A Look at Paragraph 8-B of the FR/BAR Contract
|Marlen Rodriguez, President|
HomePartners Title Services
When it comes to the execution of a real estate contract, one of the most important things you have to do is keep your client’s money safe. Did you know that many buyers who lose their escrow deposit do so because they did not track and follow the requirements of the sales contract? Mortgage contingencies do not automatically mean that if a buyer doesn’t obtain financing, they receive a return of their deposit.
The FR/BAR contract requires both application and diligence by the buyer (and by you, their Realtor®). The contract also requires that the buyer notify the seller prior to the loan approval due date if they have not been able to secure financing. This is the window for either requesting termination and a return of the deposit or requesting an extension of the due date.
If the due date comes and goes and the buyer fails to notify the seller, the contract treats that lack of action as moving forward toward closing. Then, if the closing does not occur on the closing date, the deposit may be forfeited. Another important feature of this provision is – should the buyer fail to notify the seller as required, then for 3 days after the loan approval due date, the seller may choose to terminate the contract.
Why would they do so? The seller may want to work with another buyer for more money or perhaps to a cash buyer. It’s important to provide these guidelines to your buyers and sellers so that they know their responsibilities under the contract. You can find these guidelines in paragraph8-B in the FR/BAR contract. This provision is also SO important that you should review it on a regular basis.
HomePartners Title and our Legal Counsel, Rose Sheehan, provide contract training for Realtors® on a regular basis. Be sure to inquire about the next training in your area.
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