear of all liens, including any governmental liens for special improvements installed as of the date of Buyer’s signature hereon, whether assessed or not. Title will be conveyed subject to: 13.1. Those specific Exceptions described by reference to recorded documents as reflected in the Title Documents accepted by Buyer in accordance with Record Title, 13.2. Distribution utility easements (including cable TV), 13.3. Those specifically described rights of third parties not shown by the public records of which Buyer has actual knowledge and which were accepted by Buyer in accordance with Off-Record Title and New ILC or New Survey, 13.4. Inclusion of the Property within any special taxing district, and 13.5. Any special assessment if the improvements were not installed as of the date of Buyer’s signature hereon, whether assessed prior to or after Closing, and 13.6. Other _______________________________________.
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14. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid will be paid at or before Closing from the proceeds of this transaction or from any other source.
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15.
CLOSING COSTS, CLOSING FEE, ASSOCIATION FEES AND TAXES. 15.1. Closing Costs. Buyer and Seller must pay, in Good Funds, their respective closing costs and all other items required to be paid at Closing, except as otherwise provided herein. 15.2. Closing Services Fee. The fee for real estate closing services must be paid at Closing by Buyer Seller One-Half by Buyer and One-Half by Seller Other _______________________________________. 15.3. Status Letter and Record Change Fees. Any fees incident to the issuance of Association’s statement of assessments (Status Letter) must be paid by None Buyer Seller One-Half by Buyer and One-Half by Seller. Any record change fee assessed by the Association including, but not limited to, ownership record transfer fees regardless of name
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or title of such fee (Association’s Record Change Fee) must be paid by None Buyer Seller One-Half by Buyer and One-Half by Seller. 15.4. Local Transfer Tax. The Local Transfer Tax of ________% of the Purchase Price must be paid at Closing by None Buyer Seller One-Half by Buyer and One-Half by Seller. 15.5. Private Transfer Fee. Private transfer fees and other fees due to a transfer of the Property, payable at Closing, such as community association fees, developer fees and foundation fees, must be paid at Closing by None Buyer Seller One-Half by Buyer and One-Half by Seller. The Private Transfer fee, whether one or more, is for the following association(s): in the total amount of % of the Purchase Price or $_________________. 15.6. Water Transfer Fees. The Water Transfer Fees can change. The fees, as of the date of this Contract, do not exceed $____________ for: Water Stock/Certificates Water District Augmentation Membership Small Domestic Water Company __________ and must be paid at Closing by None Buyer Seller One-Half by Buyer and One-Half by Seller 15.7. Sales and Use Tax. Any sales and use tax that may accrue because of this transaction must be paid when due by None Buyer Seller One-Half by Buyer and One-Half by Seller.
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16.
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17. POSSESSION. Possession of the Property will be delivered to Buyer on Possession Date at Possession Time, subject to the Leases as set forth in § 10.6.1.1.
PRORATIONS. The following will be prorated to the Closing Date, except as otherwise provided: 16.1. Taxes. Personal property taxes, if any, special taxing district assessments, if any, and general real estate taxes for the year of Closing, based on Taxes for the Calendar Year Immediately Preceding Closing Most Recent Mill Levy and Most Recent Assessed Valuation, adjusted by any applicable qualifying seniors property tax exemption, qualifying disabled veteran exemption or Other . 16.2. Rents. Rents based on Rents Actually Received Accrued. At Closing, Seller will transfer or credit to Buyer the security deposits for all Leases assigned, or any remainder after lawful deductions, and notify all tenants in writing of such transfer and of the transferee’s name and address. Seller must assign to Buyer all Leases in effect at Closing and Buyer must assume Seller’s obligations under such Leases. 16.3. Association Assessments. Current regular Association assessments and dues (Association Assessments) paid in advance will be credited to Seller at Closing. Cash reserves held out of the regular Association Assessments for deferred maintenance by the Association will not be credited to Seller except as may be otherwise provided by the Governing Documents. Buyer acknowledges that Buyer may be obligated to pay the Association, at Closing, an amount for reserves or working capital. Any special assessment assessed prior to Closing Date by the Association will be the obligation of Buyer Seller. Except however, any special assessment by the Association for improvements that have been installed as of the date of Buyer’s signature hereon, whether assessed prior to or after Closing, will be the obligation of Seller. Seller represents that the Association Assessments are currently payable at approximately $______________ per ______________ and that there are no unpaid regular or special assessments against the Property except the current regular assessments and ______________________________. Such assessments are subject to change as provided in the Governing Documents. Seller agrees to promptly request the Association to deliver to Buyer before Closing Date a current Status Letter. 16.4. Other Prorations. Water and sewer charges, propane, interest on continuing loan, and _______________________. 16.5. Final Settlement. Unless otherwise agreed in writing, these prorations are final.
