The Porch

Deed of Trust and the Other Guy, and Naked Rights

Deed of Trust and the Other Guy, and Naked Rights

We were talking the other day and a few folks had the impression the lender was the only party involved (other than themselves) in their mortgage security, and that the nice mortgage company would send back their title when they paid off the loan.

'Sort of sounds correct, doesn't it?

 

 

 

 

 

Illustration of the borrowers and the lender ... when the mortgage is paid off...under mortgage theory.

 

 

But there's another party involved whenever a Deed of Trust is used (and generally is used in most Utah transactions)...other than the mortgage lender.

The deed of trust is a mortgage instrument creating security and third party oversight.

When a debt is secured by a mortgage, the borrower delivers his promissory note and mortgage to the lender, who keeps them until the debt is paid.

But when a note is secured by a deed of trust, three parties are involved: the borrower (the trustor), the lender (the beneficiary), and the neutral third party (the other guy--the trustee).

The lender makes a loan to the borrowers, and the borrower give the lender a promissory note and a deed of trust. In the deed of trust document the borrower conveys title to the trustee, to be held in trust until the note is paid in full.

This could be considered a distinguishing feature of a deed of trust.

The deed of trust is recorded in the county where the property is located and a copy goes to the lender and the trustee for safekeeping.

This "title" the borrower gives to the trustee is sometimes referred to as a naked title...or a bare title.

It's naked or bare because as long as the borrower makes his payments, there's nothing the trustee can do with the "naked" or "bare" title because there are no rights in it -- it is naked. It is bare.

__

Almost sounds like real estate sex.

Mercy ........................

Trustor: One who creates the trust; the borrower.

Beneficiary:  One for whose benefit the trust is created; the lender in a deed of trust transaction.

Trustee:  One who holds property in trust for another party.

Naked Title: Title that lacks the rights and privileges generally associated with ownership.

From My Porch

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.
The Porch weblog and all contents herein are © 2009 Mike Ballif. All rights reserved.

 

 

Vertical Leases and Management Ratios

Vertical Leases and Management Ratios

'Thought I might cover a few random concepts that are of interest to me and sort of fun to re-study …. a bit more fun than reading about the economy....

Mercy...

Vertical Leases.

A lease doesn’t need be only on the use of the earth’s surface. We can also lease land that extends from the center of the earth skyward. Donald Trump has made some successful sky space leases you may have read about.

It is possible for one party to own surface rights, another company to perhaps own oil and gas, or mineral rights below the land, and an entirely different party to own the air rights

A few railroads have leased surface and air rights above their downtown tracks (underground) or otherwise, for the purpose of constructing high-rise office buildings...

******************************************

Management-Unit Ratios

In apartment management, a working rule of thumb is that an on-site manager can effectively manage 50 or 60 units by himself.

From about 60 to 100 or so units the manger needs a helper.

100-150 Units: In properties over 100 units one will generally find a husband-wife team and a helper—perhaps a fulltime custodian.

200 Units. Typically would have an onsite husband-wife team plus two fulltime assistants, hiring another full-time helper for each additional 50 or so apartments.

From My Porch

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.
The Porch weblog and all contents herein are © 2009 Mike Ballif. All rights reserved.

 

New Utah Law ... Minimum Charge For Escrow Services

On January 22, 2009 the Title and Escrow Commission in conjunction with the Utah State Insurance Department invoked a new rule:

Rule R592-13.  Minimum Charge For Escrow Services.

This new rule requires all title insurance agencies operating in the state of Utah to charge a uniform minimum fee for escrow services.

The fee aoumt is determined by the purchase price/ loan amount of the transaction and includes the combination of both the closing/ settlement fee and the document preparation fee.

These are the new rates, effective April 1, 2009:

The new minimum charge requirements will be applied as follows:

Purchase Price/ Loan Amount	Minimum Escrow Fee
$0 to $180,000.00	$150 per side
$180,000.01 to $250,000.00	$250 per side
$250,000.01 and above	$350 per side

Note this is a minimum fee.

*********************************************

Here's the rule as published by the insuracne commission,  or http://www.insurance.utah.gov/rules/ .... scroll to the bottom of the web page ...

R592. Insurance, Title and Escrow Commission (Effective 1-22-09)

R592-13 Minimum Charges for Escrow Services

R592-13-1. Authority.
This rule is promulgated by the Title and Escrow Commission
pursuant to the authority provided in Section 31A-2-404,
authorizing the Title and Escrow Commission to write rules, and
Section 31A-19a-209, authorizing rules to establish minimum
charges for escrow services.

