2015 IAR Residential Forms Changes

IAR Legal Affairs presents:

RESIDENTIAL FORMS CHANGES2015

IAR RESIDENTIAL FORMS CHANGES

The following legal forms were

revised and updated for 2015:

• Purchase Agreement (Improved Property) (#02)

• Purchase Agreement (Unimproved Property) (#34)

• Listing Contract (Exclusive Right to Sell) (#01)

• Listing Contract (Exclusive Right to Lease) (#35)

• Listing Contract (Unimproved Property) (#50)

• Pre-Closing Possession Agreement (#21)

Note: Changes made to form #02 are identical to those made to Form #34 where applicable. Changes made to Form #01 are identical to those made to Forms #35 and #50 where applicable.

NEW FORMS

The following new IAR residential

forms were added for 2015:

• “As Is” Addendum to Purchase Agreement (Form #53)

• Withdrawal of Offer or Counter Offer #____ (Form #54)

• Buyer’s Inspection Response Acceptance of Property

Condition (Form #04)

• Buyer’s Inspection Response #___ Conditional

Acceptance of Property Condition (Form #05A-D)

• Seller’s Inspection Response #___ (Form #06A-D)

NOTE: Forms 4, 5 and 6 replace the previous

Inspection Response Form (#17).

REPLACED FORM

The following form has been

eliminated for 2015:

• Independent Inspection Response (Form

#17A-E).

This form was replaced with new Inspection

Response Forms #04, #05 and #06.

IAR PURCHASE AGREEMENT CHANGE

RATIONALE:

To clarify that wall mounts are fixtures and stay with the property and to

remove remote controls for satellite dishes as they are obsolete.

• Line 16

Note: New language is indicated in red. Strikeouts

indicate language being deleted.

… and fixtures, ceiling fans and light fixtures, towel racks

and bars, storm doors, windows, awnings, TV antennas,

wall mounts, satellite dishes and controls, storage barns,

all landscaping, mailbox, garage door opener with . . .


RATIONALE:

Clarifies that, just because the Seller marked on the Seller’s

Disclosure that an item is “not defective” doesn’t mean that it

is incorporated into the Purchase Agreement and staying with

the property.

The terms of this Agreement will determine what items are included/excluded, not the Seller’s Disclosure Form, multiple listing service or other promotional materials.

• Lines 24-25

Note: New language is indicated in red. Strikeouts indicate language being deleted.


• The entire Earnest Money section of the

Purchase Agreement has been replaced with the

following new language:1. Submission: Buyer submits $_____ as Earnest Money which shall be

applied to the purchase price at closing. Unless indicated otherwise in this

Agreement, the listing broker shall act as Escrow Agent and shall deposit

Earnest Money received into it escrow account within two (2) banking days of

acceptance of this Agreement and hold it until time of closing the transaction or

termination of this Agreement. Earnest money shall be returned promptly to

Buyer in the event this offer is not accepted. If Buyer fails for any reason to

timely submit Earnest Money in the contracted amount, Seller may terminate

this Agreement upon notice to Buyer prior to Escrow Agent’s receipt of the

Earnest Money.

RATIONALE: Due to Indiana license law changes regarding

earnest money.Note: New language is indicated in red. Strikeouts indicate language being deleted.


• Earnest Money Section Continued2. Disbursement: Upon notification that Buyer or Seller intends not to perform, and if

Escrow Agent is the Broker, then Broker holding the Earnest Money may release the

Earnest Money as provided in this Agreement. If no provision is made in this Agreement,

Broker may send to Buyer and Seller notice of the disbursement by certified mail of the

intended payee of the Earnest Money as permitted in 876 IAC 8-2-2. If neither Buyer nor

Seller enters into a mutual release or initiates litigation within sixty (60) days of the

mailing date of the certified letter, Broker may release the Earnest Money to the party

identified in the certified letter. If the Escrow Agent is the Broker, Broker shall be

absolved from any responsibility to make payment to Seller or Buyer unless the parties

enter into a Mutual Release or a Court issues an Order for payment, except as permitted

in 876 IAC 8-2-2 (release of earnest money). Buyer and Seller agree to hold the Broker

harmless from any liability, including attorney’s fees and costs, for good faith

disbursement of Earnest Money in accordance with this Agreement and licensing

regulations.

RATIONALE: Due to Indiana license law changes regarding

earnest money.



RATIONALE: Due to Indiana license law changes regarding earnest money

as well as to clearly indicate legal remedies available to both parties in case

of a breach of contract.

• Earnest Money Section Continued3. Legal Remedies/Default: If this offer is accepted and Buyer fails or refuses to close the transaction, without legal cause, the earnest money shall be retained by Seller for damages Seller has or will incur. Seller retains all rights to seek other legal and equitable remedies, which may include specific performance and additional monetary damages. All parties have the legal duty to use good faith and due diligence in completing the terms and conditions of this Agreement. A material failure to perform any obligation under this Agreement is a default which may subject the defaulting party to liability for damages and/or other legal remedies, which, as stated above, may include specific performance and monetary damages in addition to loss of Earnest Money.



RATIONALE:

Changes “favorable written commitment” to “loan approval” for

clarification. Also makes the termination of the agreement

optional instead of automatic.

No more than days after acceptance of the Agreement shall be allowed for obtaining favorable written

commitment(s) loan approval or mortgage assumption approval. If an commitment or approval is not

obtained within the time specified above, this Agreement shall may terminate unless an extension of

time for this purpose is mutually agreed to in writing.

• Line 71 (2014 version) Line 81 (2015 version)



RATIONALE: To ensure that wire transfer fees are paid by the buyer and not

the broker holding the money in an earnest account.