If Seller, after Closing, fails to deliver possession as specified, Seller will be subject to eviction and will be additionally liable to Buyer for payment of $______________ per day (or any part of a day notwithstanding § 18.1) from Possession Date and Possession Time until possession is delivered. Buyer represents that Buyer will occupy the Property as Buyer’s principal residence unless the following box is checked, then Buyer Does Not represent that Buyer will occupy the Property as Buyer’s principal residence. If the box is checked, Buyer and Seller agree to execute a Post-Closing Occupancy Agreement.
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GENERAL PROVISIONS
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18.
DAY; COMPUTATION OF PERIOD OF DAYS, DEADLINE. 18.1. Day. As used in this Contract, the term “day” means the entire day ending at 11:59 p.m., United States Mountain Time (Standard or Daylight Savings as applicable). 18.2. Computation of Period of Days, Deadline. In computing a period of days, when the ending date is not specified, the first day is excluded and the last day is included (e.g., three days after MEC). If any deadline falls on a Saturday, Sunday or federal or Colorado state holiday (Holiday), such deadline Will Will Not be extended to the next day that is not a Saturday, Sunday or Holiday. Should neither box be checked, the deadline will not be extended. CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 150
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19. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH. Except as otherwise provided in this Contract, the Property, Inclusions or both will be delivered in the condition existing as of the date of this Contract, ordinary wear and tear excepted. 19.1. Causes of Loss, Insurance. In the event the Property or Inclusions are damaged by fire, other perils or causes of loss prior to Closing in an amount of not more than ten percent of the total Purchase Price (Property Damage), and if the repair of the damage will be paid by insurance (other than the deductible to be paid by Seller), then Seller, upon receipt of the insurance proceeds, will use Seller’s reasonable efforts to repair the Property before Closing Date. Buyer has the Right to Terminate under § 25.1, on or before Closing Date if the Property is not repaired before Closing Date or if the damage exceeds such sum. Should Buyer elect to carry out this Contract despite such Property Damage, Buyer is entitled to a credit at Closing for all insurance proceeds that were received by Seller (but not the Association, if any) resulting from damage to the Property and Inclusions, plus the amount of any deductible provided for in the insurance policy. This credit may not exceed the Purchase Price. In the event Seller has not received the insurance proceeds prior to Closing, the parties may agree to extend the Closing Date to have the Property repaired prior to Closing or, at the option of Buyer, (1) Seller must assign to Buyer the right to the proceeds at Closing, if acceptable to Seller’s insurance company and Buyer’s lender; or (2) the parties may enter into a written agreement prepared by the parties or their attorney requiring the Seller to escrow at Closing from Seller’s sale proceeds the amount Seller has received and will receive due to such damage, not exceeding the total Purchase Price, plus the amount of any deductible that applies to the insurance claim. 19.2. Damage, Inclusions and Services. Should any Inclusion or service (including utilities and communication services), system, component or fixture of the Property (collectively Service) (e.g., heating or plumbing), fail or be damaged between the date of this Contract and Closing or possession, whichever is earlier, then Seller is liable for the repair or replacement of such Inclusion or Service with a unit of similar size, age and quality, or an equivalent credit, but only to the extent that the maintenance or replacement of such Inclusion or Service is not the responsibility of the Association, if any, less any insurance proceeds received by Buyer covering such repair or replacement. If the failed or damaged Inclusion or Service is not repaired or replaced on or before Closing or possession, whichever is earlier, Buyer has the Right to Terminate under § 25.1, on or before Closing Date, or, at the option of Buyer, Buyer is entitled to a credit at Closing for the repair or replacement of such Inclusion or Service. Such credit must not exceed the Purchase Price. If Buyer receives such a credit, Seller's right for any claim against the Association, if any, will survive Closing. Seller and Buyer are aware of the existence of pre-owned home warranty programs that may be purchased and may cover the repair or replacement of such Inclusions. 19.3. Condemnation. In the event Seller receives actual notice prior to Closing that a pending condemnation action may result in a taking of all or part of the Property or Inclusions, Seller must promptly notify Buyer, in writing, of such condemnation action. Buyer has the Right to Terminate under § 25.1, on or before Closing Date, based on such condemnation action, in Buyer’s sole subjective discretion. Should Buyer elect to consummate this Contract despite such diminution of value to the Property and Inclusions, Buyer is entitled to a credit at Closing for all condemnation proceeds awarded to Seller for the diminution in the value of the Property or Inclusions but such credit will not include relocation benefits or expenses, or exceed the Purchase Price. 19.4. Walk-Through and Verification of Condition. Buyer, upon reasonable notice, has the right to walk through the Property prior to Closing to verify that the physical condition of the Property and Inclusions complies with this Contract.