R592-13-2. Purpose and Scope.
(1) The purpose of this rule is to establish minimum charges
for escrow services.
(2) This rule applies to all title insurers, agencies and
producers providing escrow services in Utah.

R592-13-3. Definitions.
In addition to the definitions of Sections 31A-1-301, 31A-2-
402,and 31A-19a-102, the following definitions shall apply for the
purpose of this rule:

(1) "Charge" means a dollar amount charged for a service
rendered by a title insurer, title agency, or title producer.

(2) "Minimum escrow fee" means the lowest amount that can be
charged for escrow settlement services that are rendered which
incorporates both the escrow closing charge and the basic
document preparation charge.

(3) "Pass through charges" means the actual and reasonable
charge or expense for services rendered that are not included in
the minimum escrow fee.

R592-13-4. Minimum Charge for Escrow Services.
(1) A title insurer, agency and producer providing escrow
services in Utah must not charge less than the minimum escrow fee
for each side of the transaction. The minimum escrow fee shall be
as follows:

Purchase Price/ Loan Amount	Minimum Escrow Fee
$0 to $180,000.00	$150 per side
$180,000.01 to $250,000.00	$250 per side
$250,000.01 and above	$350 per side

(a) As an example:

(i) On a real estate purchase of $100,000 the minimum
escrow fees would be as follows:
(A) $150 charged to the buyer;
(B) $150 charged to the seller.

(ii) On a refinance loan amount of $300,000 the minimum
escrow fee would be $350 charged to the borrower.
(2) All other charges or expenses must be actual and
reasonable passed through to the consumer.

R592-13-5. Penalties.
A person found, after a hearing or other regulatory process, to
be in violation of this rule shall be subject to penalties as
provided under Section 31A-2-308.

R592-13-6. Enforcement Date.
The commissioner will begin enforcing this rule 90 days from the
rule's effective date.

R592-13-7. Severability.
If any provision of this rule or the application thereof to any
person or circumstance is for any reason held to be invalid, the
remainder of the rule and the application of the provision to
other persons or circumstances shall not be affected thereby.

From My Porch

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

Utah's New REPC Section 19

Utah's New REPC Section 19.  Assignment has replaced Abrogation as the section contents.

There are two concepts between the old and new REPC, Section 19 dealing with assignment and abrogation.

The old REPC Section 19 was described the condition of abrogation, meaning the contract was considered "torn up" or "destroyed" after settlement and closing.  The contract doesn't mean anything and is considered non-existent at that point.

The new REPC Section 19 has replaced abrogation with No Assignment.

Utah Association of Realtor's legal counsel states: "The legal doctrine of abrogation and the merger of the deed and the contract are retained through the separate sentences that appear throughout the REPC, so we don't need a separate section on Abrogation."

In Section 19 No Assignment has replaced the abrogation statements.

Contracts are generally assignable, but with many exceptions. Buyers can still assign the REPC...but the Buyers have to get the Seller's consent.  But if the Buyer has a permissible transfer situation (owns the business entity that's purchasing the property after the assignment, or is part of the family partnership that will buy the property after assignment, etc.,) permission from the Seller is not necessary.

The inclusion of the phrase: "and/or assigns" earlier in the contract (pre-printed language) ...constitutes the Seller's consent only to a permissible assignment only.

Old REPC
Section 19:

19. ABROGATION. Except for the provisions of Sections 10.1, 10.2, 15 and 17 and express warranties made in this Contract, the provisions of this Contract shall not apply after Closing.

New REPC
Section 19:

19. NO ASSIGNMENT. The REPC and the rights and obligations of Buyer hereunder, are personal to Buyer. The REPC may not be assigned by Buyer without the prior written consent of Seller. Provided, however, the transfer of Buyer’s interest in the REPC to any business entity in which Buyer holds a legal interest, including, but not limited to, a family partnership, family trust, limited liability company, partnership, or corporation (collectively referred to as a “Permissible Transfer”), shall not be treated as an assignment by Buyer that requires Seller’s prior written consent. Furthermore, the inclusion of “and/or assigns” or similar language on the line identifying Buyer on the first page of the REPC shall constitute Seller’s written consent only to a Permissible Transfer.

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

This is the final installment of the Utah REPC changes.  The new REPC goes into force on January 1, 2009 exclusively, and the former REPC is officially discontinued.

There are a couple more sections in the new REPC that haven't changed from the former version and are likewise not covered here.

