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Contracts, Addenda and Disclosures

Adding and Modifying Language to Contracts

Many times, buyers or sellers want to add specific language to their contracts that adds terms or changes the pre-printed language. While this may be doable sometimes, agents should use caution depending on the context of the changes.

ORLANDO, Fla. – One of the most popular contracts Florida Realtors has available for members is the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase (FR/Bar AS IS). While this contract contains many of the needed terms for a successful transaction, each transaction is unique. Sometimes buyers and sellers request to have certain things modified or flat out changed. For the purposes of this article, we will use the FR/Bar AS IS language.

While general, basic changes to the contract are possible, sometimes the customer’s request is more complex than it initially seems and agents should use caution before moving forward.

A primary example? As the FR/Bar AS IS contract’s name implies, the seller listed the property “as is,” which means the seller has no obligation to make repairs. However, many buyers want to request repairs from a seller after the inspection results come in during the inspection period. While nothing prevents parties from renegotiating the terms of an existing contract, it’s important to understand the nuances and risks in doing so in order to facilitate a smooth transaction.

It’s imperative to recognize this: There is no obligation on the seller’s part to make any repairs, nor to even respond to a request for repairs.

As a buyer’s agent, it’s important to communicate this upfront to buyers because you want a plan in place if the seller says “no” or simply doesn’t respond. The buyer has a strong right of cancellation during the inspection period, but once that period expires, that’s it. There may be other contingencies within the contract, but the time to cancel for any reason – within the buyer’s sole discretion – is gone.

In some cases, a buyer hasn’t heard back from the seller, the end of the inspection period is fast approaching, and the buyer isn’t sure what to do. In this case, your buyer must make a decision: “Do I stay in the deal and potentially take the property “as is” without the requested repairs, or do I cancel before the inspection period ends?”

Assuming the seller does agree to a buyer’s repair request, their agreement should be written into the contract under the additional terms or as an addendum to the contract.

While it seems easy enough to jot something down, however, Realtors should understand the importance of the language used in this repair agreement – and they should also understand the potential liability they’re taking on if they take it upon themselves to draft this addendum.

Is the seller agreeing to fix an electrical problem? Great. But simply stating that the seller will do so is not adequately covering the parties. Far too often, calls to Florida Realtors Legal Hotline involve questions about the way in which the seller completed those agreed-upon repairs. Most of the time in these cases, the language used in the repair addendum didn’t address any repair standards, say what would happen if the seller didn’t make the repair at all, or outline what would happen if the seller’s repair fell below the buyer’s standards.

The Florida Realtors contracts that obligate sellers to make repairs contain additional language regarding repair standards as well as when the repairs should be made. This language isn’t in the FR/Bar AS IS contract.

An addendum that involves many repairs of varying degrees likely should be drafted by an attorney to ensure appropriate language is used to protect the buyer and seller.

Another example we hear about on the Legal Hotline? Buyers who want to add “appraisal gap” language. There is no appraisal-to-purchase price contingency in the body of the FR/Bar AS IS contract. Therefore, any language that intends to cover a buyer’s willingness to pay the difference between the purchase price and the appraisal is new language to this form contract. And, I will be blunt, it isn’t basic drafting. Depending on the buyer’s exact intent regarding language like this added to the contract, agents should advise their buyers to run any language by their attorney to ensure it covers the buyers’ wants.

I get it: Some Realtors feel that asking their customer to consult their own attorney is doing a disservice to the customer.

Unfortunately, we get lots of calls from panicked agents who say their deal is blowing up because language added to the contract insufficiently addressed whatever their issue is. Recognize your limitations in assisting buyers or sellers. It’s a good way to avoid problems later.

Meredith Caruso is Associate General Counsel for Florida Realtors
Note: Advice deemed accurate on date of publication

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