Buyer is advised that the cost incurred to wire funds on behalf of the buyer to the closing agent’s escrow account for the closing of this transaction shall become an expense to the buyer and the actual cost incurred shall appear on the closing statement.



RATIONALE: Disclosure to warn buyer and to protect brokers due to recent

Federal Law changes regarding flood plains and flood insurance.



If the property is located in a flood plain, Buyer may be required to

carry flood insurance at Buyer’s expense. Revised flood maps

and changes to Federal law may substantially increase future

flood insurance premiums or require insurance for formerly

exempt properties. Buyer should consult with one or more flood

insurance agents regarding the need for flood insurance and

possible premium increases.



Broker is not responsible for obtaining or verifying this information.

RATIONALE: To protect broker from liability regarding obtaining HOA

documents or verifying whether HOA documents are current.





The Indiana State Police has created a registry of known meth contaminated

properties which can be found at www.in.gov/meth. Click on “Clan Lab

Addresses.” Broker is not responsible for providing or verifying this information.

RATIONALE: To give buyer information about how to research a property if

they are concerned about meth contamination. Also protects broker from

liability concerning obtaining information or verifying meth contamination.

http://www.in.gov/meth



• Line 317 (2014 version) Line 339 (2015

version)Seller represents and warrants that Seller is not a “foreign person” (individual

or entity) and, therefore, is not subject to the Foreign Investment in real

Property Tax Act. If it is determined Seller is a “foreign person” subject to the

Foreign Investment in Real Property Tax Act, Seller will pay applicable tax

obligation.

RATIONALE: Clarified that Seller will be responsible for the tax if they do fall

under the IRS guidelines as owing such tax.




version)By signing below, the parties to this transaction acknowledge: 1) receipt of a

copy of this Agreement; and 2) give their permission information regarding

this transaction may be published in a to a multiple listing service, Internet or

other advertising media, if any, to publish information regarding this

transaction.

RATIONALE: Clarified to buyers that they don’t have the ability to object to

the sales information being published.




version)

This □ is □ is not a limited agency transaction.

RATIONALE: To protect brokers from claims of undisclosed limited agency.

IAR LISTING CONTRACT CHANGE


• Line 21

Seller represents and warrants that Seller □ is □ is not a “foreign person”

(individual or entity). and, therefore, is not Seller □ is □ is not subject to the

Foreign Investment in Real Property Tax Act.

RATIONALE: To have a more definite statement about whether the

transaction may include tax consequences for the Seller.



• Line 68

SELLER HAS BEEN ADVISED OF BROKER’S COOPERATIVE

COMPENSATION POLICY, including the amount of any compensation

that will be offered to cooperating Brokers which is ____% of the selling

price.

RATIONALE: To ensure that the actual amount offered is disclosed as

required by the NAR Code of Ethics.




version)

Seller has been advised of the benefits of marketing a property through a

multiple listing service. Excluding a property from a multiple listing service

may result in a lower number of offers received and lower sales price.

RATIONALE: To protect a Broker from breach of fiduciary duty claims in the

event Seller requests a “pocket listing.”




version)

HOA Management Company: ___________________________________

HOA Contact Information: ______________________________________

RATIONALE: For Broker to gather the pertinent HOA information from the

Seller at the time of the listing.




version)

Seller □ does □ does not authorize Broker to disclose the existence of written

offers to Buyer.

RATIONALE: To clarify that this section only concerns offers that are written.




version)

Seller consents to receive communications from Broker via telephone, U.S.

mail, email, text message and facsimile . . . “

RATIONALE: To include a newer form of communication.

AMENDMENT/ADDENDUM TO PURCHASE

AGREEMENT PRE-CLOSING POSSESSION

AGREEMENT CHANGE


• Line 27

If any of the conditions precedent to closing as provided for in the Purchase

Agreement, are not fulfilled within _____ months days from the date of

possession, ….

RATIONALE: Most often will be days rather than months.

IAR NEW RESIDENTIAL

FORMS• “As Is” Addendum to Purchase Agreement (Form

#53)

• To be used in addition to the purchase

agreement if property is being sold “As Is.”

• Withdrawal of Offer or Counter Offer #____ (Form

#54)

• To be used when Buyer or Seller wants to

withdraw an offer or counter-offer before

receiving an acceptance of the offer or counter-

offer.

IAR NEW RESIDENTIAL

FORMS

• Buyer’s Inspection Response Acceptance of Property

Conditions (Form #04)

– To be used if Buyer has had inspections and is not asking the

Seller to make any repairs to the property.

• Buyer’s Inspection Response #___ Conditional

Acceptance of Property Condition (Form #05A-D)

– To be used if Buyer has had inspections and is asking the

Seller to make repairs to the property.

• Seller’s Inspection Response #___ (Form #06A-D)

- To be used by Seller to respond to Buyer’s Conditional

Acceptance of Property Condition (Form #05).

NOTE: These 3 forms are replacing the Indepen-

dent Inspection Response (Form 17A-E)

EFFECTIVE DATE

In addition to the above mentioned changes, all

copyright dates will be changed to 2015.

The new forms and the changes to the existing

IAR forms will be available for member use on

January 1, 2015.

THANK YOU FORMS COMMITTEE

Special thanks must be extended to the IAR Forms Committee. This

volunteer group provides many hours of time each year to provide the most current updates to these forms.

Questions on these changes may be directed to

the IAR Legal Hotline.

IAR Legal Hotline: 1.800.444.5472 toll free

[email protected]

The IAR Legal Hotline is available to managing broker members, and their designated agents, statewide.

mailto:[email protected]

2015 IAR Residential Forms Changes

Real Estate

Transcript of 2015 IAR Residential Forms Changes