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20. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing this Contract, Buyer and Seller acknowledge that the respective broker has advised that this Contract has important legal consequences and has recommended the examination of title and consultation with legal and tax or other counsel before signing this Contract.
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21. TIME OF ESSENCE, DEFAULT AND REMEDIES. Time is of the essence for all dates and deadlines in this Contract. This means that all dates and deadlines are strict and absolute. If any payment due, including Earnest Money, is not paid, honored or tendered when due, or if any obligation is not performed timely as provided in this Contract or waived, the non-defaulting party has the following remedies: 21.1. If Buyer is in Default: 21.1.1. Specific Performance. Seller may elect to cancel this Contract and all Earnest Money (whether or not paid by Buyer) will be paid to Seller and retained by Seller. It is agreed that the Earnest Money is not a penalty, and the Parties agree the amount is fair and reasonable. Seller may recover such additional damages as may be proper. Alternatively, Seller may elect to treat this Contract as being in full force and effect and Seller has the right to specific performance or damages, or both. 21.1.2. Liquidated Damages, Applicable. This § 21.1.2 applies unless the box in § 21.1.1. is checked. Seller may cancel this Contract. All Earnest Money (whether or not paid by Buyer) will be paid to Seller, and retained by Seller. It is agreed that the Earnest Money specified in § 4.1 is LIQUIDATED DAMAGES, and not a penalty, which amount the parties agree is fair and reasonable and (except as provided in §§ 10.4, 22, 23 and 24), said payment of Earnest Money is SELLER’S ONLY REMEDY for Buyer’s failure to perform the obligations of this Contract. Seller expressly waives the remedies of specific performance and additional damages. 21.2. If Seller is in Default: Buyer may elect to treat this Contract as canceled, in which case all Earnest Money received hereunder will be returned and Buyer may recover such damages as may be proper. Alternatively, Buyer may elect to treat this Contract as being in full force and effect and Buyer has the right to specific performance or damages, or both. CBS1-6-15. CONTRACT BUYReserved AND SELL REAL ESTATE (RESIDENTIAL) Copyright 2016 – AllTO Rights 151
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22. LEGAL FEES, COST AND EXPENSES. Anything to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Contract, prior to or after Closing Date, the arbitrator or court must award to the prevailing party all reasonable costs and expenses, including attorney fees, legal fees and expenses.
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23. MEDIATION. If a dispute arises relating to this Contract, (whether prior to or after Closing) and is not resolved, the parties must first proceed, in good faith, to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. Before any mediated settlement is binding, the parties to the dispute must agree to the settlement, in writing. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The obligation to mediate, unless otherwise agreed, will terminate if the entire dispute is not resolved within thirty days of the date written notice requesting mediation is delivered by one party to the other at that party’s last known address (physical or electronic as provided in § 27). Nothing in this Section prohibits either party from filing a lawsuit and recording a lis pendens affecting the Property, before or after the date of written notice requesting mediation. This section will not alter any date in this Contract, unless otherwise agreed.
