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Revised Agreement of Sale available

By: Desiree Brougher, Esq. on in

Several changes to our most often-used form, the Standard Agreement for the Sale of Real Estate (PAR Form ASR) were approved by the Standard Forms Committee this fall for publication on Jan. 1. The revised form is available now on PAR’s website, along with updated Guidelines for Preparation & Use. To get you started, here are some important changes to learn.

  1. A title report must be ordered early. Paragraph 14(A) is new and will require the buyer to order a title report within seven days of the execution date. The basis of a home sale is the transfer of good title, and the sooner the parties are aware of any potential clouds or restrictions on the title, the better. While this is usually part of the mortgage process, a report may not be ordered until later in the transaction, after the parties have invested significant time and money in the process. You can read more on this change in tomorrow’s JustListed.
  2. Details on inspections have been added to Paragraph 12. Starting with subparagraph (A), an explanation of who may attend inspections and the purpose of a pre-settlement walk-through are now in the agreement. Persons who may attend any inspection, other than the inspectors, are limited to the named parties and his or her licensee. Any exceptions to this must be set out in writing prior to the inspections. As for the pre-settlement walk-through, the purpose is limited to confirming the condition of the property. While this was always the intention, the many stories about parties taking advantage of access to the property were plentiful enough that a specific definition was needed.
  3. The buyer must provide the entire inspection reports to the seller following inspections. Currently, the buyer is only required to provide inspection reports to the seller if requested or with a written corrective proposal. The contract will now specify that inspections reports must be provided in their entirety, and in all circumstances following inspections. Whether the buyer accepts the property, terminates the agreement or wishes to negotiate a change to the agreement, all inspection reports must be provided to the seller.

These changes and others can be reviewed in more detail on the standard forms page. Any questions? Email me.

Read. The. Forms.

Each year the PAR Legal Hotline fields a fair number of calls with questions can be answered simply by taking the time to carefully read some of the most common transactional forms every so often.

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Agreement of Sale to be Updated July 1

Beginning July 1, all of the agreements should have the following elements to them, where applicable: fixtures and personal property, inspection limitations and reports and the Internet of Things and recordings.

 Read More
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Comments (47)

Comments

  • Linda Walters   January 7, 2019 at 7:37 am

    Yea! Never understood why title wasn’t one of the things you ordered right away consider you important it is.

    Reply to Linda Walters
  • Lisa Roemer   January 7, 2019 at 7:44 am

    Thank you for the update. One concern: the AOS I just pulled up in Dotloop says the following with regards to inspection reports: “Seller has the right, upon request, to receive a free copy of any inspection Report from the party for whom it was preapred”.

    The agreement here does not clearly state that the report HAS to be provided, just provided upon request. Is this a dotloop error, or does the contract still say this?

    Also, “prepared” is misspelled.

    Reply to Lisa Roemer
    • Chad Leonberg   January 7, 2019 at 9:10 am

      Your dotloop must not have the updated sales agreement. It changed from 13 to 14 pages. Sometime last week this was done.

      Reply to Chad Leonberg
      • Don Boyle   January 7, 2019 at 3:57 pm

        Yeah! More pages to the sales agreement.

        Reply to Don Boyle
      • Lisa Roemer   January 8, 2019 at 12:41 pm

        It is the 14 page version and so is updated.

        Reply to Lisa Roemer
    • Desiree Brougher   January 7, 2019 at 11:17 am

      Lisa, the new language requiring that the inspection reports be handed over is in Paragraph 13(B). What you are seeing in Dotloop is the sentence in Paragraph 12(A), which was left in the contract because of the home inspection law. The home inspection law states that the seller is entitled to a free copy of a home inspection report, regardless of what is in – or not in – the contract.

      Reply to Desiree Brougher
      • Lisa Roemer   January 8, 2019 at 12:47 pm

        Ah, I see it. Thank you. Hopefully, at some point it will be revised so that it just says (no matter the outcome of the inspections) that Buyer will present all reports in their entirety. Seems pretty wordy and repetitive the way it is now.

        Reply to Lisa Roemer
    • Ed Kelly   February 18, 2019 at 7:48 pm

      Just check zipForm. It has the 1/19 version with the following text in paragraph 12:
      Seller has the right, upon request, to receive a free copy of any inspection Report from the party for whom it was prepared. Unless otherwise stated, Seller does not have the right to receive a copy of any lender’s appraisal report.

      Reply to Ed Kelly
  • Jack Fleming   January 7, 2019 at 8:54 am

    I have a question about paragraph 3. I have had instances of a sale that did not close for one reason or another. Does the seller have to provide a copy of that report if requested by the next buyer? The report was paid for and is the property of the first buyer. I had the request in the past and have not shared the report.