The State of Utah, Division of Real Estate, and the Utah Attorney General indicates all licensed agents in Utah are required to use the REPC.

 

 

 

From My Porch

 

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

Utah's New REPC Section 18

Utah's New REPC Section 18.  NOTICES

 

The new REPC spells out how to deliver paperwork in this section. Once you're under contract, here's how to deliver paperwork, addendums, and notices which are properly written, signed, and receipted.

This section also describes effective notice with new added Item C. Item C. states:  "received by the Buyer or the Seller, or their respective agent, or by the brokerage firm representing the Buyer or the Seller..."

The secretary at the front desk can now take delivery of a document.

The state made this provision available because the other side in a transaction sometimes cannot be located and a safety valve is needed where time clauses and deadlines are in force.

Needless to say all agents now need to develop a tight policy at the front desk for receiving documents.

Old REPC
Section 18:

18. NOTICES. Except as provided in Section 23, all notices required under this Contract must be: (a) in writing; (b) signed by the party giving notice; and (c) received by the other party or the other party's agent no later than the applicable date referenced in this Contract.

New REPC
Section 18:

18. NOTICES. Except as provided in Section 23, all notices required under the REPC must be: (a) in writing; (b) signed by the Buyer or Seller giving notice;  and (c) received by the Buyer or the Seller, or their respective agent, or by the brokerage firm representing the Buyer or Seller, no later than the applicable date referenced in the REPC.

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

Next up ...Section 19: No Assignment of REPC and Abrogation is gone...

 

 

From My Porch

 

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

Utah's New REPC Section 17

Utah's New REPC Section 17.  ATTORNEY FEES AND COSTS / GOVERNING LAW.

This updated section clarifies that Utah law governs the contract.

Old REPC
Section 17:

17. ATTORNEY FEES AND COSTS. In the event of litigation or binding arbitration to enforce this Contract, the prevailing party shall be entitled to costs and reasonable attorney fees. However, attorney fees shall not be awarded for participation in mediation under Section 15.

New REPC
Section 17:

17. ATTORNEY FEES AND COSTS/GOVERNING LAW. In the event of litigation or binding arbitration to enforce the REPC, the prevailing party shall be entitled to costs and reasonable attorney fees. However, attorney fees shall not be awarded for participation in mediation under Section 15. This contract shall be governed by and construed in accordance with the laws of the State of Utah. The provisions of this Section 17 shall survive Closing.

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

Next up ...Section 18: NOTICES.

 

 

From My Porch

 

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

Utah's New REPC Sections 11 - 16

Utah's New REPC Sections 11 - 16

Quick discussion, as the changes are few and minor in these sections:|

11. Final Pre-Settlement Walk-Through Inspection
12. Changes During Transaction
13. Authority of Signers
14. Complete Contract
15. Mediation
16. Default

These sections have only minor changes, if any.  The changes are mainly clarifying and break the text down into sections for better comprehension and ease of reading.  Here are the side by side sections:

 

 

Old REPC
Section 11:

WALK-THROUGH INSPECTION.  Before Settlement, Buyer may, upon reasonable notice and at a reasonable time, conduct a "walk-through" inspection of the Property to determine only that the Property is "as represented," meaning that the items referenced in Sections 1.1, 8.4 and 10.2 ("the items") are respectively present, repaired/changed as agreed, and in the warranted condition. If the items are not as represented, Seller will, prior to Settlement, replace, correct or repair the items or, with the consent of Buyer (and Lender if applicable), escrow an amount at Settlement to provide for the same. The failure to conduct a walk-through inspection, or to claim that an item is not as represented, shall not constitute a waiver by Buyer of the right to receive, on the date of possession, the items as represented.

 

New REPC
Section 11: 

 

FINAL PRE-SETTLEMENT WALK-THROUGH INSPECTION.

   11.1 Walk-Through Inspection. No earlier than seven (7) calendar days prior to Settlement, and upon reasonable notice and at a reasonable time, Buyer may conduct a final pre-Settlement walk-through inspection of the Property to determine only that the Property is "as represented," meaning that the items referenced in Sections 1.1, 1.2 and 8.1(b)(ii) ("the items") are respectively present, repaired or corrected as agreed. The failure to conduct a walk-through inspection or to claim that an item is not as represented shall not constitute a waiver by Buyer of the right to receive, on the date of possession, the items as represented. If the items are not as represented, Seller agrees to cause all applicable items to be corrected, repaired or replaced (the "Work") prior to the Settlement Deadline referenced in Section 24(d).