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24. EARNEST MONEY DISPUTE. Except as otherwise provided herein, Earnest Money Holder must release the Earnest Money following receipt of written mutual instructions, signed by both Buyer and Seller. In the event of any controversy regarding the Earnest Money, Earnest Money Holder is not required to release the Earnest Money. Earnest Money Holder, in its sole subjective discretion, has several options: (1) wait for any proceeding between Buyer and Seller; (2) interplead all parties and deposit Earnest Money into a court of competent jurisdiction, (Earnest Money Holder is entitled to recover court costs and reasonable attorney and legal fees incurred with such action); or (3) provide notice to Buyer and Seller that unless Earnest Money Holder receives a copy of the Summons and Complaint or Claim (between Buyer and Seller) containing the case number of the lawsuit (Lawsuit) within one hundred twenty days of Earnest Money Holder’s notice to the parties, Earnest Money Holder is authorized to return the Earnest Money to Buyer. In the event Earnest Money Holder does receive a copy of the Lawsuit, and has not interpled the monies at the time of any Order, Earnest Money Holder must disburse the Earnest Money pursuant to the Order of the Court. The parties reaffirm the obligation of Mediation. This Section will survive cancellation or termination of this Contract.
695 696 697 698 699 700 701 702
25.
703 704 705 706 707 708
26. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL; SUCCESSORS. This Contract, its exhibits and specified addenda, constitute the entire agreement between the parties relating to the subject hereof, and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Contract. No subsequent modification of any of the terms of this Contract is valid, binding upon the parties, or enforceable unless made in writing and signed by the parties. Any right or obligation in this Contract that, by its terms, exists or is intended to be performed after termination or Closing survives the same. Any successor to a Party receives the predecessor’s benefits and obligations of this Contract.
709 710 711 712 713 714 715 716 717 718 719 720 721 722 723
27.
TERMINATION. 25.1. Right to Terminate. If a party has a right to terminate, as provided in this Contract (Right to Terminate), the termination is effective upon the other party’s receipt of a written notice to terminate (Notice to Terminate), provided such written notice was received on or before the applicable deadline specified in this Contract. If the Notice to Terminate is not received on or before the specified deadline, the party with the Right to Terminate accepts the specified matter, document or condition as satisfactory and waives the Right to Terminate under such provision. 25.2. Effect of Termination. In the event this Contract is terminated, all Earnest Money received hereunder will be returned and the parties are relieved of all obligations hereunder, subject to §§ 10.4, 22, 23 and 24.
NOTICE, DELIVERY, AND CHOICE OF LAW. 27.1. Physical Delivery and Notice. Any document, or notice to Buyer or Seller must be in writing, except as provided in § 27.2, and is effective when physically received by such party, any individual named in this Contract to receive documents or notices for such party, the Broker, or Brokerage Firm of Broker working with such party (except any notice or delivery after Closing must be received by the party, not Broker or Brokerage Firm). 27.2. Electronic Notice. As an alternative to physical delivery, any notice, may be delivered in electronic form to Buyer or Seller, any individual named in this Contract to receive documents or notices for such party, the Broker or Brokerage Firm of Broker working with such party (except any notice or delivery after Closing must be received by the party; not Broker or Brokerage Firm) at the electronic address of the recipient by facsimile, email or ______________________________________. 27.3. Electronic Delivery. Electronic Delivery of documents and notice may be delivered by: (1) email at the email address of the recipient, (2) a link or access to a website or server provided the recipient receives the information necessary to access the documents, or (3) facsimile at the Fax No. of the recipient. 27.4. Choice of Law. This Contract and all disputes arising hereunder are governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in Colorado for real property located in Colorado.
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724 725 726 727 728
28. NOTICE OF ACCEPTANCE, COUNTERPARTS. This proposal will expire unless accepted in writing, by Buyer and Seller, as evidenced by their signatures below, and the offering party receives notice of such acceptance pursuant to § 27 on or before Acceptance Deadline Date and Acceptance Deadline Time. If accepted, this document will become a contract between Seller and Buyer. A copy of this Contract may be executed by each party, separately, and when each party has executed a copy thereof, such copies taken together are deemed to be a full and complete contract between the parties.
729 730 731 732
29. GOOD FAITH. Buyer and Seller acknowledge that each party has an obligation to act in good faith including, but not limited to, exercising the rights and obligations set forth in the provisions of Financing Conditions and Obligations, Title Insurance, Record Title and Off-Record Title, New ILC, New Survey and Property Disclosure, Inspection, Indemnity, Insurability, Due Diligence, Buyer Disclosure and Source of Water.
733
ADDITIONAL PROVISIONS AND ATTACHMENTS
734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 753 754 755 756
30. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
31.