    Reply to Jack Fleming
    • Desiree Brougher   January 7, 2019 at 9:12 am

      Your question is a common one and the answer is no. There is no requirement that the seller provide a copy of the report to the next potential buyer, it is merely for the seller’s knowledge. However, this does not excuse the seller’s obligation to update the seller’s property disclosure if necessary.

      Reply to Desiree Brougher
      • Ron decesare   January 15, 2019 at 8:49 pm

        Is there anything to prohibit the Seller from sharing the report with a prospective Buyer?

        Reply to Ron decesare
  • Wadhwa, Muskan   January 7, 2019 at 9:13 am

    I agree with Lisa Roemer’s question above and want to know the same. Even Zipforms Agreement of Sale January 2019 version says: “Seller has the right, upon request, to receive a free copy of any inspection Report from the party for whom it was prepared.”
    The article says: “The contract will now specify that inspections reports must be provided in their entirety,” but the agreement of sale does not. Please confirm whether sellers must be provided all inspection reports by the buyer or not.

    Reply to Wadhwa, Muskan
    • Desiree Brougher   January 7, 2019 at 11:18 am

      The new language that is referred to in the article is in Paragraph 13(B), which requires inspection reports to be provided with the buyers’ response to the elected inspections.

      Reply to Desiree Brougher
  • Suzette Colvin   January 7, 2019 at 10:27 am

    Wondering ‘rationale’ behind providing the entire inspection report to a seller…If the seller does not request it or need it. Typical in our area, is to provide it if requested, or otherwise submit that part of the inspection that buyer is requesting for repair or further negotiations. What is ‘purpose’ of automatically providing these when completed by buyer to seller, and what if buyer does not want to give it to the seller.

    Title insurance question…what guidance can be provided for our lender industry partners? We have had several already question this change, and subsequent article by Brett Woodburn, that it may be an issue,or at very least, change in practice.

    Thank you!

    Reply to Suzette Colvin
    • Desiree Brougher   January 7, 2019 at 1:59 pm

      There are a few reasons, but the most pressing reason for providing the full inspection report to the seller is because disclosure is encouraged. Even sellers (and agents) who refuse parts of an inspection report are not immune from liability for a failure to disclose material defects to future buyers.

      We’re aware that requesting a title report early could be a change in practice. Like most other parts of the agreement, it is a negotiable item. Again, the purpose of the change is to encourage best practices. Make sure to read tomorrow’s JustListed article!

      Reply to Desiree Brougher
  • Toby Fox   January 7, 2019 at 11:03 am

    Happy New Year to All,

    Regarding the requirement to provide Inspection Reports – there appears to be both “upon request” language on line 301 and then 3 mandatory requirement situations between lines 414 and 422.

    The above is a statement of items we all need to be aware of but I do have a question. Is there a reason that the intended obligation to provide reports is not rolled into one sentence? I am guessing there is a nuance that I am missing.

    Thanks

    Reply to Toby Fox
  • Ed Feese   January 7, 2019 at 11:15 am

    I can see the rationale for a early title search but I have always held off from a title search before home inspection results were back because if a deal falls thru because of the inspection I don’t want buyer to have to pay for title search also.

    Reply to Ed Feese
    • Mike Urban   January 7, 2019 at 1:19 pm

      100% Agree with all of these changes

      Reply to Mike Urban
    • Nancy Answini   January 7, 2019 at 3:28 pm

      I absolutely agree with a problem having inspections after ordering title. If inspections and negotiations fail, and title was ordered, buyer is left with a huge inspection bill and paying the cost of title and no house. We should address that and build a safeguard in the language

      Reply to Nancy Answini
      • Steph Robinson   January 9, 2019 at 11:56 am

        I completely agree. That is what concerns me about that.

        Reply to Steph Robinson
    • Lisa Roemer   January 8, 2019 at 1:10 pm

      Paragraph 14G in the agreement addresses that issue of who pays for what should title not be marketable – and it is the the seller. How does buyer actually collect on the costs of title/inspections/appraisal, etc.? Does buyer ask for that to be escrowed in the event title isn’t acceptable? I don’t know a single one of my sellers over the years who would have been willing to do that. But I do know my explanations of the contracts will be even more detailed than they already are. I just hope clients don’t zone out and miss what I’m saying (yeah, THAT never happens after about page 5!) BTW, in several states seller pays for title search.

