The market continues to blaze along, short on supply, and heavy on demand. The familiar dash to submit an offer occurs and your client’s offer is accepted. The offer was presented using the FAR BAR “AS IS” Residential Contract for Sale and Purchase. Discussions were brief with your client because of the time sensitivity to submit an offer. However, something not to be overlooked is the “AS IS” Maintenance Requirement. Here is what the real estate agents and parties need to consider:
- Paragraph 11 of the FAR BAR “AS IS” Residential Contract for Sale and Purchase requires a seller to, except for ordinary wear and tear and casualty loss, to maintain the contract property, including but not limited to, lawn, shrubbery and pool in the condition existing as of the Effective Date of the contract.
- If a seller is unable to meet the “AS IS Maintenance Requirement, Paragraph 9 of the FAR BAR “AS IS” contract requires a sum of 125% of the estimated costs to meet the AS IS Maintenance Requirement be escrowed at closing.
- Paragraph 9 sets out that if the actual costs exceed the escrow amount, the Seller will then be required to pay the actual costs.
- Paragraph 12 sets out that if the buyer accepts the physical condition of the property after an inspection, Seller is still subject to its AS IS Maintenance Requirement, and the buyer is responsible for any repairs or improvements required by a buyer’s lender.
These three provisions of the FAR BAR contract are important to consider for a few types of current buyers, the absentee buyer and the anxious buyer. An absentee buyer will be relying heavily on her/his real estate agent to review the property in person prior to making the offer. The anxious buyer does not even know what they are looking for outside of just wanting buy a property in Florida. The contract does permit for a buyer to conduct an independent inspection (Paragraph 12 of the contract), as well as requiring a buyer to pay for any repairs and improvements that a lender may require. However, before having a buyer enter into contract, a real estate agent may take a more proactive role in asking about lawn and pool services, current maintenance programs, operating condition of the pool equipment, appliances, operating condition of the air conditioner, as well as a discussion with the listing agent reaffirming that the property will continue to be maintained until closing. This coupled with the inspection will allow for a smooth closing, with no unexpected escrow holdbacks and surprise repairs to be completed.
As always, should you have any questions on this or any other real estate topic we encourage you to reach out to your trusted local real estate attorney.
Anastasia M. Stefanou, Esq. firstname.lastname@example.org
Berlin Patten Ebling