ATTACHMENTS. 31.1. The following attachments are a part of this Contract:
31.1.1. Post-Closing Occupancy Agreement. If the Post-Closing Occupancy Agreement box is checked in § 17 the PostClosing Occupancy Agreement is attached.
31.2.
The following disclosure forms are attached but are not a part of this Contract:
SIGNATURES
757 758
Buyer’s Name:
Buyer’s Signature Address:
759
Buyer’s Name:
Date
Buyer’s Signature
Date
Address:
Phone No.: Phone No.: Fax No.: Fax No.: Email Address: Email Address: [NOTE: If this offer is being countered or rejected, do not sign this document. Refer to § 32] Seller’s Name:
Seller’s Name:
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Seller’s Signature
Seller’s Signature
Date
Address:
Address:
Phone No.: Fax No.: Email Address:
Phone No.: Fax No.: Email Address:
Date
760 761 762
32. COUNTER; REJECTION. This offer is Countered Rejected. Initials only of party (Buyer or Seller) who countered or rejected offer END OF CONTRACT TO BUY AND SELL REAL ESTATE
763
33. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE. (To be completed by Broker working with Buyer) Broker Does Does Not acknowledge receipt of Earnest Money deposit and, while not a party to the Contract, agrees to cooperate upon request with any mediation concluded under § 23. Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder’s receipt of the executed written mutual instructions, provided the Earnest Money check has cleared. Broker is working with Buyer as a
Buyer’s Agent
Seller’s Agent
Transaction-Broker in this transaction.
This is a Change of Status. Brokerage Firm’s compensation or commission is to be paid by
Listing Brokerage Firm
Buyer
Other
.
Brokerage Firm’s Name: Broker’s Name:
Broker’s Signature
Date
Address: Phone No.: Fax No.: Email Address:
34. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE. (To be completed by Broker working with Seller) Broker Does Does Not acknowledge receipt of Earnest Money deposit and, while not a party to the Contract, agrees to cooperate upon request with any mediation concluded under § 23. Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder’s receipt of the executed written mutual instructions, provided the Earnest Money check has cleared. Broker is working with Seller as a
Seller’s Agent
Buyer’s Agent
Transaction-Broker in this transaction.
This is a Change of Status. Brokerage Firm’s compensation or commission is to be paid by
Seller
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Buyer
Other
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Brokerage Firm’s Name: Broker’s Name:
Broker’s Signature
Date
Address: Phone No.: Fax No.: Email Address: 764
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COUNTERPROPOSAL – “Swan to Hopper” Now that you have written the contract between the Swans and Hoppers, take this new set of facts and draw up a counterproposal form. The Hoppers have made their offer in the manner and on the terms previously set forth in the Contract problem you have completed. In this problem, the Swans are agreeable to the terms offered, with the exception of the following items: 1. The price is to be $106,000. 2. The difference between the original offer and the counteroffer is to be paid in cash. 3. The date of the closing shall be June 30th of the current year, because the Swans cannot get into their new house until July. 4. They need five days to vacate, and aren’t willing to pay over $50.00 per day.
Use the blank Counterproposal on the following pages to fill in these facts. Answer Key follows at the end of this Chapter.
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Not for Use Before 1-1-16
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (CP40-6-15) (Mandatory 1-16) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
COUNTERPROPOSAL Date: 1. This Counterproposal supersedes and replaces any previous counterproposal. This Counterproposal amends the proposed contract dated (Contract), between (Seller), and (Buyer), relating to the sale and purchase of the following legally described real estate in the County of , Colorado:
known as No.
(Property). Street Address
City
State
Zip
NOTE: If the table is omitted, or if any item is left blank or is marked in the “No Change” column, it means no change to the corresponding provision of the Contract. If any item is marked in the “Deleted” column, it means that the corresponding provision of the Contract to which reference is made is deleted. 2.
§ 3. DATES AND DEADLINES. [Note: This table may be omitted if inapplicable.]
