Personal Update

The next few days: my goal is to keep you update in this crazy economy and give you options of what might be done. Also, Utah has changed some laws regarding which contract can and cannot be used while buying and selling real properties. I would try to keep you updated about 10 new/changed things you should know about Real Estate Purchase Agreement (and all unchanged items can be found in this blog's all posting)

However, if I disappear one of this coming days: it is due my pregnancy: I have 6 days to go before my due date. And, only my little boy knows when he is planning to make an appearance.

I would try to keep you posted, and notify everyone as soon as this event happens. For now, I would like apologize in advance for possibly disappearing for a while.

Stigmatized Propety

What is Stigmatized Property?

1. The Site or suspected site of a homicidem other felony, or suicide
2. The dwelling place of a person infected, or suspected of being infected, with the Human Immunodeficiency Virus (HIV), or any other infectious desease that the Utah Department of Health determines cannot be trasferred by occupancy of a dwelling place, or
3. Property that has been found to be contaminated, and that the local health department has subsequently found to have been decontaminated in accordance with Title 19, Chapter 6, Part 9, Illegal Operations Site Reporting and Decontamination Act

Neither an owner nor his agent is liable for failing to disclose that the property is stigmatized.

What is 10.2?

What is 10.2? 10.2 is a section of Real Estate Purchase Agreement, which specifically talks about 5 items sellers warrant to buyer:

1. broom clean and free of debris property
2. heating, cooling, electrical, plumbing and sprinkler systems and fixtures, appliances and fireplaces will be in working condition
3. roof and foundation shall be free of leaks known to seller
4. private well or septic tank servicing the property should have correct permits
5. property, improvements, including landscaping, will be in the same general condition as they were on the date of acceptance

Sometimes, Sellers concern than after the inspection, buyer will use "written objection" period of time as a renegotiation period. While it might be true, and I almost strong suggest to work reasonable things out, seller must be aware what items he/she must to repair, and what items are not up for negotiation.

On the date seller deliveres physical possession to the buyer, those 5 items should be completed. And, they are not up for discussion.

Let's review short scenario, seller and buyer under contract, and after the inspection, buyer requires seller to change the roof because it is an old one. Does he have to do that? As long as this roof does not leak, no, he does need to do that.

"As-Is" vs. 10.2 modified.

Please never forget, regardless of the type of the sale, the seller must disclose material defects of the property that they know about.

So, what the difference "As-Is" and 10.2 modified? In an "as-is" sale, a seller property condition disclosure form is filled out. The seller disclosures what is known, and section 10.2 applies. In this case, the Buyer will most likely find out either in the inspection or on the seller dicsloures that there are some problems, and the seller knows about it, and will not do anything about it. The price better be right to compensate for it. When "as-is" property is advertised, buyer often concern that they would not have right to inspection, and would need to purchase the house as it. It is not true, you have a right to inspection, you may not have a right to request sellers to fix these problems. In "as-is" sale correct as-is addendum must be used.

In a situation of modified 10.2, seller only fills out the addendum, and some or all sections of 10.2 are removed. It is not enough to advertise the property "10.2 removed" as you can sometimes see on the lising. Buyer need to agree to this addendum. So, the biggest difference is whenever some or all items of 10.2 are removed, seller does not warrant them anymore.

Seller's Disclosures

We have just a little more to finish reviewing Real Estate Purchase Agreement.


* Some potential buyers might be scared when seller's disclosure (personal information of the seller is not available of the house). Do not worry! If you are a buyer, you have a right to do the inspection anyway in all situations:

1. "As-Is" Addendum
2. Non-Occupant Addendum...
3. 10.2 modified

I will review what is 10.2 tomorrow... As a seller, do you have to repair anything buyer would want you to? And, what is the difference between "As-Is" and 10.2 modified?

* Why wouldn't Seller provide Seller's Disclosure? And, if you are a seller, when you would not want to?

If you have limited information about the property, the best thing to do is to provide the Buyers with a non-occupant addendum, it is better than making information up.

* Is it correct to request Seller's Disclosures the next day?

Even though it happens very often, keep in mind that seller's disclosure is not one document, it is a set of documents which include:

1. actual seller' disclosure
2. a copy of any leases affecting the property not expiring prior to closing
3. written notice of any claims and/or conditions known to seller relating to environmental problems and building or zoning code violations
4. commitment for the policy of title insurance
5. and, as a buyer, you can request more here...

In other words, it may take more time to gather this information. The quickest Title company can provide you policy of title insurance is 3 days.

* Especialy, if you are buying a condo, chances are, you have Home Owner's Association (HOA). And, if you do, HOA has CC&R (community rules and regurlation). My suggestion is never to ask seller's agent to provide these rules to you, get it from the 3rd disinterested party.

Lots of war stories are told about omitted information in CC&R, just so buyer will purchase the property

Date Plus Three Days Warning Notice!

I promised yesterday that I will review in more details Date Plus Three Days Warning Notice!

There are several sections in Real Estate Purchase Contract (REPC) regarding this rule, this is the first one.

Let's say for easy explaination, your loan denial deadline was set as Monday, January the 1st. It means that the buyer, not seller, needs to get the Loan Denial Notice by this deadline to be of any benefit to the buyer.

Any notices received after this date would still allow buyer to cancel the agreement, but the earnest money would not be protected. In simple words, it is all about earnest money, as a seller, you cannot sue or otherwise make the buyer purchase your house here.

There is particurlar section in REPC which will govern the exact day and time of when the counting would sart, and it also states that uness another time has been agreed upon, the time that would apply would be 5:00 pm Mountain Time.

So, let's say you are a buyer, and you receive your Loan Denial Notice on the 1st, you would have 3 additional calendar days to communicate this to the Seller, and still receive the earnest money back

As a seller, you would ask why? One of the good reasons, I can think of is it allows buyer possibly find another mortgage company to make the purchase happen.

So, let's say you are a seller, and you receive this notice no later than January 4th, keep in mind Buyer still has a right to keep a deposit. And, you now have a right (Buyer has the same right) to cancel this contract by providing written notice to the other party within next three calendar days.

So, in January 7, you wrote that notice, and Buyer kept the Easnest Money, and you, as a seller, hopefully received a better offer from people who qualify for the mortgage. :)