      Reply to Lisa Roemer
  • Aggie Schoenberger   January 7, 2019 at 11:20 am

    1) buyers required to supply inspection reports – purpose? (Didnt think this was broken – why fix it) unless is applies to bank owned props…that would be fun
    2) ordering title at very early stage (before inspections ) can cause unnecessary work for title co and a cost to buyer if deal falls through ALSO we now need a way to “prove” the date title was ordered in order to protect deposit refunds. I dont like this change at all.
    3) seller to pay for hydraulic load test water…that can be up to a grand if someone is bringing in a tanker. Nice change…its not the buyers fault the place is vacant

    Reply to Aggie Schoenberger
  • Williams, Robert   January 7, 2019 at 11:24 am

    Regarding the “Seller has the right” language, it’s still in the AoS Par 12 (A) 5. The conflict is the new language stating the REQUIREMENT to provide the Seller is now included in Par 13 (B) numbers 1.,2. and 3. All read (based upon the Buyer election) that the BUYER WILL present all Reports, etc.

    Reply to Williams, Robert
  • Audrey Tozer   January 7, 2019 at 1:44 pm

    Are appraisals considered or defined as inspections per this new requirement? If buyer is paying for appraisal (and no seller assistance) and no repairs or corrections are needed, normal procedure has been to simply indicate yes or no that value was ok. Does buyer have to provide full copy of the appraisal to the seller?

    Reply to Audrey Tozer
    • Desiree Brougher   January 7, 2019 at 2:01 pm

      Appraisals are treated separately. The requirement to provide an inspection report applies to the inspections elected in Paragraph 12.

      Reply to Desiree Brougher
  • Erica Shulsky   January 7, 2019 at 2:28 pm

    I completely agree with the ordering of title ASAP. I recently had a transaction (representing the buyer(s)). They had thousands of dollars worth of inspections including the appraisal to find out a week later that there was a federal tax lien against the property worth more than the house. My buyer(s) lost all of the money for their inspections and the seller lost the house.

    Question regarding the inspection report. If the transaction terminates, are agents/sellers supposed to make the report available to other interested parties. There is usually too much in the report to add to the disclosure. I’m asking because I’ve heard differing opinions that the home inspection company owns that report and would have to permit it’s distribution. Also, the inspection reports usually have the buyers information on them.

    Reply to Erica Shulsky
    • Michele Frederick   January 7, 2019 at 9:56 pm

      According to Paragraph 14. G, the Seller would have been responsible to reimburse the Buyer for all of their expenses, including the inspection fees. Good luck enforcing this term, though. We had a transaction that failed due to title issues, and the same story, over $1000 in inspection fees, etc. When we put the termination notice in front of the Seller, with the request for the costs including receipts for paid items, the Seller basically said “sue me”. The cost to pursue would have been more than the damages, and just not worth the negative energy for anyone. In your case, there may have also been a non-disclosure complaint–were the Sellers trying to say they knew nothing about the tax lien? This question is on the SD.

      Reply to Michele Frederick
    • Greg Gerlach   January 9, 2019 at 8:19 pm

      As a title agent, we see IRS liens like this, and can assure you that the IRS will clear the lien for the proceeds. They have no interest in having a lien against a house, but would rather have the cash. More often, I see agreements terminated for failed inspections, and not an inability to clear title. In those cases, seldom does anyone step forward and offer to reimburse me the $$s I have in a title search, tax certs, etc.

      Reply to Greg Gerlach
      • Donna Miller   February 12, 2019 at 10:10 am

        I’m going to weigh-in here as another title agent. It has been my experience over many, many years that NO one pays the title agent’s cancellation fee when a deal falls through. Title agents cannot be expected to hire a professional to do a title search and then not be reimbursed for the costs incurred; it is unreasonable. Sellers are even less likely to pay for the title when a deal falls through. I recommend getting Buyers accustomed to the fact that they will have to pay a retainer to a title agent if inspections aren’t complete and they don’t have mortgage approval. The retainer should be applied to the title premium at closing, or retained by the agent for expenses incurred if the deal falls through. The charge for an appraisal is collected upfront, and I think it is time that the title search is paid upfront as well.

        Reply to Donna Miller
    • Ryan Kobeski   January 16, 2019 at 11:22 pm

      It’s hard to agree with the change because your incident is more uncommon. You will greatly have more issues with inspection reports that title searches. To order prior to inspections is just another unnecessary expense that the buyer will not get back if deal falls through.

      Reply to Ryan Kobeski
  • Gary L Cassel   January 7, 2019 at 2:40 pm

    Happy New Year to Everyone, and success in 2019.

