Editor’s note: PAR is publishing a series of articles on upcoming changes to several PAR standard forms which take effect on July 1, 2022.
There will be 12 updated forms and one brand new form going live on July 1. While the number of forms can look overwhelming, it is really only a few different categories. This release is all about clarification, clarification, clarification. The actual function of a majority of the forms is not changing. This will cover some of the more minor forms changes we have not yet covered, and then some reminders about some of the other changes that we have already covered in other articles.
Please read all of these resources and look at all the changes prior to calling the PAR Legal Hotline with questions.
Three little words have been added to the Price Escalation Addendum to the Agreement of Sale, “equal to or” to allow for the Price Escalation Addendum to be invoked where there are two or more offers with the same starting net purchase price.
The Multiple Offer Summary Worksheet has been amended to remove the buyer names from the spreadsheet. This change was made to discourage biased decision making when the decisions are made on numbers.
The Broker’s Request for Affirmation has been updated due to NAR’s addition to Standard of Practice 1-8, which applies to counteroffers. It is a requirement that Realtors® provide, if requested by a broker, written affirmation that a counteroffer was presented to their client. This form allows members to provide that written request, whether it is for an offer or counteroffer. This can be the proof provided that a member has complied with Standard of Practice 1-7 for offers and 1-8 for counteroffers.
The only new form this July is the Change is Lease Terms Addendum to Commercial Lease, which was created based on requests that we develop a lease addendum specific to the commercial lease. We added some clauses that are relevant to commercial leases to help make it applicable to the commercial transactions.
The listing contracts are being updated on July 1 with a couple of changes. You can find an in-depth update in our article Updated Listing Contracts Coming July 1. The listing contracts have been updated with two sections.
First is the “marketing of property” section, which was modified to better reflect NAR’s clear cooperation policy. This will allow agents to adequately represent to the seller the rules and guidelines regarding public marketing. Second is adding a paragraph on FIRPTA, the Foreign Investment in Real Property Tax Act of 1980. This is a section of the tax code which applies to the disposition of U.S. real property interests by foreign sellers. This paragraph was added to prompt listing agents to have a discussion with their clients about whether FIRPTA might apply to their transaction at the time the contract is signed.
Agreements of Sale
The mortgage contingency clause in the Agreement of Sale, which is one of the most popular topics on PAR’s Legal Hotline, has been reworded to provide greater clarity. It is important to note that the changes in the agreements of sale do NOT change the function of the mortgage contingency. We have rearranged the order of the paragraphs to provide clarification. The key points of clarification here are that waiving the mortgage contingency does not mean that the buyer cannot obtain financing and that the buyer cannot terminate the agreement under the contingency.
The rearrangement put the paragraphs first that are applicable to the transaction regardless of whether the buyer is electing or waiving the mortgage contingency. Then, you will find the election or waiver of the contingency, and then the subsections to follow are applicable only if the contingency has been elected. You can find a more detailed discussion in our article Updated Pennsylvania Sales Agreements Coming July 1.
The Appraisal Contingency Addendum to Agreement of Sale is a commonly misunderstood form. You can find more information in our article Changes to the PAR Appraisal Contingency Addendum Coming July 1. The changes made clarify the terminology by using the term “minimum appraised value” rather than referring to paragraph one. We also changed some of the language in option 2 in order to be very clear what the outcome is if the minimum appraisal value is not met when that option is selected. Again, the use of the function of this form has NOT changed, it has just been clarified for ease of use.
You can review all of these forms on the Standard Forms page prior to their release on July 1. If you have any questions about changes or how to use the forms, please contact us.