The Legal Awareness Committee has been busy with questions from our members about GHAR forms. In response to some recent concerns about the Short Sale Rider, the Sale of Buyer’s Property Contingency Removal, and the mortgage contingency in the purchase contract; this year’s Committee Chair, Susan Schenker, has put out three videos to help explain.
First, the purpose of the Short Sale rider is to empower the buyer to set their own timeline for how long they are willing to be held under contract. For example, if the buyer writes in 60 days and the lender has not come back with written approval during that time period, then the contract is terminated. The committee added two options in a short sale rider. Option one: the notice receipt date box is checked, meaning the buyer does not have to begin the process of applying for a mortgage or setting up an inspection until the bank has approved the sale. Option two is to check the appropriate box in paragraph 4 that says, “see contract for contingency dates” if the buyer chooses to proceed as per the original contract dates. Watch the Short Sale Rider video.
The second video concerns item #2 of the form Sale of Buyer’s Property Contingency Removal. When the Buyer represents to the Seller that the Buyer has the financial ability to purchase the sale pending Property, even if the Buyer is unable to sell their presently owned property, the Buyer must give the Seller proof of such ability with financial documents. This should be verifiable proof, such as financial statements, banks statements, gift letters, etc. to show that the Buyer has the necessary liquid funds to close on the sale pending Property without closing on their presently owned property. Then the original contract is in effect with the original closing date as indicated. Watch the Hubbard Rider video.
Lastly, Susan addressed a question put forth by a member of the GHAR regarding the standard Real Estate Purchase Contract mortgage contingency. That question being, “should the contract be changed to require buyers to immediately apply for a mortgage after execution of a contract and to require that there be no intentional slowdown of the process such as would be the case if the appraisal request is held back?”. The contract now reads that the "buyer will make prompt and diligent efforts to obtain a written mortgage commitment......". A dictionary defines "prompt" as "at once or without delay" and defines "diligent" as "constant in effort to accomplish". Therefore the buyer is contractually obligated under the standard terms of the GHAR Purchase Contract to apply for a mortgage within a reasonably immediate period (the committee believes that to be one or two business days after execution) and without slowing down the process through any efforts that the buyer has control over and in fact, to require the buyer to try to expedite the process in a business reasonable way. Requesting that the appraisal be ordered immediately would be in keeping with the contract. In fact, a new GHAR Appraisal Rider is under construction to further address this issue, stay tuned! Watch the video.
The Legal Awareness Committee is responsible for creating and maintaining the real estate contracts that you use in your business. Sharing information with you is one of the ways GHAR maintains the highest of standards in the real estate profession!
The Legal Awareness Committee is responsible for creating and maintaining the real estate contracts that you use in your business. Sharing information with you is one of the ways GHAR maintains the highest of standards in the real estate profession!
Happy Selling!
Susy Hurlbert
Director of Executive Services