Item No. 1
Reference § 4.3
2 3 4 5 6 7
§ 8.1 § 8.2 § 8.3 § 8.3 § 8.4 § 8.6
8 9
§ 7.3 § 7.4
10
§ 10.1
11 12 13 14 15 16 17 18
§ 5.1 § 5.2 § 5.3 § 5.3 § 5.4 § 5.4 § 5.4 § 4.7
19 20 21
§ 6.2 § 6.2 § 6.2
22
§ 9.1
Event Alternative Earnest Money Deadline Title Record Title Deadline Record Title Objection Deadline Off-Record Title Deadline Off-Record Title Objection Deadline Title Resolution Deadline Right of First Refusal Deadline Owners’ Association Association Documents Deadline Association Documents Objection Deadline Seller’s Property Disclosure Seller’s Property Disclosure Deadline Loan and Credit Loan Application Deadline Loan Objection Deadline Buyer’s Credit Information Deadline Disapproval of Buyer’s Credit Information Deadline Existing Loan Documents Deadline Existing Loan Documents Objection Deadline Loan Transfer Approval Deadline Seller or Private Financing Deadline Appraisal Appraisal Deadline Appraisal Objection Deadline Appraisal Resolution Deadline Survey New ILC or New Survey Deadline
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Date or Deadline
No Change
Deleted
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Item No. 23 24
Reference § 9.3 § 9.4
25 26 27 28 29 30 31 32 33 34 35
§ 10.3 § 10.3 § 10.5 § 10.6 § 10.6 § 10.6 § 10.6 § 10.6 § 10.7 § 11.1 § 11.2
36 37 38
§ 12.3 § 17 § 17
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Event New ILC or New Survey Objection Deadline New ILC or New Survey Resolution Deadline Inspection and Due Diligence Inspection Objection Deadline Inspection Resolution Deadline Property Insurance Objection Deadline Due Diligence Documents Delivery Deadline Due Diligence Documents Objection Deadline Due Diligence Documents Resolution Deadline Environmental Inspection Objection Deadline CBS2, 3, 4 ADA Evaluation Objection Deadline CBS2, 3, 4 Conditional Sale Deadline Tenant Estoppel Statements Deadline CBS2, 3, 4 Tenant Estoppel Statements Objection Deadline CBS2, 3, 4 Closing and Possession Closing Date Possession Date Possession Time
26
3.
27
The Purchase Price set forth below is payable in U.S. Dollars by Buyer as follows:
4.
No Change
Deleted
§ 4. PURCHASE PRICE AND TERMS. [Note: This table may be deleted if inapplicable.]
Item No. 1 2 3 4 5 6 7 8 9 10 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45
Date or Deadline
Reference § 4.1 § 4.3 § 4.5 § 4.6 § 4.7 § 4.7
§ 4.4
Item
Amount
Purchase Price Earnest Money New Loan Assumption Balance Private Financing Seller Financing
Amount
$ $ $ $ $ $
Cash at Closing TOTAL
$
$ $
ATTACHMENTS. The following are a part of this Counterproposal:
Note: The following disclosure forms are attached but are not a part of this Counterproposal:
5.
OTHER CHANGES.
6. ACCEPTANCE DEADLINE. This Counterproposal expires unless accepted in writing by Seller and Buyer as evidenced by their signatures below and the offering party to this document receives notice of such acceptance on or before . Date Time
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If accepted, the Contract, as amended by this Counterproposal, will become a contract between Seller and Buyer. All other terms and conditions of the Contract remain the same. Buyer’s Name:
Buyer’s Signature
Buyer’s Signature
Date
Address:
Address:
Phone No.: Fax No.: Email Address:
Phone No.: Fax No.: Email Address:
Seller’s Name:
Seller’s Name:
Seller’s Signature
49 50 51
Buyer’s Name:
Seller’s Signature
Date
Address:
Address:
Phone No.: Fax No.: Email Address:
Phone No.: Fax No.: Email Address:
Date
Date
Note: When this Counterproposal form is used, the Contract is not to be signed by the party initiating this Counterproposal. Brokers must complete and sign the Broker’s Acknowledgments and Compensation Disclosure portion of the Contract.
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AGREEMENT TO EXTEND – “Swan to Hopper” After the contract and the counterproposal have been signed, it is discovered from the title commitment that there is a slight defect in the title. Several owners prior to the Swans, the property was owned in Joint Tenancy by a husband and wife named Swift. While still owners of the property, Mr. Swift developed a severe case of the hiccups, and quickly died from the affliction. Unfortunately, Mrs. Swift failed to file either a death certificate or an inheritance tax release. As you know, this clouds the title. Consequently, the closing cannot be held on June 30th, but will have to be postponed until July 15. All parties have agreed to this and have instructed you to draw up an extension agreement for them to sign. Account for these contingencies, bearing in mind that there are several dates in the contract to be changed. The Swans have contacted the people who sold them the house and they have agreed to correct the problem. At this late date, and since the Swans have owned the property for several years, the people who sold to the Swans will have to correct this defect. Could the Swans require anyone other than their immediate sellers to correct the defect? If so, under what theory?
