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Course author and instructor Lorraine Roemer provides us with a 100 foot view of the main updates to the contracts and forms that will be used beginning January 1st, 2016. VanEd is preparing our popular Contract Review course which should be available next month. If you have any initial questions about the new contracts, please email us at firstname.lastname@example.org.
The 2016 Contracts to Buy and Sell Real Estate are available for viewing at the Colorado Real Estate Commission site. It appears as though there has been a lot of tweaking. Words such as inurement or fixtures are gone. The theme throughout is simplification and clarity.
The 2016 Contracts were adopted in May 2015 and become mandatory January 1, 2016. The CREC has directed the forms committee to stretch changes for 3 years. No changes will occur until Jan. of 2019 unless there are legislative mandates, court decisions, or attorney general opinions warranting earlier changes.
So a brief overview of what’s new follows: For all Contracts to Buy and Sell midst dates and deadlines a new appraisal resolution deadline appears, the word NEW ILC or NEW Survey replaces current ILC or current Survey.
Seller concessions were rewritten for additional clarity.
The Appraisal sub-section now includes a definition of appraisal and sets forth certain lender requirements, replacement, removals or repairs as a condition for the property to be valued at the Appraised Value. This section further includes an appraisal objection deadline and a NEW appraisal resolution deadline. A new subsection titled Lender Property Requirements may impose requirements, replacements, removals or repairs, inc. any specified in the Appraisal to be made to the Property beyond those matters already agreed to by Seller in the Contract. Seller would have the right to terminate unless prior to termination the parties had entered into a written agreement regarding Lender Requirements or if these requirements have been completed or the satisfaction of the Lender Requirements is waived in writing by Buyer.
Within Association documents seller is obligated to provide to Buyer the documents at Sellers expense regardless of who provides these documents.
Midst title insurance the sub-section on owner’s extended coverage (OEC) was rewritten stating to provide this coverage a new survey or new ILC among other requirements may occur. The Title Advisory Sub-section has many new sub-sections concerning oil, gas, water and mineral disclosures. Surface Use Agreements, oil and gas activity on or on adjacent properties and where additional information can be obtained is provided within these sub-sections. Potential title insurance exclusions and an advisement to consult an attorney are included.
New ILC, New Survey replaces current ILC, etc. This section covers who will order and states a previous ILC or Survey may be certified and updated. Who will pay, to whom it will be delivered and the fact a surveyor will certify are clauses within. If there is a survey objection it must be resolved or said objection must be withdrawn by Buyer prior to the Survey resolution deadline.
Property disclosure, inspection, etc. now has a sub-section stating seller must disclose to Buyer any latent defects actually know by Seller and this must be in writing.
Transfer of title includes subject to any special assessment if the improvements were not installed as of the date of the Buyer’s signature hereon, whether assessed prior to or after Closing.
Newer clauses are inserted regarding causes of loss and insurance pay-outs with reasonable efforts by seller to repair the property before closing. If seller has not received insurance proceeds prior to closing the Closing date maybe extended or at the option of Buyers, Seller must assign to Buyer at Closing if acceptable to Seller’s ins. co. and Buyer’s lender or have a written agreement requiring the Seller to escrow at Closing from Seller’s sale proceeds the amount Seller has received and will receive due to such damage, not exceeding the total Purchase Price, plus the amount of any deductible that applies to the insurance claim.
Time of Essence has new words concerning all dates and deadlines are strict and absolute. If Buyers is in default and specific performance is checked a new sentence is added stating it is agreed that the Earnest Money is not a penalty, and the Parties agree the amount is fair and reasonable. If liquidated damages are applicable the sentence both parties will thereafter be released from all obligations hereunder has been removed.
Mediation adds before any mediated settlement is binding, the parties must agree to the settlement. A sentence is added concerning parties last know address physical or electronic. Nothing in this Section prohibits either party from filing a lawsuit and recording a lis pendens affecting the Property, before or after the date of written notice requesting mediation.
A clarification of physical delivery, electronic notice and electronic delivery are found within. Other minute changes are within.
The Agreement to Amend/Extend and Counterproposal have minor changes adding the appraisal resolution deadline and changing under survey the word New vs. current.
The Notice to Terminate has been rearranged and under Buyer’s notification of unsatisfactory conditions it adds insurability, damage, inclusions and services.
Look for more details in the coming months, and remember that VanEd will be offering a 2016 Colorado Forms & Contract Review course commencing October 2015.