September 18th, 2017 at 11:32 am
Question: We seem to be getting more sales lately that are contingent upon the Seller’s Purchase of Replacement Property (C.A.R. Form SPRP). The SPRP form has 2 contingencies. One for “Finding a Replacement Property” and another for “Closing Replacement Property.” Let’s say that a seller has both contingencies when entering into a contract to sell Property X. The seller finds Property Y as a replacement property, and removes the Finding Replacement Property contingency in writing. But the purchase of Property Y falls through, and the seller enters into a contract to buy Property Z instead. If the purchase of Property Z doesn’t come together in time for closing the sale on Property X, can the seller cancel under the Closing Replacement Property contingency?
Answer: Yes, most likely. Nothing in the SPRP requires that the replacement property acquired under the Finding (more…)
September 11th, 2017 at 11:30 am
Question: I am the listing agent. The buyer received all disclosures and reports before writing a non-contingent offer. The seller accepted the buyer’s offer. Now the buyer has decided to cancel escrow. If the buyer has not yet submitted to escrow his 3% deposit, is the seller entitled to the amount of the deposit as liquidated damages?
Answer: Probably not. The liquidated damages clause in the RPA states that, if the buyer defaults, the seller “shall retain, as liquidated damages, the deposit actually paid.” This contractual language tracks the liquidated damages law which generally allows liquidated damages only to the extent that “payment is actually made.” But in this situation, no deposit has been paid.
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September 8th, 2017 at 11:28 am
Multiple Choice Question: I am the buyer’s agent in a pending transaction. On the upcoming closing day of September 7, the title company will be doing a special recording at 3 p.m. The listing agent does not want the buyer to move in until after she receives confirmation of recording. But the Residential Purchase Agreement (RPA) states that “Possession shall be delivered to Buyer at 10 a.m. on the date of Close of Escrow.” When can the buyer move in? Pick the best answer:
A – At 10 a.m. on September 7.
B – At 3 p.m. on September 7.
C – After the listing agent receives confirmation of recording.
D – At 10 a.m. on September 8.
Answer: The correct answer is A because that’s what the contract says. Answers B and C are wrong because nothing in the RPA requires escrow to close, or for the listing agent to confirm recording, before the buyer takes possession. Answer D is wrong because “Close of Escrow” is defined in paragraph 30D of the RPA as the date the grant deed is recorded, or September 7 in this scenario.
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August 28th, 2017 at 11:26 am
Question: I am a buyer’s agent in a multiple offer situation. The seller has issued a Seller Multiple Counter Offer (SMCO) giving all buyers 3 days to respond. The seller likes my buyer’s response and is ready to go with my buyer even though the 3 days have not expired yet. But the listing agent’s manager said “no.” Can the seller enter into a contract with my buyer before the expiration of the 3 days for the other buyers to respond?
Answer: Yes. The SMCO issued to the other buyer specifically states in paragraph 4 that “Seller has the right to accept any other offer received, prior to Seller selection of this Multiple Counter Offer.” Of course, accepting your buyer may mean that the seller loses out on something better from another buyer. However, the SMCO does not require the seller to wait out the 3 days before entering into a contract.
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August 21st, 2017 at 11:22 am
Question: For the sale of a condominium, paragraph 10F of the Residential Purchase Agreement (RPA) states that the seller must ask the HOA to provide the buyer with the “documents required by law,” as well as other HOA items required by contract. The RPA, however, does not specify the HOA disclosures “required by law.” What are they?
Answer: The HOA disclosures required by law are the Articles of Incorporation, Bylaws, CC&Rs, and many other items. The entire list of HOA disclosures required by law is set forth in C.A.R.’s standard-form Charges for Required Homeowner Association Documents (Form HOA2) (or see section 4525 of the California Civil Code). Incidentally, the HOA items (more…)
