GCAAR Regional Sales Contract

GCAAR Regional Sales Contract (1/1/2012)

The GCAAR Regional Sales Contract was significantly revised effective January 1, 2012.  Although it is not the form primarily used in Frederick County, MD, it is a Contract preferred by Realtors in Washington, D. C., Virginia and in some parts of Montgomery County, MD.  Agents should understand the basic differences and issues presented by the Regional Sales Contract if offers are presented on local listings by agents using the GCAAR form.

1. Real Property:  Includes a description of the property being sold.  It incorporates the legal description (which the MAR Contract form does not), as well as the street address of the property.
2. Jurisdictional Addendum:   Provides for the use of a Jurisdictional Addendum, which is required for DC, VA and/or MD.
3. Price and Financing:  In the financing aspects of the Contract, there are many provisions relating to assumption of financing, including a specific paragraph (3.E) dealing exclusively with loan assumptions, although very few loans are assumptions.  The Contract requires the use of a Financing Addendum for Conventional, FHA and VA financing.
4. Deposit:  The Deposit paragraph acknowledges receipt of the deposit.  It also gives the option of using a promissory note as a deposit, although that is rarely done, as in the event of a default by the purchaser, there would not be actual cash at risk.  Additionally, the Contract provides that the deposit will not be placed in escrow until after the date of ratification.  Although the deposit may be placed in an interest bearing account, the buyer waives the right to interest earned, which will thus go to the party holding the deposit.
5. Down Payment:  The balance of the required funds are due at settlement in the form of a certified check or bank wire.
6. Settlement:   Sets forth the date for Settlement, and the Purchaser designates the Settlement Agent that will be handling the closing.
7. Property Maintenance and Condition:  In a significant change to the Contract, the systems and appliances are no longer required to be in “normal working order” as previously provided.  Instead, the Regional Contract now is an “as is” contract.  The purchaser is offered the opportunity to have a home inspection, and the parties are then expected to negotiate and agree upon all aspects of the property condition at closing.  Even though the Contract calls for the property to be delivered in “as is” condition, sellers are, nevertheless, required to disclose any and all known latent material defects in the property.
8. Access to Property:  Paragraph 8 affords the purchaser access to the property for the purposes of having any agreed upon inspections conducted, as well as to allow the appraiser for the lender to perform their appraisal.
9. Utilities – Water, Sewage, Heating and Central Air Conditioning:   Provides for an acknowledgement if the property is on a private septic system, and also requires designation of the number of bedrooms for which the septic system is approved.  This provision should help avoid controversy when the purchaser is intending to enlarge or improve the property.
10. Personal Property and fixtures:  Identifies the listed items that convey, “if existing”.  Any wall mounted electronic components do not convey, eliminating confusion over televisions and systems affixed to the property, which will not convey.  The paragraph also acknowledges that certain leased systems such as water treatment systems or security systems do not convey unless otherwise agreed.
11. Financing Application:   This provision requires the purchaser to make written application for financing within 7 days after the date of ratification of the contract.  Also, it requires the purchaser to make application for insurance during that time frame.
12. Alternate Financing:  Allows the purchaser to seek alternate financing from that originally provided in the Contract, as long as settlement is not delayed and there is no additional cost to the seller.
13. Purchaser’s Representations:  Purchasers acknowledge whether they will owner occupy the property, and that the transaction is not contingent on the sale or lease of other real estate.
14. Termite Inspection:  This paragraph has been simplified, although its simplicity can create some extreme results.  It gives the option to choose whether the Buyer or Seller pays to obtain the report, which is to be dated less than thirty (30) days prior to settlement.  However, in providing that the Seller is responsible to pay for all extermination and structural repairs identified in the report, there is NO LIMITATION on the costs to the Seller.  The MAR Contract, for example, limits the Seller’s possible expenses to two percent (2%) of the sales price of the Property.
15. Damage or Loss:  Provides that the risk of loss remains with the seller until execution and delivery of the deed at closing.
16. Title:  Provides for the delivery of title to purchaser which title is to be “good and marketable and insurable at standard rates”.  Allows the seller 30 days to correct any title defects.  Normal easements and covenants are not deemed to be title defects.
17. Possession Date:  The seller is required to deliver possession of the property to the purchaser on the date of closing.
18. Fees:  Provides for the payment of fees to the Settlement Company by the respective parties for services rendered to them.
19. Broker’s Fee:  Irrevocable instruction from the seller to the Title Agent to pay the Broker’s compensation pursuant to the listing agreement.
20. Adjustments:  Allows for the adjustment and proration of certain charges against the property such as taxes and water and sewer charges.  However, any oils or fuel remaining in the respective tanks become the property of the purchaser without adjustment or proration.
21.  Attorney’s Fees::The parties agree that in the event of a dispute between them  which results in legal action, the prevailing party may be entitled to recover attorney fees from the defaulting party, if ordered by the court.
22. Performance:  Delivery of the required funds by buyers and executed documents by the parties constitutes sufficient tender of performance.
23. Default:  In the event of a default by purchaser, the seller may elect to either forfeit the deposit as fixed and liquidated damages, or to sue the purchaser for specific performance and damages.  Conversely, the purchaser could sue the seller for specific performance or monetary damages in the event of a default by the seller.  If legal action is taken, the defaulting party may be required to pay the attorney fees of the non-defaulting party.
24. Other Disclosures:  The parties to the contract are advised of their right to seek legal or other advice regarding the terms of the Contract.  There is also a list of other possible provisions indicating areas that the purchasers may wish to have further investigated:

• Property Condition:  A multitude of possible inspections are available such as home inspection, lead paint, zoning, easements, radon, and many more.  An addendum is required for any such inspections.
• Legal Requirements:  All Contracts and any changes must be in writing.
• Financing:  Purchasers have the right to select their lender of choice, as financing terms may vary greatly among loan programs.
• Broker:  The Agents are solely real estate agents, and not attorneys, surveyors, engineers or related professionals.  The brokers may have an interest in related businesses such as insurance or home warranty, and may earn compensation from such additional businesses.
• Property Taxes:  The purchasers are cautioned that the taxes could increase following settlement.
• Property Insurance:  As the lender will always require homeowner’s insurance, the purchaser should investigate obtaining insurance.

25. Assignability:  The Contract may not be assigned without the approval and consent of both sides to the transaction.
26. Definitions:   A number of Contract terms are defined, including Appraisal, computation of time, and final date of ratification.
27. Miscellaneous:  The Contract can be signed in counterparts or by facsimile.
28. Void Contract:  The parties agree to promptly execute releases if the Contract becomes void.
29. Home Warranty:  Determines if there will be a home warranty provided at settlement and whether it will be paid for by purchaser or seller.
30. Time is of the Essence As to All Terms of This Contract:  Provides that the time periods of the contract are material in the performance of its terms.
31. Entire Agreement:  The Contract is binding on the parties and their heirs, executors and permitted assigns.  The Contract contains the final agreement between the parties.
32. Electronic Signatures:  Under the Uniform Electronic Transactions Act, electronic signatures are permitted and are valid.