August 14th, 2023 at 2:35 pm
Background: This is Week 3 of our series of Legal Tips involving the “5-Day Rule” in C.A.R.’s Residential Purchase Agreement (RPA). This week, we will be taking a closer look at the 5-Day Rule for new discoveries as set forth in paragraphs 11A(4) and 11G(1) of the RPA.
Multiple Choice Question: A buyer is in a pending sales transaction using the RPA. The seller is exempt from the TDS requirement. After the buyer removes all contingencies, a new adverse condition materially affecting the property is discovered. Which of the following way(s) by which the adverse condition is discovered will the buyer have a right to cancel within 5 days and keep the deposit? Pick ALL of the correct answers below:
A. The seller makes the new discovery, and discloses it to the buyer in writing.
B. The seller makes the new discovery, and discloses it to the buyer verbally.
C. The buyer’s inspector makes the new discovery, and discloses it to the buyer in a report that the buyer ordered and paid for.
D. The buyer makes the new discovery, which the seller did not know about.
E. The buyer makes the new discovery, which the seller knew about but concealed.
F. None of the above. (more…)
August 7th, 2023 at 1:43 pm
Background: To follow-up on last week’s Legal Tip, agents who refer to a “5-Day Rule” concerning C.A.R.’s Residential Purchase Agreement (RPA) could mean a 5-day rule for late reports (paragraph 14B(3)), new discoveries (paragraph 11G(1)), and/or cancellation rights under the TDS law (paragraph 11E). This week, we will be taking a closer look at the first 5-day rule for late reports.
Fact Pattern: A buyer is in a pending sales transaction. The RPA requires the seller to deliver all seller documents to the buyer within 7 days after acceptance (or by Day 7). The RPA also gives the buyer a 17-day contingency to review such documents (or by Day 17). The seller delivers all documents on Day 15, as well as serves a Notice to Buyer to Perform (NBP) to remove the seller-documents contingency.
Multiple Choice Question: Is the NBP valid? Pick the best answer:
A. Yes.
B. No.
C. It depends on whether there are any new discoveries in the seller documents.
D. It depends on whether this transaction falls under the TDS law. (more…)
July 31st, 2023 at 1:33 pm
Multiple Choice Question: What do agents mean when they refer to the “5-Day Rule” as it relates to C.A.R.’s Residential Purchase Agreement (RPA)? Pick the best answer:
A. A buyer’s right to: (1) Review reports that the seller delivers late; and (2) Cancel based on something on those reports.
B. A buyer’s right to cancel when a new material fact affecting the property is discovered during escrow.
C. A buyer’s right to cancel under the TDS law.
D. Any of the above. (more…)
July 24th, 2023 at 3:09 pm
Background: A seller of one-to-four residential units located in a high or very high fire hazard severity zone, who is not TDS-exempt, must generally provide the buyer with C.A.R.’s Fire Hardening and Defensible Space Disclosure and Addendum (FHDS). This requirement pertains to a seller of a condominium unit or mobilehome. The FHDS states that the seller must generally obtain documentation of compliance with defensible space requirements before close of escrow, unless the buyer agrees to do it within one year after close of escrow (see paragraph 3C(1) of the FHDS).
Question: Should a buyer of a condominium unit sign an FHDS agreeing to obtain such documentation of compliance after close of escrow if the geographical area at issue is the HOA’s common area for which the HOA, not condo unit owner, is responsible for maintaining? (more…)
July 17th, 2023 at 2:49 pm
Background: As a reminder, C.A.R. recently released a new Buyer Contingency Removal (CR-B) form that is mostly the same as it was before. One notable revision, however, is that a buyer now has more options to check when removing the investigation contingency. The buyer can now remove the investigation contingency, except for fire and/or flood insurance (see paragraph 2C(4) of the CR-B).
Fact Pattern: A buyer in a pending sales transaction has a 17-day investigation contingency. On Day 17, the seller serves the buyer with a 2-day Notice to Buyer to Perform (NBP) to remove the investigation contingency. Right before the expiration of that 2-day timeframe, the buyer uses the newly-revised CR-B form to remove the “Entire Buyer’s Investigation Contingency, EXCEPT Fire Insurance and Flood Insurance.”
Multiple Choice Question: Can the seller cancel? Pick the best answer:
A. Yes, because the buyer has not removed the entire investigation contingency.
B. No, because the seller must first serve another NBP for the buyer to remove the fire/flood insurance contingencies.
C. No, because the buyer’s failure to obtain insurance is out of the buyer’s control.
D. No, if the buyer is acting in good faith to obtain fire and flood insurance. (more…)
