November 8th, 2019 at 4:26 pm
Multiple Choice Question: Is the seller required to comply with the VA lender requirements? Pick the best answer:
A. Yes.
B. Yes for the amendatory clause, but the seller is not obligated to do the repairs.
C. Yes for the repairs, but the lender cannot force the seller to sign an amendatory clause.
D. No.
Answer: The correct answer is B. As a little background, an FHA/VA lender generally requires a seller to sign an amendatory clause that provides that, regardless of the terms of the purchase agreement, the buyer will not forfeit the deposit if the appraisal comes in low (see C.A.R.’s FHA/VA Amendatory Clause or Form FVAC). The RPA requires the seller to sign the amendatory clause. Paragraph 3D(3) states that the amendatory clause “shall be a part of this Agreement.” Although that language could have been drafted a little better (e.g. “Seller is required to sign the FHA/VA Amendatory Clause”), the intent seems clear.
For future reference, however, do not wait to get the seller to sign the amendatory clause. Include it as an addendum to the buyer’s offer, so that the seller will sign it upfront.
As for the lender-required repairs, unfortunately, paragraph 3D(3) states that the “Seller has no obligation to pay or satisfy lender requirements unless agreed in writing.” In the future, the buyer may want to consider adding a provision to the buyer’s offer, such as: “Notwithstanding paragraph 3D(3) of the RPA, Seller agrees to do any VA lender-required repairs before Close of Escrow if the total cost does not exceed $3,000.”
-Happy Veterans’ Day! We honor and thank all the brave men and women who have served our country.
Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.
