Attorneys and REALTOR®s[1] have sought to produce standardize contracts for the sale and purchase of real estate ever since I can remember. I have personally witnessed the evolution of these contracts over the past forty (40)+ years. What began for me back in 1974 as a four (4) page residential contract has grown into a thirteen (13) page residential contract (see attached). Additionally, specialized contracts addressing the purchasing and selling of commercial property and vacant land are also available today. In this blog, I will narrow my discussion to what is called the “FAR/BAR”[2] Residential Contract for Sale and Purchase with an emphasis on properties that are either in a Homeowner’s Association (HOA) or a Condominium Association (COA). (FAR/BAR Contract).
If a property is located within an HOA community, Section 720.401, of the Florida Statutes requires a Disclosure Summary to be provided to the prospective purchaser. This disclosure required by statute can be found in the attached Rider (HOA Rider) which has been approved by the Florida Association of REALTOR®s (FAR) as well as the Florida Bar Association (BAR). You will notice the various disclosures contained in this Rider, including, without limitation, the obligation of the purchaser to pay assessments and special assessments to the association, providing that the failure to pay such assessments could result in a lien on the property resulting in the possible foreclosure of the property, much like a mortgage company would foreclose for the failure to pay mortgage payments. OUCH!
Similarly, if a property is located within a COA community, many attorneys and REALTOR®s will provide their buyers with a Condominium Rider (COA Rider) to the contract similar to the attached Rider, addressing many issues that have shown a history of litigation. Issues addressed in this Rider include, without limitation, whether or not the condominium association requires an approval process for the buyer, whether or not the association and/or the other owners have the first right of refusal, a breakdown of all fees and assessments that must be collected at closing, a disclosure regarding parking and common elements and the delivery requirement of a true copy of the Declaration of Condominium.
When using these ‘standardized’ contracts, it is critical that you know what is represented in each clause of the contract. I can’t begin to tell you how many REALTOR®s have come to me over the years complaining because of an impending lawsuit that could have been avoided if they would have had a better knowledge of the ‘standardized’ contract.As you can see, the form used by real estate practitioners has progressively evolved from that 4-page residential contract I worked with over 42 years ago. These standardized forms are designed to be party neutral ... however, a thorough understanding of the form(s) is imperative prior to your implementation of your drafting of a real estate contract.
As you can see, the form used by real estate practitioners has progressively evolved from that 4-page residential contract I worked with over 42 years ago. These standardized forms are designed to be party neutral ... however, a thorough understanding of the form(s) is imperative prior to your implementation of your drafting of a real estate contract.
[1] REALTOR® is a registered trademark owned by the National Association of REALTOR®s and, therefore, is protected by law.
[2] The FAR/BAR Residential Contract for Sale and Purchase has been approved by the Florida Association of REALTOR®s (FAR) and the Florida Bar Association (BAR) hence the acronym FAR/BAR.