Have you heard the news? The Oceanside Transaction Coordinators at Transaction 911 are here to tell you that the RPA—the Residential Purchase Agreement—is changing again this November. It seems like just yesterday that the Oceanside Transaction Coordinators experienced the last change to the RPA.
The RPA is such a lengthy and detailed document. We at Transaction 911 recommend that real estate agents take a RPA class in order to get familiar with the changes to this form.
According to RealtyTimes, these are the changes to the RPA that we can expect this November:
- Added to the Financing section is a paragraph entitled Lender Limits on Buyer Credits. It reads: “Any credit to Buyer, from any source, for closing or other costs that is agreed to by the Parties (“Contractual Credit”) shall be disclosed to Buyer’s lender. If the total credit allowed by Buyer’s lender (“Lender Allowable Credit”) is less than the Contractual Credit, then (i) the Contractual Credit shall be reduced to the Lender Allowable Credit, and (ii) in the absence of a separate written agreement between the Parties, there shall be no automatic adjustment to the purchase price to make up for the difference between the Contractual Credit and the Lender Allowable Credit.” This is to say, a buyer who offers a big price, but then seeks to reduce it by asking for big credits, had better be prepared to deal with the lender’s disallowance of those credits.
- Another addition to the RPA is a section entitled “Representative Capacity.” It deals with parties who are signing “in a representative capacity and not for him/herself as an individual.” Such parties must complete a specified addendum and must deliver within three days after acceptance of the contract “evidence of authority to act in that capacity.” Failure to deliver such evidence triggers a Seller’s right to cancel.
- Loan contingency is not automatically tied to appraisal. “If there is no appraisal contingency or the appraisal contingency has been waived or removed, then failure of the Property to appraise at the purchase price does not entitle Buyer to exercise the cancellation right pursuant to the loan contingency if Buyer is otherwise qualified for the specified loan.”
- Added to the section detailing what items are included and excluded from the sale is a section for Leased or Liened Items and Systems. The need for this was occasioned primarily by the increasing presence of solar systems that come with a long-term lease. The Buyer’s approval of and ability to assume the lease is made a contingency of the purchase.
- A large Scope of Duty section has been added to the purchase agreement. It has nothing to do with contractual terms between buyer and seller. It is a CYA section for the protection of brokers. It details the many things that the brokers are not responsible for and that they are not required to do. The entire section was taken from an existing buyer and seller advisory, which, unfortunately, is not always used by agents.
- A major change that will particularly be noticed by southern California agents is the removal of the termite report from the list of inspections whose cost is allocated, by negotiation, either to the buyer or the seller. Additionally, a widely-used addendum (WPA) — indicating who will pay for termite repairs — is no longer referenced in the contract.
Of course, if you need assistance with this or any other documentation for your upcoming real estate transactions, please do not hesitate to contact the Oceanside Transaction Coordinators at Transaction 911.