Use the blank Agreement to Extend on the following pages to fill in these facts. Answer Key follows at the end of this Chapter.
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Not for Use Before 1-1-16
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (AE41-6-15) (Mandatory 1-16) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
AGREEMENT TO AMEND/EXTEND CONTRACT Date: 1.
This agreement amends the contract dated
(Contract), between (Seller), and (Buyer), relating to the sale and purchase of the following legally described real estate in the County of Colorado:
,
known as No.
(Property). Street Address
City
State
Zip
NOTE: If the table is omitted, or if any item is left blank or is marked in the “No Change” column, it means no change to the corresponding provision of the Contract. If any item is marked in the “Deleted” column, it means that the corresponding provision of the Contract to which reference is made is deleted. 2.
§ 3. DATES AND DEADLINES. [Note: This table may be omitted if inapplicable.]
Item No. 1
Reference § 4.3
2 3 4 5 6 7
§ 8.1 § 8.2 § 8.3 § 8.3 § 8.4 § 8.6
8 9
§ 7.3 § 7.4
10
§ 10.1
11 12 13 14 15 16 17 18
§ 5.1 § 5.2 § 5.3 § 5.3 § 5.4 § 5.4 § 5.4 § 4.7
19 20 21
§ 6.2 § 6.2 § 6.2
22
§ 9.1
Event Alternative Earnest Money Deadline Title Record Title Deadline Record Title Objection Deadline Off-Record Title Deadline Off-Record Title Objection Deadline Title Resolution Deadline Right of First Refusal Deadline Owners’ Association Association Documents Deadline Association Documents Objection Deadline Seller’s Property Disclosure Seller’s Property Disclosure Deadline Loan and Credit Loan Application Deadline Loan Objection Deadline Buyer’s Credit Information Deadline Disapproval of Buyer’s Credit Information Deadline Existing Loan Documents Deadline Existing Loan Documents Objection Deadline Loan Transfer Approval Deadline Seller or Private Financing Deadline Appraisal Appraisal Deadline Appraisal Objection Deadline Appraisal Resolution Deadline Survey New ILC or New Survey Deadline
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Date or Deadline
No Change
Deleted
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Item No. 23 24
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
Reference § 9.3 § 9.4
25 26 27 28 29 30 31 32 33 34 35
§ 10.3 § 10.3 § 10.5 § 10.6 § 10.6 § 10.6 § 10.6 § 10.6 § 10.7 § 11.1 § 11.2
36 37 38
§ 12.3 § 17 § 17
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Event New ILC or New Survey Objection Deadline New ILC or New Survey Resolution Deadline Inspection and Due Diligence Inspection Objection Deadline Inspection Resolution Deadline Property Insurance Objection Deadline Due Diligence Documents Delivery Deadline Due Diligence Documents Objection Deadline Due Diligence Documents Resolution Deadline Environmental Inspection Objection Deadline CBS2, 3, 4 ADA Evaluation Objection Deadline CBS2, 3, 4 Conditional Sale Deadline Tenant Estoppel Statements Deadline CBS2, 3, 4 Tenant Estoppel Statements Objection Deadline CBS2, 3, 4 Closing and Possession Closing Date Possession Date Possession Time
3.
Other dates or deadlines set forth in the Contract are changed as follows:
4.
Additional amendments:
Date or Deadline
No Change
Deleted
All other terms and conditions of the Contract remain the same.
This proposal expires unless accepted in writing by Seller and Buyer as evidenced by their signatures below and the offering party to this document receives notice of such acceptance on or before . Date Time
Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Buyer’s Signature
Date
Seller’s Name:
Seller’s Signature
Date
Seller’s Name:
Seller’s Signature
Date
Date
43
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AGREEMENT TO AMEND – “Swan to Hopper” The life of a real estate broker is never easy. Before the closing, it is discovered that a fence the Swans put on the property two years previous, encroaches by three feet on the yard of the neighbors to the south. In refinancing their property, the neighbors secured an improvement location certificate, showing this fact. The neighbors have demanded that the fence be removed from their land and the Swans have agreed to do this prior to the closing, and bear the expense of moving it onto their property. It is also discovered that there is damage to the roof that was previously unknown to any of the parties. The insurance company has agreed to pay for the repairs and will issue the check directly to the repair company. In addition, the water heater is on its last legs and needs to be replaced. In order not to delay the closing further, the Swans agreed to allow the Hoppers $375 toward the cost of a new heater. This will be adjusted at the time of the closing. Although these matters will not delay the closing, the Hoppers want these agreements in writing. Prepare another amendment to the contract, detailing these matters.
