Did You Ever Notice?

 

The things we are seeing in today’s real estate market are giving attorneys all across the state heartache; buyers waiving appraisal and financing contingencies, a constant barrage of escalation provisions, and even parties forgoing their right to inspect the property! Due to a severe shortage of inventory, this is a seller’s market in which buyers have very little leverage. So the last thing a buyer would want to do is unwittingly give their seller yet another advantage in the process. But that’s precisely what one obscure provision in your contract might do if you aren’t careful.

Many of us are familiar with Section 8(b) of the FR/Bar contract, which is commonly referred to as the “financing contingency”. This provision gives the buyer the right to terminate the contract in case they cannot get their loan, right? Well, kind of….

Section 8(b)(v) requires the buyer to either provide notice of (a) obtaining Loan Approval (as defined in the contract) or (b) waiving their financing contingency. However, upon closer review, the buyer’s failure to provide notice of either (a) or (b) actually allows the seller to terminate the contract and relist the property with no penalty. All the seller has to do is give notice that they want out, and the contract automatically terminates. The original intent of this provision was to protect a seller in the event they did not feel the buyer would be able to obtain financing and actually close. And in a normal market, a seller would almost never exercise this option, as they would want to keep the buyer locked into the contract no matter what. But in today’s market, with every listing turning into a bidding frenzy, savvy agents and sellers are using this sneaky little clause as a way to get out of a contract when there is a better offer on the table.

So remember to always provide written notice whenever required in the contract, even you don’t believe it is necessary. Because failing to give that notice won’t matter…until it does.

If you have any questions or concerns about a contract or any other matter related to your real estate transaction, please reach out to your trusted real estate attorney for legal advice.

 

Sincerely,

Bishoy M. Habib, Esq., M.B.A. bhabib@berlinpatten.com
Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com

SARASOTA
3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239
P (941) 954-9991 F (941) 954-9992

VENICE
247 Tamiami Trail South, Suite 201, Venice, FL 34285
P (941) 955-9991 F (941) 484-9992

LAKEWOOD RANCH
8433 Enterprise Circle, Suite 100, Lakewood Ranch, FL 34202
P (941) 907-9022 F (941) 907-9024

TAMPA
324 S. Hyde Park Ave., Suite 325, Tampa, FL 33606
P (813) 467-7500 F (813) 251-1662

ST. PETERSBURG
3179 4th Street North, St. Petersburg, FL 33704
P (727) 822-2505 F (727) 822-2909

Did you find this real estate law content useful, but need actual legal counsel?

Speak to a real estate attorney!

, , , , , , , , , , , , , ,

Avoiding Litigation. The Married Seller Edition.

  This has been an incredible selling market. Real estate professionals are signing up their sellers, listing the property, and procuring offers in contract in short time periods. Time is of the essence, but it is important to make sure that you dot your “I’s and cross your “T’s” when it comes to not only…

Repairs In an As Is Contract?

  As the local real estate market continues to experience an unprecedented level of competition and lack of inventory, it is more important than ever to brush up on exactly what is and is not contained in the FAR/BAR residential contracts. The FAR/BAR “As Is” Residential Contract for Sale and Purchase (the “Contract”), which is…

Notice Something is Missing?

  Get it in Writing We know. You’re in the real estate industry. You’ve heard “get it in writing” a thousand times. That applies to contracts for the sale of property (I’m sure you’ve read a previous blog on Florida’s statute of frauds), and for any changes to the contract that the parties agree on.…
Menu