 

11.2 Escrow to Complete the Work. If, as of Settlement, the Work has not been completed, then Buyer and Seller agree to withhold in escrow at Settlement a reasonable amount agreed to by Seller, Buyer (and Lender, if applicable), sufficient to pay for completion of the Work. If the Work is not completed within thirty (30) calendar days after the Settlement Deadline, the amount so escrowed may, subject to Lender's approval, be released to Buyer as liquidated damages for failure to complete the Work. The provisions of this Section 11.2 shall survive Closing.

 

Old REPC
Section 12.

CHANGES DURING TRANSACTION. Seller agrees that from the date of Acceptance until the date of Closing, none of the following shall occur without the prior written consent of Buyer: (a) no changes in any existing leases shall be made; (b) no new leases shall be entered into; (c) no substantial alterations or improvements to the Property shall be made or undertaken; and (d) no further financial encumbrances to the Property shall be made.

New REPC
Section 12.

CHANGES DURING TRANSACTION. Seller agrees that from the date of Acceptance until the date of Closing, none of the following shall occur without the prior written consent of Buyer: (a) no changes in any leases, rental or property management agreements shall be made; (b) no new lease, rental or property management agreements shall be entered into; (c) no substantial alterations or improvements to the Property shall be made or undertaken; (d) no further financial encumbrances to the Property shall be made, and (e) no changes in the legal title to the Property shall be made.

*********************

Old REPC
Section 13.

AUTHORITY OF SIGNERS. If Buyer or Seller is a corporation, partnership, trust, estate, limited liability company, or other entity, the person executing this Contract on its behalf warrants his or her authority to do so and to bind Buyer and Seller.

New REPC
Section 13.

AUTHORITY OF SIGNERS. If Buyer or Seller is a corporation, partnership, trust, estate, limited liability company or other entity, the person signing the REPC on its behalf warrants his or her authority to do so and to bind Buyer and Seller. 

*********************

Old REPC
Section 14.

COMPLETE CONTRACT. This Contract together with its addenda, any attached exhibits, and Seller Disclosures, constitutes the entire Contract between the parties and supersedes and replaces any and all prior negotiations, representations, warranties, understandings or contracts between the parties.   This Contract cannot be changed except by written agreement of the parties.

 

New REPC
Section 14.

COMPLETE CONTRACT. The REPC together with its addenda, any attached exhibits, and Seller Disclosures (collectively referred to as the "REPC"), constitutes the entire contract between the parties and supersedes and replaces any and all prior negotiations, representations, warranties, understandings or contracts between the parties whether verbal or otherwise. The REPC cannot be changed except by written agreement of the parties.

*********************

Old REPC
Section 15.

15. DISPUTE RESOLUTION. The parties agree that any dispute, arising prior to or after Closing, related to this Contract (check applicable box) [ ] SHALL [ ] MAY AT THE OPTION OF THE PARTIES first be submitted to mediation. If the parties agree to mediation, the dispute shall be submitted to mediation through a mediation provider mutually agreed upon by the parties. Each party agrees to bear its own costs of mediation. If mediation fails, the other procedures and remedies available under this Contract shall apply. Nothing in this Section 15 shall prohibit any party from seeking emergency equitable relief pending mediation.

New REPC
Section 15.

15. MEDIATION. Any dispute relating to the REPC arising prior to or after Closing: [ ] SHALL [ ] MAY AT THE OPTION OF THE PARTIES first be submitted to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The parties to the dispute must agree before any settlement is binding. The parties will jointly appoint an acceptable mediator and share equally in the cost of such mediation. If mediation fails, the other procedures and remedies available under the REPC shall apply. Nothing in this Section 15 prohibits any party from seeking emergency legal or equitable relief, pending mediation. The provisions of this Section 15 shall survive Closing.

 

*********************

Old REPC
Section 16.

DEFAULT. If Buyer defaults, Seller may elect either to retain the Earnest Money Deposit as liquidated damages, or to return it and sue Buyer to specifically enforce this Contract or pursue other remedies available at law. If Seller defaults, in addition to return of the Earnest Money Deposit, Buyer may elect either to accept from Seller a sum equal to the Earnest Money Deposit as liquidated damages, or may sue Seller to specifically enforce this Contract or pursue other remedies available at law. If Buyer elects to accept liquidated damages, Seller agrees to pay the liquidated damages to Buyer upon demand. It is agreed that denial of a Loan Application made by the Buyer is not a default and is governed by Section 2.3(b).

New REPC
Section 16.

