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…)
July 10th, 2023 at 2:16 pm
As fair warning to everyone, today’s Legal Tip addresses an issue that you will want to know about before, not after, something goes wrong in one of your transactions!
Background: Last month, C.A.R. rolled out its June 2023 Forms Release, which included some new “clarification language” in C.A.R.’s Notice to Buyer to Perform (NBP). Unfortunately, the “clarification language” may actually cause confusion, as discussed below. But as a listing agent, you can easily sidestep this issue entirely by remembering that, under the Residential Purchase Agreement (RPA), a seller cannot serve an NBP for the removal of a buyer’s contingency until 2 days before the expiration of that contingency period (see paragraph 14E of the RPA).
Multiple Choice Question: Let’s say that a buyer with a signed purchase agreement has a 17-day inspection contingency, and a 25-day loan contingency. On Day 17 of the agreement, the seller serves the buyer with an NBP to remove all contingencies. Is the NBP valid? Pick the best answer:
A. Yes.
B. Yes for the removal of the inspection contingency, but not for the removal of the loan contingency.
C. Yes for the removal of the loan contingency, but not for the removal of the inspection contingency.
D. No. (more…)
June 26th, 2023 at 1:51 pm
On June 27, 2023, C.A.R. plans to roll out its June 2023 Standard Forms Release with changes to over 100 of its forms. Many of the changes are minor, including the changing of the word “Landlord” to “Housing Provider” for about 20 leasing forms, and an updated revision date for about 30 other forms. Here are some notable highlights of C.A.R.’s Forms Release: (more…)
June 12th, 2023 at 4:10 pm
Fact Pattern: A seller and buyer enter into a purchase agreement on Day 0. The C.A.R. Residential Purchase Agreement (RPA) calls for the seller to deliver all seller documents to the buyer within 7 days after acceptance, or by Day 7 (under paragraph 3N(1)). The RPA also gives the buyer a contingency for 10 days after acceptance to review the seller documents (under paragraph 3L(4)). The seller in this situation does deliver all seller documents to the buyer on Day 7.
Multiple Choice Question: When does the timeframe expire for the buyer’s contingency to review seller documents? Pick the best answer:
A. Day 10.
B. Day 12.
C. It depends on whether Day 10 or Day 12 is a Saturday, Sunday, or legal holiday.
D. Two days after the seller serves a Notice to Buyer to Perform (NBP). (more…)
