May 1st, 2017 at 9:42 am
Fact Pattern: A buyer has a pending sales transaction using the C.A.R. Residential Purchase Agreement (RPA). The buyer has been served with a Notice to Buyer to Perform (NBP) to remove all contingencies. All contingency timeframes have expired, except that the buyer has not yet received the Seller Property Questionnaire (SPQ) which the seller had agreed to provide.
Question: What should the buyer do to prevent the seller from cancelling? Select the best answer:
A. Remove all contingencies.
B. Remove all contingencies, except the SPQ.
C. Remove all contingencies, except the reports/disclosures contingency.
D. Advise the seller that the NBP is defective.
E. Both C and D.
Answer: The best answer is E. As background, the RPA does not specifically address this situation where a seller serves a NBP to remove all contingencies, even though not all disclosures have been given to the buyer. According to the RPA, a seller must provide all reports and disclosures within 7 days after acceptance (see paragraph 14A). If, however, the seller is late, the buyer has 5 days after receipt of an item to review it and remove the “applicable contingency” (paragraph 14B(3)). Moreover, the seller cannot serve a NBP until 2 days before the expiration of the applicable timeframe “to remove a contingency” (paragraph 14E).
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April 24th, 2017 at 5:25 pm
Question: My client and I were previewing a condominium for lease. My client saw a notice posted in the parking garage stating that the building complex contains chemicals that cause cancer, birth defects, and other reproductive harm. Neither the listing agent nor landlord were aware of the sign or the carcinogens. Was this sign posted because of an actual danger or is it just a preemptive warning?
Answer: We don’t know. You’ve succinctly laid out a major problem with Proposition 65. In 1986, California voters approved the Safe Drinking Water and Toxic Enforcement Act, more commonly known as “Prop 65.” The law aimed to protect people by, among other things, requiring businesses with 10 or more employees to provide a warning about a significant exposure to certain chemicals known to cause cancer, birth defects, or other reproductive harm.
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April 17th, 2017 at 5:23 pm
Question: A buyer submits an offer for a single-family home that includes an attached C.A.R. Contingency Removal (or CR) form removing all contingencies. The seller accepts the offer. The seller, however, has not yet delivered to the buyer the Transfer Disclosure Statement (TDS), Seller Property Questionnaire (SPQ), and other disclosures. After the buyer receives these disclosures, can the buyer cancel the agreement and retain the deposit?
Answer: Yes, most likely. Some agents think that the answer is “no” because both the CR and paragraph 14F of the RPA state that, unless otherwise specified in writing, a buyer who removes contingencies shall be deemed to have reviewed the disclosures. However, an exception as “otherwise specified in writing” is found in paragraph 10A(3) of the RPA, which states (more…)
April 10th, 2017 at 5:20 pm
Question: I am the listing agent in a sales transaction. The buyer was supposed to remove all contingencies within 5 days and close escrow within 10 days. None of that has happened. Is the seller required to serve a Notice to Buyer to Perform before serving a Demand to Close Escrow, or can they be served at the same time?
Answer: At the same time. Nothing in the Residential Purchase Agreement prohibits service of both notices at the same time. As for the Notice to Buyer to Perform (NBP), the seller cannot cancel based on the buyer’s failure to remove contingencies unless the seller first serves a 2-day NBP (see paragraph 14D(1)). The NBP cannot be served any sooner than (more…)
April 3rd, 2017 at 5:17 pm
Question: Two weeks ago, you talked about the C.A.R. Seller Counter Offers (SCO and SMCO). You said that, if a seller uses the SCO or SMCO to increase the purchase price and the buyer accepts, the boilerplate language adjusts the buyer’s loan amount and down payment in the same proportion as in the buyer’s original offer. As a follow-up question, if the buyers do not have more money for the down payment, do they have to counter again? And what if it’s a multiple offer situation?
Answer: As to your first question, the answer is “Yes.” As background, let’s say a buyer offers $1 million with an $800,000 loan contingency and $200,000 down payment, but the seller counters at $1.1 million and the buyer accepts. Under that circumstance, paragraph 1B of the SCO states that the loan amount and down payment will be adjusted proportionally as with the buyer’s original offer. Hence, the buyer’s loan contingency will be for an $880,000 loan, and the down payment will be $220,000.
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