DEFAULT. 16.1 Buyer Default. If Buyer defaults, Seller may elect one of the following remedies: (a) cancel the REPC and retain the Earnest Money Deposit, or Deposits, if applicable, as liquidated damages; (b) maintain the Earnest Money Deposit, or Deposits, if applicable, in trust and sue Buyer to specifically enforce the REPC; or (c) return the Earnest Money Deposit, or Deposits, if applicable, to Buyer and pursue any other remedies available at law. 

16.2 Seller Default. If Seller defaults, Buyer may elect one of the following remedies: (a) cancel the REPC, and in addition to the return of the Earnest Money Deposit, or Deposits, if applicable, Buyer may elect to accept from Seller, as liquidated damages, a sum equal to the Earnest Money Deposit, or Deposits, if applicable; or (b) maintain the Earnest Money Deposit, or Deposits, if applicable, in trust and sue Seller to specifically enforce the REPC; or (c) accept a return of the\ Earnest Money Deposit, or Deposits, if applicable, and pursue any other remedies available at law. If Buyer elects to accept liquidated damages, Seller agrees to pay the liquidated damages to Buyer upon demand.

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

Next up ...Section 17: ATTORNEY FEES AND COSTS/GOVERNING LAW and Section 18: NOTICES.

 

 

From My Porch

 

 

 

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

Utah's New REPC Section 10. Condition of the Property and Seller's Warranties

Utah's New REPC Section 10. 

***********************************

10. HOME WARRANTY PLAN / AS-IS CONDITION OF PROPERTY. 

 

Discussion.

The form has changed a little bit, and the Seller's warranties about the condition of the property have changed a lot.  Essentially the Seller is no longer personally obligated to warranty that all the systems are functioning and all features are in their proper functioning state.

The Buyer can obviously still ask the Seller to repair a defect or correct a situation as a condition of the purchase; and the Seller can agree or disagree.  But the property is now sold as is. 

The seller is required to fully disclose all facts known by the Seller, latent or obvious.

The Buyer likewise has a period of time that can be used to thoroughly and completely inspect the property.

There's not much change in the Home Warranty provisions. Sections 10.2 and 10.3 survive Closing.

... and here are Section 10's -- beginning with the new REPC and followed by the old REPC:

 

new REPC:

10. HOME WARRANTY PLAN / AS-IS CONDITION OF PROPERTY.

10.1 Home Warranty Plan.A one-year Home Warranty Plan [ ] WILL [ ] WILL NOT be included in this transaction. If  included, the Home Warranty Plan shall be ordered by [ ] Buyer [ ] Seller and shall be issued by a company selected by [ ] Buyer [ ] Seller. The cost of the Home Warranty Plan shall not exceed $ ____ and shall be paid for at Settlement by [ ] Buyer [ ] Seller.

10.2 Condition of Property/Buyer Acknowledgments. Buyer acknowledges and agrees that in reference to the physical condition of the Property: (a) Buyer is purchasing the Property in its “As-Is” condition without expressed or implied warranties of any kind; (b) Buyer shall have, during Buyer’s Due Diligence as referenced in Section 8.1, an opportunity to completely inspect and evaluate the condition of the Property; and (c) if based on the Buyer’s Due Diligence, Buyer elects to proceed with the purchase of the Property, Buyer is relying wholly on Buyer’s own judgment and that of any contractors or inspectors engaged by Buyer to review, evaluate and inspect the Property.

10.3 Condition of Property/Seller Acknowledgments. Seller acknowledges and agrees that in reference to the physical condition of the Property, Seller agrees to: (a) disclose in writing to Buyer defects in the Property known to Seller that materially affect the value of the Property that cannot be discovered by a reasonable inspection by an ordinary prudent Buyer; (b) carefully review, complete, and provide to Buyer a written Seller property condition disclosure as stated in section 7(a); and (c) deliver the Property to Buyer in substantially the same general condition as it was on the date of Acceptance, as defined in Section 23, ordinary wear and tear excepted. The provisions of Sections 10.2 and 10.3 shall survive Closing.