Use the blank Agreement to Amend on the following pages to fill in these facts. Answer Key follows at the end of this Chapter.
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Not for Use Before 1-1-16
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (AE41-6-15) (Mandatory 1-16) THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
AGREEMENT TO AMEND/EXTEND CONTRACT Date: 1.
This agreement amends the contract dated
(Contract), between (Seller), and (Buyer), relating to the sale and purchase of the following legally described real estate in the County of Colorado:
,
known as No.
(Property). Street Address
City
State
Zip
NOTE: If the table is omitted, or if any item is left blank or is marked in the “No Change” column, it means no change to the corresponding provision of the Contract. If any item is marked in the “Deleted” column, it means that the corresponding provision of the Contract to which reference is made is deleted. 2.
§ 3. DATES AND DEADLINES. [Note: This table may be omitted if inapplicable.]
Item No. 1
Reference § 4.3
2 3 4 5 6 7
§ 8.1 § 8.2 § 8.3 § 8.3 § 8.4 § 8.6
8 9
§ 7.3 § 7.4
10
§ 10.1
11 12 13 14 15 16 17 18
§ 5.1 § 5.2 § 5.3 § 5.3 § 5.4 § 5.4 § 5.4 § 4.7
19 20 21
§ 6.2 § 6.2 § 6.2
22
§ 9.1
Event Alternative Earnest Money Deadline Title Record Title Deadline Record Title Objection Deadline Off-Record Title Deadline Off-Record Title Objection Deadline Title Resolution Deadline Right of First Refusal Deadline Owners’ Association Association Documents Deadline Association Documents Objection Deadline Seller’s Property Disclosure Seller’s Property Disclosure Deadline Loan and Credit Loan Application Deadline Loan Objection Deadline Buyer’s Credit Information Deadline Disapproval of Buyer’s Credit Information Deadline Existing Loan Documents Deadline Existing Loan Documents Objection Deadline Loan Transfer Approval Deadline Seller or Private Financing Deadline Appraisal Appraisal Deadline Appraisal Objection Deadline Appraisal Resolution Deadline Survey New ILC or New Survey Deadline
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Date or Deadline
No Change
Deleted
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Item No. 23 24
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
Reference § 9.3 § 9.4
25 26 27 28 29 30 31 32 33 34 35
§ 10.3 § 10.3 § 10.5 § 10.6 § 10.6 § 10.6 § 10.6 § 10.6 § 10.7 § 11.1 § 11.2
36 37 38
§ 12.3 § 17 § 17
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Event New ILC or New Survey Objection Deadline New ILC or New Survey Resolution Deadline Inspection and Due Diligence Inspection Objection Deadline Inspection Resolution Deadline Property Insurance Objection Deadline Due Diligence Documents Delivery Deadline Due Diligence Documents Objection Deadline Due Diligence Documents Resolution Deadline Environmental Inspection Objection Deadline CBS2, 3, 4 ADA Evaluation Objection Deadline CBS2, 3, 4 Conditional Sale Deadline Tenant Estoppel Statements Deadline CBS2, 3, 4 Tenant Estoppel Statements Objection Deadline CBS2, 3, 4 Closing and Possession Closing Date Possession Date Possession Time
3.
Other dates or deadlines set forth in the Contract are changed as follows:
4.
Additional amendments:
Date or Deadline
No Change
Deleted
All other terms and conditions of the Contract remain the same.
This proposal expires unless accepted in writing by Seller and Buyer as evidenced by their signatures below and the offering party to this document receives notice of such acceptance on or before . Date Time
Buyer’s Name:
Buyer’s Signature
Buyer’s Name:
Buyer’s Signature
Date
Seller’s Name:
Seller’s Signature
Date
Seller’s Name:
Seller’s Signature
Date
Date
43
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