    I have a real issue with REQUIRING the reports be supplied to the Seller, even if a Buyer terminates. The seller should have the right to say whether they want a copy of any report or not. I was always taught that “what a Seller does not know does not have to be disclosed”. What happens in an Estate sale where the Executor/Administrator signs the SDF, not disclosing anything, because they are not aware of issues, and then a Buyer terminates and provides a copy of the inspection report, and there are issues? The Seller then has to deal with issues revealed in the inspection reports. So much for an “as is” sale. And I thought the Agreement of Sale indicates the Buyer is buying the property, as is, subject to inspection reports. I guess in cases like these, the language in the Standard Agreement of Sale could be modified, but I was not under the impression that this needed fixing in the first place. When the Seller was in receipt of the report, along with the reply to inspections, and then the transaction did not move forward, due to failed negotiations, a copy of the report could be provided to a subsequent Buyer, or the Seller would need to revise the Sellers Disclosure Form accordingly. Same with a lead based paint inspection. If I represent the Seller, and Seller allows the test, and then the Buyer walks and supplies my Seller with a copy of the report that reveals evidence of lead based paint, I have possibly exposed my Seller client to Thousands of dollars of costs. Who am I to say the Seller MUST receive a copy of the reports?

    Reply to Gary L Cassel
    • Desiree Brougher   January 8, 2019 at 10:17 am

      Gary, we understand that this is controversial and very different from what some members practice. Based on the experience of counsel and members on the Committee, it is unlikely that refusing an inspection report will protect a seller or his/her agent from liability in a lawsuit for a failure to disclose or fraud. Like many other provisions of the ASR, it is a negotiable term but both parties should understand what is at stake when deciding whether to include or exclude this requirement.

      Reply to Desiree Brougher
      • Tracy Zarola   January 9, 2019 at 2:29 pm

        An inspection is for the buyer’s knowledge. Some buyers may elect to do an inspection. Other buyers might waive an inspection. There is no absolute that says a property must have an inspection. If buyer #1 walks away after inspection, why should a seller be required to disclose every item? Our Agreement of Sale allows a buyer to walk away after inspections, regardless of whatever issue they are not comfortable with. MANY, MANY buyers just get cold feet and terminate, using the inspection as their out. Happens all the time. This puts the seller in a terrible predicament…. and let’s not forget about the inspectors who aren’t say “as knowledgeable” as others and completely get something WRONG on a report? This should have to be disclosed? Just doesn’t seem to be fair in protecting a seller. Puts too much power on the buyers side. It is basically putting all the cards in the buyers hands as leverage to negotiate a credit or huge repairs … basically because they know a seller MUST disclose or remedy, instead of negotiate based on sale price, etc.

        Reply to Tracy Zarola
  • Jan Bernardini   January 7, 2019 at 4:03 pm

    This is actually good news – my question is and my apologies if it is answered here on the threat, does DotLoop have the updated version?

    Reply to Jan Bernardini
    • Desiree Brougher   January 8, 2019 at 10:18 am

      Yes Jan, Dotloop does have the updated version of the ASR and the four other forms that were amended and released on January 1.

      Reply to Desiree Brougher
  • Don Boyle   January 7, 2019 at 4:19 pm

    I agree if the seller requests the report then the buyer and/or inspectors must provide it. I don’t agree that it is mandatory the report be given to the seller regardless. Every inspector has difference of opinion – one inspector may paint a horrible picture of a property in how they word their report when it could be items very easily repaired. If the report is provided to the seller and/or agent without requesting it, do we have to provide that report to other buyers or agents? Just because it is provided to us does that mean we have to open it and read it?

    Reply to Don Boyle
    • Desiree Brougher   January 8, 2019 at 10:20 am

      Nothing in the Agreement requires the inspection reports to be provided to a subsequent buyer or his/her agent.

      Reply to Desiree Brougher
  • Matthew Steger   January 8, 2019 at 9:05 am

    As a home inspector, I see the change to item #2 above (who may attend the home inspection) as a good thing. Over the years, we’ve (myself and other home inspectors) have had issues from time to time with other people attending home inspections and sometimes causing issues (we’ve had sellers report that things stolen, their drawers were gone through, etc.). My question is… how is this new rule enforced? Many agents don’t attend their buyer’s inspections. Is it up to the inspectors to now enforce this rule onsite (at the inspection)?

    Pertaining to item #3, the ASHI Code of Ethics (and PA Act 114) forbid home inspectors from providing the report to anyone but his client. With the old rule and the new rule, all inspection reports that go to sellers must come from the person for whom it was prepared, in other words, the inspector’s client is the person who must provide a copy of the report to the seller.

