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TOP 10
Questions about the Contract DEAR FORMS GUY: Have you ever done a list of the top 10 questions you get about the Offer to Purchase and Contract? I think that would be really interesting. Sincerely, Stevie DEAR STEVIE: Everywhere I turn these days I see a top 10 list—top 10 dogs, top 10 worst-dressed celebrities, top 10 unsolved mysteries of the brain, top 10 this, top 10 that. This post-modern world we live in is so…so… superficial! Sincerely, Forms Guy STEVIE: So I take it you haven’t done a top 10 list? FORMS GUY: No, but I think it’s a great idea! Here’s a list of the 10 most common legal questions I receive about the contract, in no particular order, along with illustrative questions and brief answers.
#1: Negotiating Repairs at End of Due Diligence Period QUESTION: So as long as I get the buyer’s repair request to the listing agent before the 5 p.m. deadline on the last day of the due diligence period, the buyer will be able to get her earnest money deposit back if the seller won’t agree to the requested repairs, right? ANSWER: No. See the “Warning” at the end of paragraph 4(f) of the contract (form 2-T). Also see the Forms Guy Q&A in the September 2013 issue of Insight magazine.*
#2: New Settlement Date QUESTION: If the parties agree on a new settlement date, does the 14-day permitted delay apply to the new settlement date? ANSWER: Yes. See the second sentence in paragraph 13 of the contract.
#3: When Offers Turn into Contracts QUESTION: Does an offer become a binding contract once the parties have both signed the offer, or must the signed contract be delivered to the offering party before it becomes binding? ANSWER: Neither (trick question). See definition of 28 INSIGHT • Spring 2014
“Effective Date” in paragraph 1(g) of the contract. The contract becomes binding only after the last person to sign or initial it communicates the fact of the signing/initialing to the offering party, but delivery of the signed/initialed contract isn’t required to make it binding.
#4: Disbursing Earnest Money Deposit in Absence of Written Agreement by Parties
QUESTION: If the buyer terminates the contract during the due diligence period and the seller won’t sign the form authorizing the escrow agent to return the earnest money deposit (EMD) to the buyer, can the escrow agent return the EMD to the buyer anyway since the contract clearly says the buyer gets it back? ANSWER: If there’s a dispute about the return of the EMD, no. See the “Note” at the end of paragraph 1(f) of the contract. If you don’t like this answer, talk to the Real Estate Commission, not me.
#5: No Due Diligence Fee QUESTION: If there is a zero in the blank for the due diligence fee in paragraph 1(d), has a binding contract been created, and if so, does the buyer still have the right to conduct due diligence and terminate before the end of the due diligence period even though no due diligence fee is paid?