 

old REPC:

10. SELLER WARRANTIES & REPRESENTATIONS.

10.1 Condition of Title. Seller represents that Seller has fee title to the Property and will convey good and marketable title to Buyer at Closing by general warranty deed. Buyer agrees, however, to accept title to the Property subject to the following matters of record: easements, deed restrictions, CC&R’s (meaning covenants, conditions and restrictions), and rights-of-way; and subject to the contents of the Commitment for Title Insurance as agreed to by Buyer under Section 8. Buyer also agrees to take the Property subject to existing leases affecting the Property and not expiring prior to Closing. Buyer agrees to be responsible for taxes, assessments, homeowners association dues, utilities, and other services provided to the Property after Closing. Except for any loan(s) specifically assumed by Buyer under Section 2.1(c), Seller will cause to be paid off by Closing all mortgages, trust deeds, judgments, mechanic's liens, tax liens and warrants. Seller will cause to be paid current by Closing all assessments and homeowners association dues.

10.2 Condition of Property. Seller warrants that the Property will be in the following condition ON THE DATE SELLER DELIVERS PHYSICAL POSSESSION TO BUYER:
(a) the Property shall be broom-clean and free of debris and personal belongings. Any Seller or tenant moving-related damage to the Property shall be repaired at Seller's expense;
(b) the heating, cooling, electrical, plumbing and sprinkler systems and fixtures, and the appliances and fireplaces will be in working order and fit for their intended purposes;
(c) the roof and foundation shall be free of leaks known to Seller;
(d) any private well or septic tank serving the Property shall have applicable permits, and shall be in working order and fit for its intended purpose; and
(e) the Property and improvements, including the landscaping, will be in the same general condition as they were on the date of Acceptance.

10.3 Home Warranty Plan.The “Home Warranty Plan” referenced in this Section 10.3 is separate from the warranties provided by Seller under Sections 10.1 and 10.2 above. (Check applicable boxes): A one-year Home Warranty Plan [ ] WILL [] WILL NOT be included in this transaction. If included, the Home Warranty Plan shall be ordered by [ ] Buyer [ ] Seller and shall be issued by a company selected by [ ] Buyer [ ] Seller. The cost of the Home Warranty Plan shall not exceed $_______ and shall be paid for at Settlement by [ ] Buyer [ ] Seller.

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

Next up ...Section 17: ATTORNEY FEES AND COSTS/GOVERNING LAW and Section 18: NOTICES.

 

From My Porch

Mike B. Class Star®

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

 

 

Utah's New REPC Section 9. Addenda

REPC Section 9. Addenda

Utah's New REPC Section 9.

Section 9 is re-named from ADDITIONAL TERMS to ADDENDA.

There is a bit of rearrangment of the list of addendum names..and the Assumption Addendum is gone.   Its effect is treated elsewhere.

Here is the text from both the new and old REPC Section 9.

 

New ...

 

9. ADDENDA. There [ ] ARE [ ] ARE NOT addenda to the REPC containing additional terms. If there are, the terms of the following addenda are incorporated into the REPC by this reference: [ ] Addendum No. ________ [ ] Seller Financing Addendum [ ] FHA/VA Loan Addendum [ ] Lead-Based Paint Disclosure & Acknowledgement in some transactions this disclosure is required by law) [ ] Other (specify) ______ .

 

 

Old ...

9. ADDITIONAL TERMS. There [ ] ARE [ ] ARE NOT addenda to this Contract containing additional terms. If there are, the terms of the following addenda are incorporated into this Contract by this reference: [ ] Addendum No.________ [ ] Seller Financing Addendum [ ] FHA/VA Loan Addendum [ ] Assumption Addendum [ ] Lead-Based Paint Disclosure & Acknowledgement (in some transactions this disclosure is required by law) [ ] Lead-Based PaintAddendum (in some transactions this addendum is required by law) [ ] Other (specify)_______________ .

 

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

 

Next up ...Section 10.2. Condition of The Property

 

From My Porch

 

 

 

Mike B. Class Star®

 

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.

 

 

Utah's New REPC Section 8. Buyer's Due Diligence

REPC Section 8. Buyer's Due Diligence

New Section 8.  Discussion....

All the Buyer's contingencies have been re-located to the new Section 8.  These are the due diligence items, such as the right to cancel, approval of seller disclosures, tests of the property and condition of the property, appraisal condition, financing considerations and "subject-to's" of the old REPC.

Additionally, the new REPC uses drop dead or hard-coded dates rather than "slippery dates" e.g. provisional dates.  The drop dead dates streamline the item or process to simply be completed by the date.  Period.  This is in contrast to the old REPC where dates were provisional, such as “no later than three calendar days after expiration of the ....... (Condition).

The new REPC's hard-coded or drop dead dates now govern the completion of Seller Disclosure,  Buyer's Due Diligence, and Financing and Appraisal due dates.

Discussion ...

8.1a  Due Diligence Condition.

