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Rider B revisions: What’s changing – and why

By Marcia Tabak
 

Sept. 4, 2017 – Rider B – part of the Comprehensive Riders to the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase – is being revised, with the latest version debuting in three weeks – on Sept. 26, 2017.

This is the rider you include with the Florida Realtors/Florida Bar Residential Contract when the property being purchased is within a community (excluding condominiums) that requires a buyer to become a member of a homeowner's association (HOA). A redline version of the Rider B that will debut in three weeks (changes are in red to make them stand out) is posted on Florida Realtors' website.

The current form, numbered CR-4, is a one-page statutory form mandated by the Florida Legislature. Buyers must receive it when HOA membership is mandatory after the transaction.

Current CR-4

  • Advises buyers that the property is within a community that requires owners to become members of the association
  • Discloses to the buyer that the property is subject to covenants and restrictions
  • States that assessments on the property are a disclosed amount and payable in specified time periods
  • States that special assessments could be levied on the property and, if any currently exist, the amount currently owed and when sums are due
  • Discloses that things can change in the future, such as yearly assessments, special assessments, covenants and restrictions can change.

In addition to this information, the disclosure contains several other matters relevant to buyers of such properties.

What's changing and why

Within Florida Realtors, the Realtor Attorney Committee maintains the Residential Contract and its riders, and it updates forms as necessary. And, after many hours of debate, the committee recently approved revisions to the HOA form.

Committee members generally fell into two camps regarding the wording for this update: Some felt that buyers of property within an HOA should receive the same type of documentation that condominium buyers receive –actual covenants and restrictions, HOA policies and financial statements, and info about expenses to be borne by buyers, for example – to assist buyers in the home-buying process.

Other committee members felt that the form should not be changed. These members felt the Florida Legislature already addressed what information should be revealed to buyers in the statutory form. They also were concerned that it would be difficult to provide current HOA documents to buyers timely since many HOAs don't have professional management companies with ready access to information. Condos are more likely to be operated by professional staff who can more easily access that information.

In addition, there were concerns that providing specific information about expenses – info beyond those required in the part of the form mandated by law – could serve as a basis for buyers to terminate a contract if, inadvertently, the additional amounts disclosed were inaccurate.

In the end, the committee came together. As a group, it took the position that some additional information should be provided to buyers beyond the statutory form language but not the full complement of information that condominium buyers receive.

Summary of info required in new Part B (Page 2, CR-5)

  • Approval by the association, if required, by a date inserted in the contract
  • Additional lines for other fees a buyer will owe, including application fees, transfer fees and initial contributions
  • Fields used to negotiate which party will pay special assessments that are due in installments past closing
  • Blank fields to insert contact information for the association and management company

Marcia Tabak is Deputy General Counsel of Florida Realtors

© 2017 Florida Realtors

 

Related Topics: Florida Realtors Legal News