    Reply to Matthew Steger
  • Skillman, Mike   January 8, 2019 at 3:19 pm

    In the past when significant changes have been made to the AOS, I remember seeing a copy with all the changes being highlighted, to make it easier to find them. Is that available for this version?

    Reply to Skillman, Mike
  • Michael Maerten   January 8, 2019 at 5:45 pm

    Paragraph 12 A 3. Line 298 in bold “Seller will have heating and all utilities (including fuel(s)) on for all inspections/appraisals.”

    Has there been any thought to adding “In the event that any utilities are not on during inspections or appraisal, the seller will pay for any re-inspection fees.”? It states in bold what the seller’s contractual obligation is but it doesn’t offer recourse when the utilities are not on and the buyer incurs additional charges.

    Reply to Michael Maerten
    • Matthew Steger   January 10, 2019 at 11:45 am

      Tagging along with Michael’s remark.. why only utilities? What about major appliances (refrigerator, water heater, etc.)? We are required to inspect these per the ASHI Standard Of Practice, however we get to many vacant homes where the refrigerator is unplugged or the water heater is turned off, for example. As home inspectors, we don’t move appliances nor turn on circuit breakers or turn on gas or water valves for liability reasons as we don’t assume we know why they are turned off. Instead of simply requiring the water or gas service being on, why not also require the systems/appliances that inspectors are required to inspect to also be operational? Michael’s suggestion of adding verbiage about the seller paying for re-inspections if the utilities or systems/appliances aren’t operational (or even parts of the home are inaccessible, such as blocked attics or crawl spaces) would protect the buyer and would be a good addition to the AOS.

      Also, item 3 above says the inspection report must not be provided in full to the seller, although the Jan. update to the AOS says “Seller has the right, upon request, to receive a free copy of any inspection Report from the party for whom it was prepared ” [typo in the updated document].” Where does it say “full report”?

      Something else that agents may not be familiar with is the verbiage in most home inspection agreements.. they normally include verbiage that the report is copywritten by the inspector and the inspection report may not be shared with 3rd parties (such as a later buyer should the original inspection client terminate the sale). Doing so opens up the inspector for additional liability since a potential later buyer is not a party to the terms and limitations of the original home inspection, its agreement contract, and the actual report. Most agreements also state that if the buyer shares the report with 3rd parties (someone beyond the buyer, seller, and agents involved), the client (the original buyer) agrees to indemnify the inspector should a 3rd party bring a lawsuit against the inspector.

      Reply to Matthew Steger
  • Charles L.   January 9, 2019 at 1:07 pm

    Would the seller/owner’s title insurance policy suffice as a disclosure?

    Reply to Charles L.
    • B. John Duffy   January 10, 2019 at 2:04 pm

      In a typical transaction the inspection contingency is not completed until 12-15 days from the execution of the Agreement of Sale. The revised Agreement is requiring that title be ordered as early as 7 days. If title is ordered and the Agreement is voided who will pay for the cancellation of the title?
      Regarding another matter, can either Seller or Buyer agree not to submit the Inspection reports to the Seller?

      Reply to B. John Duffy
      • Sam   January 18, 2019 at 9:55 am

        This is a reflection of our industry. Sure, it’s going to create new problems, but I feel that we need these changes as quality educated agents are becoming less the norm.

        Reply to Sam
  • Mindi Weikert-Kauffman   January 24, 2019 at 11:42 am

    We are getting push back on the seller paying for the water for the hydraulic load test. Sellers say ‘I have a hose” Using a hose does not constitute a controlled amount of water as dictated by PSMA for a proper test. Also, when the company comes with the 500 gallons of water, their inspection includes the filling, transportation, the actual water, and the inspection for $275. How are others handling this? Can we have a more clear definition of ‘water’ in the contract?

    Thanks!

    Reply to Mindi Weikert-Kauffman
  • Erik Wagner   February 7, 2019 at 11:16 pm

    My very last sale, a commercial property, had no inspection provisions except for the roof and sewar line. The buyer immediately sent the paperwork to his title company (who held the hand money), but stayed the title search until he could get plumber out with a camera. He did not want to incur the cost of paying for the search before knowing if the transaction would conclude in a sale.

    As Lisa Roemer said, it is customary in some states, I believe Fla is one, that the seller pays to present a clean title.

    This has been a long-standing problem however, that the search could be done days prior to the closing and a cloud appears or a prior defective title which holds the process up. There should be mitigation of the time requirement as it now appears.

    As for the inspections, please do not put it in the commercial contract. Many sellers say “Do all the inspections you want, then let me know if you want to buy the property”. Many things are subjective on the inspection list.

    Reply to Erik Wagner

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