This section presents a list of items about the property to highlight and remind the Buyer of factors affecting the property such as HOA conditions, flood insurance, square footage, etc. and to especially alert the Buyer to situations that might not be initially considered, or could be overlooked, including sex offenders that might be living in the neighborhood.  Utah doesn't presently have a law that requires convicted sex offenders to inform the neighbors.

This list of items pertinent to the sale is public knowledge.  The burden of Due Diligence is on the Buyer, rather than upon the Seller or the real estate agents.

A new sentence has also been added: "Buyer agrees to pay for any damage to the Property resulting from any such inspections or tests during the Due Diligence."

 

New REPC actual text:  ----------------------------------------

8. BUYER’S CONDITIONS OF PURCHASE.

8.1 DUE DILIGENCE CONDITION. Buyer's obligation to purchase the Property: [ ] IS [ ] IS NOT conditioned upon Buyer’s Due Diligence as defined in this Section 8.1(a) below. This condition is referred to as the “Due Diligence Condition.” If checked in the affirmative, Sections 8.1(a) through 8.1(c) apply; otherwise they do not.

(a) Due Diligence Items. Buyer’s Due Diligence shall consist of Buyer’s review and approval of the contents of the Seller Disclosures referenced in Section 7, and any other tests, evaluations and verifications of the Property deemed necessary or appropriate by Buyer, such as: the physical condition of the Property; the existence of any hazardous substances, environmental issues or geologic conditions; the square footage or acreage of the land and/or improvements; the condition of the roof, walls, and foundation; the condition of the plumbing, electrical, mechanical, heating and air conditioning systems and fixtures; the condition of all appliances; the costs and availability of homeowners’ insurance and flood insurance, if applicable; water source, availability and quality; the location of property lines; regulatory use restrictions or violations; fees for services such as HOA dues, municipal services, and utility costs; convicted sex offenders residing in proximity to the Property; and any other matters deemed material to Buyer in making a decision to purchase the Property. Unless otherwise provided in the REPC, all of Buyer’s Due Diligence shall be paid for by Buyer and shall be conducted by individuals or entities of Buyer's choice. Seller agrees to cooperate with Buyer’s Due Diligence. Buyer agrees to pay for any damage to the Property resulting from any such inspections or tests during the Due Diligence.

(b) Buyer’s Right to Cancel or Resolve Objections. If Buyer determines, in Buyer’s sole discretion, that the results of the Due Diligence are unacceptable, Buyer may either: (i) no later than the Due Diligence Deadline referenced in Section 24(b), cancel the REPC by providing written notice to Seller, whereupon the Earnest Money Deposit shall be released to Buyer without the requirement of further written authorization from Seller; or (ii) no later than the Due Diligence Deadline referenced in Section 24(b), resolve in writing with Seller any objections Buyer has arising from Buyer’s Due Diligence.

(c) Failure to Cancel or Resolve Objections. If Buyer fails to cancel the REPC or fails to resolve in writing any objections Buyer has arising from Buyer’s Due Diligence, as provided in Section 8.1(b), Buyer shall be deemed to have waived the Due Diligence Condition.

 

 

---------------------------------------------------------------------------------------------------

Discussion...

8.2 Appraisal Condition.  

Appraisal:  The old REPC stated...once the Buyer received the appraisal, the Buyer had three days to get the appraisal to the Seller and to cancel based upon the appraisal if desired.  The Buyer had to cancel within three days -- a "slippery" date discussed earlier.

The new REPC says that by the Financing and Appraisal deadline date, if the Buyer wishes to cancel based upon the appraisal, then the Buyer will do so in writing, providing a copy of the appraisal, and by the Financing and Appraisal drop dead date.  Period.  The date is hard-coded.

Additionally under this new provision the broker may release the earnest money to the Buyer without the Seller's signature.

New REPC actual text: ------------------------------

8.2 APPRAISAL CONDITION. Buyer's obligation to purchase the Property: [ ] IS [ ] IS NOT conditioned upon the Property appraising for not less than the Purchase Price. This condition is referred to as the “Appraisal Condition.” If checked in the affirmative, Sections 8.2(a) and 8.2(b) apply; otherwise they do not.

(a) Buyer’s Right to Cancel. If after completion of an appraisal by a licensed appraiser, Buyer receives written notice from the Lender or the appraiser that the Property has appraised for less than the Purchase Price (a “Notice of Appraised Value”), Buyer may cancel the REPC by providing written notice to Seller (with a copy of the Notice of Appraised Value) no later than the Financing & Appraisal Deadline referenced in Section 24(c); whereupon the Earnest Money Deposit shall be released to Buyer without the requirement of further written authorization from Seller.

