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Here’s What You Need to Know About Upcoming Standard Forms Changes

by Kacy Clouser, Esq. on

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.

Price Escalation Addendum to Agreement of Sale (Form PEA)

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.

Multiple Offer Summary Worksheet (Form MOS)

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.

Broker’s Request for Affirmation (Form BRFA)

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.

New: Change in Lease Terms Addendum to Commercial Lease (Form CLTC)

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.

Listing Contracts

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.

Appraisal Contingency Addendum to Agreement of Sale (Form ACA)

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.

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Standard forms PAR Legal Hotline
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David Tkacik

So the forms committee believes the general public in PA to be so biased as to not even deserve to know the name of the buyers?

Hank Lerner, Esq.

First, I’m not sure what is meant by saying that the seller “deserves to know” the identity of potential buyers on this form. Sellers will obviously know the buyers’ identity at some point, but at this preliminary stage in the process where the sellers are comparing terms and conditions of competing offers to determine which is most suitable for them the buyer’s name(s) should have no bearing at all on the decision. And if it has no bearing on the decision then there’s no reason to have it included in this worksheet.

If what you’re asking is whether sellers are sometimes using buyers’ names to make inappropriate and discriminatory determinations in the sale of their properties, the unfortunate answer is “yes.” The Legal Hotline has fielded calls from listing agents whose clients, after seeing a buyer’s name, have said things like:

– “I just don’t want to sell to .”
– “I like this offer, but are the buyers
?”
– “We did some more research on the buyers and just don’t think they’d be a good fit for the neighborhood.”

Is it all sellers? Clearly not. But the committee felt it helps protect both sellers and their agents by keeping this bit of irrelevant information off the form so there’s less of a chance that it might improperly influence a decision.

Finally, I’d note that PAR is not breaking any new ground here. In some markets across the country it’s become the norm to present all offers without buyer names for exactly this reason. Some agents in PA have adopted it as a personal practice as well.