Summary of Form Revisions - Oct. 2008

REVISIONS TO EXISTING FORMS

Form #1300 - MAR Contract of Sale

MAR Residential Contract of Sale - The following changes are incorporated into the Contract dated 10/08:

  • Paragraph 16 - Lead Paint. This paragraph was revised to be more concise. The paragraph requires the seller to specify the date the home was constructed. Given this information, the parties will then be able to determine the extent to which the property is subject to the federal and/or Maryland lead paint laws. If the property is not subject to either law, the parties are not required to do anything else.
  • Paragraph 50 - Notice to the Parties. In response to the 2008 Protection of Homeowners in Foreclosure Act, paragraph 50 was revised to add a statement alerting the parties that a seller who is 60 days or more in arrears on the seller's mortgage has a 5-day right to rescind the contract. The Act provides other protections to distressed sellers and the parties are given a reference to the law in case the parties wish to seek additional information.

Form #1312 - Montgomery County Jurisdictional Addendum to the Sales Contract

  1. The first change to this form is the addition of a new paragraph 7, "Protection of Homeowners in Foreclosure Act Notice" (PHFA), and the renumbering of the paragraphs that follow. Addition of this Paragraph and the creation of new GCAAR Form 1364 are necessitated by the passage of MD Code Sections 7-310 and 7-313.

    The new paragraph 7 includes a basic description of an owner-occupant seller's right to a 5-day right of rescission when the seller is 60 days or more in default on any mortgage that is secured by the property. The Seller has this right of rescission within 5 days of the latter of; 1) Contract execution, or 2) the date that all parties sign new GCAAR Form 1364, Statement about Tenancy, if the parties have agreed to a Post Settlement Occupancy Agreement. Paragraph 7 also includes a warranty by the seller that such a default does not exist.

  2. Paragraph 11 (Now Paragraph 12) has been modified by changes to Paragraph 12 (D) (5). These changes have been incorporated to correct an inadvertently broad statement regarding what constitutes Buyer's default. The language has been redrafted to reflect the original intent, which is that the Buyer will be in Default, even if a Financing Contingency remains in effect, IF the circumstances described in Para. 12(D)(5)(a) thru (g) occur.

  3. Paragraph 16 Additional Default Provisions, now reflected as Paragraph 17, has been wholly changed to reflect the modification and correction described immediately prior hereto. In essence, New Paragraph 17 comprises the exact language of new Paragraph 12 (D)(5)(a) thru (g). This has been done for consistency and clarification purposes.

 
Form #1313 - DC Jurisdictional Addendum to Sales Contract

  1. Additional Default Provisions.
    Has been revised in the same manner and for the same reason as Paragraph 17 of the Montgomery County Jurisdictional Addendum as described above.

 
Form #1318 - Some Information Relative to the Purchase of Real Estate

Form #1318 was extensively re-written and reorganized to present the information in a manner that makes it applicable to both Montgomery County and the District of Columbia in the same paragraph. For areas that the law/information varies between the jurisdictions this is noted within the same paragraph rather than in one paragraph exclusive to MOCO and another exclusive to DC. Legal updates were made throughout the form. In particular, the Property Tax and Tenant Rights paragraphs were expanded considerably.

 
Form #1332 - Addendum of Clauses

Revisions were made to the following paragraphs:

  1. Radon Inspection Contingency.
    We included a parenthetical in paragraph 4 A. which refers to new GCAAR recommended Form # 1363, which will be able to be used similarly to GCAAR Form #1344, Home Inspection Notice, for purposes of negotiating the removal of the Radon Inspection Contingency. We also added to paragraph 4 A the right for the buyer, when negotiating the removal of the Radon Inspection Contingency, to request a credit in lieu of remediation. This provision merely provides the buyer the legal right to ask for something that the prior version of this contingency did not include. This change will be transparent to our membership.

  2. Lead-Based Paint Inspection Contingency.
    We made the same changes to this contingency that we made to the Radon Inspection Contingency described above.

  3. Appraisal Contingency.
    We added a parenthetical after the title warning agents not to use this contingency with FHA and VA Loans, since the FHA and VA Addenda have built-in appraisal contingencies which comply with Federal Law. This warning is necessary since a buyer using an FHA or VA loan cannot be required to go forward with a purchase in the face of a low appraisal.

  4. Post-Settlement Occupancy Agreement.
    The bolded language at the end of this section has been added to alert the agent and the parties of a Seller's potential right of rescission if the provisions of PHFA apply.

  5. Licensed Related Party Disclosure.
    We gave the paragraph a better title (changed from "Licensed Seller/Buyer Agent". We also cleaned up the language for clarity and flow.

  6. Agreement Between Unrepresented Seller (FSBO/Builder) and Buyer Concerning Buyer Broker Fee.
    We gave this paragraph a better title which more accurately describes its purpose and content.

General Changes to the Addendum of Clauses

We also eliminated the following provisions: Prequalification Letter Contingency (This had become obsolete.)

The Notices Paragraph, the Definitions Paragraphs, and all Blanks for contact information. (We were able to do this since all of these provisions are included in the Jurisdictional Addenda.)

We also cleaned up the titles of several of the provisions to appropriately call them contingencies when, in fact, they are contingencies.

 
NEW FORMS

Form #1340 - Lead-Based Testing Notice and/or Addendum/Release

Form #1363 - Radon Testing Notice and/or Addendum/Release

Forms #1340 and #1363, which are similar in format to Form #1344 Home Inspection Notice, were created to provide the agent with a form to use for the negotiation of the removal of the Lead and/or Radon Inspection Contingencies.

You will also notice that the title of these forms have been expanded to include the term "and/or. . .Release". Many of our members, along with GCAAR counsel, were concerned about potential liability if a buyer were to accept a credit in lieu of remediation, not remediate and end up with a radon or lead related health condition, and, then initiate a legal proceeding against the agent, broker and/or GCAAR, alleging that our form suggested that a credit was a good idea to accept in lieu of remediation. Thus, each of these contingencies includes release, indemnification and hold harmless language.

Form #1364 - Statement of Tenancy

The creation of new GCAAR Form 1364 was necessitated by the passage of MD Code Sections 7-310 and 7-313.

 
DELETED FORMS

Form #1339 - Lead-Based Paint Inspection Addendum.

We no longer need this form since we now have a contingency for a lead inspection contained in the Addendum of Clauses.

Form #1005 - Confirmation of Declining Presumption of Buyer Agency.

We determined that the state required agency disclosure forms adequately addressed this question.

 
EDITORIAL CHANGES

Form #930 - Short Sale Addendum to the Listing Agreement

Form #931 - Credit Authorization and Release Form

Editorial change to Disclaimer Paragraph at bottom of the form. Added word Disclaimer: and bolded the paragraph.