FAR/BAR Contract Updates, Volume 4, – Sections 9, 10 and 18

This week’s article will address certain changes made to Sections 9, 10 and 18 of the contract, which covers closing costs, disclosures and the standards for real estate transactions. The changes made to these sections were, for the most part, not substantive in nature and designed to provide further clarification on current practices in the real estate industry. A copy of the redline version of the contract is available here (https://berlinpatten.com/wp-content/uploads/2021/10/03843547.pdf) for reference.

Section 9(a) was amended to add FIRPTA withholding and reporting charges as a cost to be paid by the seller. Generally speaking, FIRPTA applies when the seller is a “foreign person” (as defined under Section 1445 of the Internal Revenue Code) and requires the buyer to withhold and remit up to 15% of the sales price at closing, unless an exemption applies or the seller has obtained a Withholding Certificate from the Internal Revenue Service for reduced withholding. Since the law places a burden on the buyer to withhold and remit, there is often confusion as to which party would be responsible for the costs associated with FIRPTA. This change makes clear that the seller would be responsible for such costs.

Section 9(f) was amended to revise the language set forth in option (b) to address when pre-payment of special assessments may not be allowed by a public body. In the prior version of the contract, option (b) required the seller to pay the special assessments in full prior to or at closing. However, there are certain instances where pre-payment of the special assessments would not be allowed due to the public body’s restrictions or method of collection. In those instances, the buyer would be responsible for paying for any special assessments due after closing. This section was likely revised to clarify when a buyer would be responsible for paying the special assessments even if option (b) was selected.

Section 10(b) was amended to add language referencing Section 553.79, Florida Statutes, which was recently amended to provide for additional methods to satisfy open or expired permits.

Section 18, Standard F was amended to address when a contract deadline falls on a day in which a legal public holiday is observed because the legal public holiday fell on a Saturday or Sunday. Earlier this year, Independence Day fell on a Sunday and the following Monday, July 5th was observed as a legal public holiday. While most federal banks were closed, the previous version of the contract did not specifically address what would happen if a contract deadline, such as the delivery of the deposit, fell on that date. The new language provides clarification that the contract deadline would extend to the next calendar day. This section was also amended to remove the 5pm timeframe for a deadline which was extended under this paragraph.

Section 18, Standard G was amended to provide for additional “Force Majeure” events, including civil unrest, governmental actions and mandates, governmental shut downs, epidemics or pandemics. This change was likely made as a result of the COVID-19 pandemic and other events from this past year which delayed or prevented a party from performing their contractual obligations. Standard G was further revised to specify that a Force Majeure event is deemed to have begun on the first day that the Force Majeure prevents performance, non-performance or the availability of services required for closing. In other words, it’s important to note that just because a Force Majeure exists does not necessarily mean that a party will be excused. Rather, the Force Majeure event must also be the reason preventing the party from performing their obligations under the contract.

Our subsequent and final blog to this series will address Rider I. Mold Inspection; however, if you have any questions in the meantime, we encourage you to reach out to your trusted real estate lawyer.
Sincerely,
Kathryn A. Huynh, Esq, khuynh@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
525 1st Ave 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!

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

ESTATE PROPERTY

When Can Estate Property Be Sold?

WHEN CAN THE PROPERTY BE LEGALLY SOLD? We are in the midst of a period of unprecedented demand for the sale and purchase of real estate. Because there are more interested buyers of real estate than there are properties available for sale, some would characterize this as a “seller’s market” (i.e., demand exceeding supply, putting…

PACE Disclosure: A Transaction’s Best Friend

PACE Disclosure This week’s article will address the recent addition of a new rider to the FAR/BAR Residential Contract for Sale and Purchase, the Property Assessed Clean Energy (PACE) Disclosure. Over the years, the movement towards clean energy and reduced emissions has gained momentum. From electric vehicles to solar panels, the clean energy movement has…
Business man wearing gloves and using computer - fraud, hacker, scammer, identity theft, cyber crime concept

Will the Real Seller Please Stand Up

  New Age of Scammers It might go without saying, but as a real estate agent, it is important to know your client. You will be assisting in the purchase or sale process and helping them through an important stage in their life. However, in our interconnected world there is another, less discrete reason, why…
Menu