In an effort to make the Addendum of Clauses an even better tool for our membership, we have made the following enhancements:
- We have grouped together at the beginning of the form all provisions regarding property condition. We have also created a Lead-Based Paint Inspection Contingency, as well as a Post-Settlement Air Conditioning And/Or Swimming Pool Inspection Contingency.
- We have also created an Appraisal Contingency.
- With the regrouping and addition of new provisions, paragraphs have been renumbered.
- Numerous modifications have also been made to existing provisions which will be described in this summary.
1. HOME INSPECTION CONTINGENCY
We have incorporated, in bold, in the second line of paragraph 1, language to make it clear that radon and/or lead inspections require separate contingencies. This has been done to accommodate either the licensing or certification requirements of the inspector and/or remediator, as well as the need in some instances to have additional access to the property.
To clarify the order of who can give notice, we have corrected the introductory clause to the notice provisions (i), (ii) and (iii) from:
"Within 3 Days after Delivery of notice from the other party, either party may:"
"Within 3 Days after Delivery of notice from one party, the other party may:"
2. GENERAL INSPECTION CONTINGENCY
We have eliminated the gratuitous language previously contained in the second subparagraph of this contingency providing that this inspection did not release the Seller from any responsibilities existing or created under any other part of the contract. Those obligations of the Seller would continue to exist whether or not the now deleted clause was included or not. If we were to include it, then, for uniformity, we would have to include it in numerous other property condition related provisions of the sales contract and the Addendum of Clauses. We have also "pluralized" the word "inspections" on the second line to allow for the possibility of the Buyer having more than one type of inspection during the contingency period.
3. "AS-IS" PROPERTY CONDITION
In light of the fact that this paragraph obligates the Seller to deliver the property in "As-Is physical condition" as of a particular time, we have eliminated the provision that "…the Seller will have no obligation to make repairs to electrical, plumbing, heating, air conditioning or any other mechanical system, equipment or fixture".
4. RADON TESTING CONTINGENCY.
In light of the fact that most remediation firms do not provide retest results, coupled with the fact that it is not practical for a Seller to provide a Purchaser with written re-test results from the Testing Firm, we have modified this contingency to provide that the Seller's sole requirement following remediation is "…to provide the Buyer with written verification that the required remediation has been performed". We have also eliminated the alternative of a closing cost credit in lieu of remediation.
5. LEAD-BASED INSPECTION CONTINGENCY.
This provision is new and has been created to parallel the mechanics of the Radon Testing Contingency. We have also added language to make this provision applicable for D.C. transactions, as well.
6. POST SETTLEMENT AIR CONDITIONING AND/OR SWIMMING POOL INSPECTION CONTINGENCY.
In an effort to create uniformity in the marketplace when dealing with the off-season inspections of Pools and Air-Conditioning Systems, as well to help ensure that this contingency request will be proffered at the appropriate time, we have created this new provision. It has incorporated the typical May 31st deadline for the inspection. We have, however, given the Seller the first opportunity to bring the Pool or Air Conditioning System into the condition required under the sales contract followed by a Buyer cure period in the event of Seller noncompliance.
10. APPRAISAL CONTINGENCY.
While we await the long overdue revisions of the Regional Contract, which will apparently include a complete reconstruction of the Financing Contingency, this provision has been created to allow the parties to clearly and explicitly agree to make the contract contingent upon an appraisal without having to rely on the awkward and incongruous provisions of paragraph 8 of the Regional Contract. The mechanics of this contingency are very similar to the Home Inspection Contingency, with two key distinctions.
Firstly, we have eliminated the right to declare the contract void in the event of, in this case, a low appraisal. The Buyer's only right will be to request the Seller to reduce the sales price to an amount of not less than the appraised value. Secondly, after long debate, and to make this provision parallel to the appraisal language projected to be contained in the upcoming new and improved Regional Contract, we have departed from our long history of non-response from either party being considered to be agreement with the other party's request. The new language reads:
"FAILURE OF EITHER PARTY TO RESPOND WITHIN 3 DAYS AFTER DELIVERY OF A NOTICE FROM THE OTHER PARTY WILL RESULT IN THE CONTRACT BECOMING NULL AND VOID."
This has been done to avoid the very grave situation of a Buyer requesting a Seller to dramatically reduce the sales price, the Seller accidentally missing the response deadline, and then being obligated to the lower price. This would create an undue burden on the Seller and an enormous liability for the Agent. This variation from historical practice will require careful education, so that Buyer Agents don't upset their clients by "allowing" a response deadline to pass resulting in the contract becoming void.
The education must also carefully address the fact that if a buyer requests the seller to reduce the sales price due to a low appraisal, and the seller merely does not respond within the 3 day time period, the contract would also become null and void. It will be essential that buyer agents advise their clients that if the buyer requests the low appraisal, they, then face the risk of the sellers' non-response and the contract becoming null and void.
12. BACK-UP CONTRACT OR OFFER.
In order to allow for the postponement of dates for contingencies and other obligations under the contract to commence and for the settlement date to be established only after the contract becomes primary, the last two sentences of this provision have been added. They are self-explanatory.
20. POST-SETTLEMENT OCCUPANCY AGREEMENT.
Since, oftentimes, the post-settlement occupancy agreement is not attached to the sales contract, we have deleted the word "attached" from this clause. Also, in hopes of facilitating uniformity by encouraging the use of a standard form for post-settlement occupancies, we have added the provision that the agreement to be attached is the "GCAAR" Post-Settlement Occupancy Agreement.
21. PRE-SETTLEMENT OCCUPANCY AGREEMENT.
We have made the same changes for the same reasons to this provision as we did for the Post-Settlement Occupancy Agreement.
In hopes of avoiding any further misunderstandings as to when a contract is deemed ratified, we have added and set out separately a new clause which defines ratification. This concept was actually borrowed from the Agreement of Principals paragraph of the "MCBR Form 1301" from yesteryear.
We have now combined the balance of the original General Provisions paragraph with the former Notices paragraph, massaged a few clauses, and included a provision allowing email, when the transmission "…includes an attachment with an actual copy of the executed instruments being transmitted…" to come up with a new Notices Paragraph. Finally, an alternative provision for delivery of Notice to the Agent's Supervising Manager has been added (to deal with delivery when the other Agent is "difficult to track down", and you don't just want to leave the Notice at the Broker's front desk). This provision will now be the standard and will also be incorporated into the Montgomery County and D.C. Jurisdictional Addenda.