©Copyright, 2010 Florida Realtors® 1 The Effective Sales and Purchase Contract By: Steven J. David, CRB,CRS,GRI Presented by: Florida Realtors®

©Copyright, 2010 Florida Realtors® 2 Course Objectives : By drafting an effective purchase and sales contract The student is empowered to: Explain the agreement Identify timing and use of disclosures. Reduce litigation

©Copyright, 2010 Florida Realtors® 3 Course Topics: Basics of a contract Required disclosures Review of the contract form Workshop activity Changes, counter-offers, conditions

©Copyright, 2010 Florida Realtors® 4 The Contract Represents desires of all parties Instructs the closing agent

©Copyright, 2010 Florida Realtors® 5 Purchasers Name Legal Description Use of Property Personal Property Purchaser Price Terms of Purchase The Basics

©Copyright, 2010 Florida Realtors® 6 The Basics Acceptance Date Closing Date Repair Limitations Special Clauses Signatures

©Copyright, 2010 Florida Realtors® 7 The Basics EVERYTHING should be in writing Most problems are due to miscommunication

©Copyright, 2010 Florida Realtors® 8 Purchasers name Legal description Personal property Use of property Purchase price Terms of purchase Acceptance date Closing date Repair limitations Special clauses Signatures

©Copyright, 2010 Florida Realtors® 9 Required Disclosures Which disclosures must be given? When are they given?

©Copyright, 2010 Florida Realtors® 10 Attorneys feeSurvey Escrow balanceTitle Insurance Hazard insuranceMtg Transfer Fee Abstract recertification Appraisal Disclosures – Cost/Fees

©Copyright, 2010 Florida Realtors® 11 Disclosures - Costs/Fees Credit reportPrepaid escrows Documentary Stamps Origination fees Lenders attorney fees Other

©Copyright, 2010 Florida Realtors® 12 Lead-based Paint FHA-Mandated Home Inspection Energy efficiency Agency Controlled business arrangements Other Disclosures

13 Other Disclosures Mold Homeowners Association Property Tax Increase Warning 2003 Law Changes Material Facts Disclosure HIV Death ©Copyright, 2010 Florida Realtors®

14 Financing Agency Homeowners assoc Property tax Hazardous materials Inspections Equal housing Leases

©Copyright, 2010 Florida Realtors® 15 We will discuss the contract most often used in your area.

16 Filling in the Blanks Legal Description Complete address Personal property - included Personal property - excluded Leased equipment Seller representations ©Copyright, 2010 Florida Realtors®

17 Filling in the blanks Deposit Additional deposit Amount of new note Existing mortgage Purchase money Other consideration Balance of funds Total purchase price

©Copyright, 2010 Florida Realtors® 18 Filling in the Blanks FHA or VA Condominiums FHA or VA Condominiums Special Clauses Acceptance date Acceptance date

©Copyright, 2010 Florida Realtors® 19 Filling in the blanks Closing Date

20 Filling in the Blanks Old mortgages New mortgages Assignment Survey Inspections Environmental condition Radon gas Insurance Leases Sellers affidavit Place of closing Documents for closing ©Copyright, 2010 Florida Realtors®

21 Filling in the Blanks Expenses Pro-rations Other pro-rations Special Assessments Risk of loss Maintenance Escrow proceeds Escrow deposits Default Non-recordable Survival of covenants ©Copyright, 2010 Florida Realtors®

22 Final Agreement Special Clauses Signature Section Sign only if you have actually received the deposit! NOTE: The riders for VA, FHA etc. will be discussed thoroughly at this time.

©Copyright, 2007 Florida Association of Realtors® 23 Section 4: Workshop Preparation of an effective purchase and sales contract Workshop Activity

©Copyright, 2010 Florida Realtors® 24 Changes? Counter-offers? Conditions? A counter-offer is a change in the offer from one party to the other May use a clean contract Initial/sign all changes

©Copyright, 2010 Florida Realtors® 25 Submit offers/counter offers ASAP Parties can cancel before acceptance Get EVERYTHING in writing Dont Forget!

©Copyright, 2010 Florida Realtors® 26 Track time constraints Initials/signatures on changes Submit offers ASAP May cancel before acceptance Submit counter offers ASAP Verify all deposits in writing Avoid verbal offers