(b) Failure to Cancel. If the REPC is not cancelled as provided in this section 8.2, Buyer shall be deemed to have waived the Appraisal Condition.

 

---------------------------------------------------------------------------------------------------------------

Discussion...

8.3 Financing Condition. 

In new Section 8.3.a Buyer's Right to Cancel Before the Hard-Coded Date; a significant change in the new REPC gives the Buyer some new latitude.  The Buyer can cancel before the Financing and Appraisal deadline if the Buyer is not satisfied with the financing provisions and in the Buyer's sole discretion. Period. This means the Buyer can cancel if he or she simply does not like the terms of the financing.

The Loan Denial Letter in the old REPC is gone.  But again, Buyer’s cancellation must occur in writing before the hard-coded Financing and Appraisal Deadline.

With cancellation under this provision the Broker can release the earnest money to the Buyer without the Seller's signature.

In new Section 8.3.b Buyer's Right to Cancel After the Hard-Coded Date;  the REPC can be cancelled by Seller or Buyer after the Financing and Appraisal hard-coded date if the Buyer's financing fails.  Seller and Buyer agree to liquidated damages in the amount of the Earnest Money deposit, and the broker may release the Earnest Money deposit to the Seller without the Buyer's signature.

New REPC actual text: --------------------------------

8.3 FINANCING CONDITION. Buyer’s obligation to purchase the property: [ ] IS [ ] IS NOT conditioned upon Buyer obtaining the Loan referenced in Section 2(b). This condition is referred to as the “Financing Condition.” If checked in the affirmative, Sections 8.3(a) and 8.3(b) apply; otherwise they do not. If the Financing Condition applies, Buyer agrees to work diligently and in good faith to obtain the Loan.

(a) Buyer’s Right to Cancel Before the Financing & Appraisal Deadline. If Buyer, in Buyer’s sole discretion, is not satisfied with the terms and conditions of the Loan, Buyer may cancel the REPC by providing written notice to Seller no later than the Financing & Appraisal Deadline referenced in Section 24(c); whereupon the Earnest Money Deposit shall be released to Buyer without the requirement of further written authorization from Seller.

(b) Buyer’s Right to Cancel After the Financing & Appraisal Deadline. If after expiration of the Financing & Appraisal Deadline referenced in Section 24(c), Buyer fails to obtain the Loan, meaning that the proceeds of the Loan have not been delivered by the Lender to Seller or to the escrow/closing office as required under Section 3.5 of the REPC, then Buyer or Seller may cancel the REPC by providing written notice to the other party; whereupon the Earnest Money Deposit, or Deposits, if applicable (see Section 8.4 below), shall be released to Seller without the requirement of further written authorization from the Buyer. In the event of such cancellation, Seller agrees to accept as Seller’s exclusive remedy, the Earnest Money Deposit, or Deposits, if applicable, as liquidated damages. Buyer and Seller agree that liquidated damages would be difficult and impractical to calculate, and the Earnest Money Deposit, or Deposits, if applicable, is a fair and reasonable estimate of Seller’s damages in the event Buyer fails to obtain the Loan.

 

 

 

 

------------------------------------------------------------------------------------------------

 

 

Discussion

8.4 ADDITIONAL EARNEST MONEY DEPOSIT

Where additional earnest money may be a consideration and needs to be addressed, this new provision is now available.

New REPC actual text: ------------------------------------

8.4 ADDITIONAL EARNEST MONEY DEPOSIT. If the REPC has not been previously canceled by Buyer as provided in Sections 8.1, 8.2 or 8.3(a), then no later than the Due Diligence Deadline referenced in Section 24(b), or the Financing & Appraisal Deadline referenced in Section 24(c), whichever is later, Buyer: [ ] WILL [ ] WILL NOT deliver to the Buyer’s Brokerage, an Additional Earnest Money Deposit in the amount of $_________________. The Earnest Money Deposit and the Additional Earnest Money Deposit, if applicable, are sometimes referred to herein as the “Deposits”. The Earnest Money Deposit, or Deposits, if applicable, shall be credited toward the Purchase Price at Closing.

 

 

I’m remarking on the new REPC changes as I see them. This isn't legal advice.

------------------------------------------------------------------------------------------------

 

Next up ...Section 10.2. Condition of The Property

 

From My Porch

Mike B. Class Star®

 

ClassStar® offers two, 3-hour core courses. Your business and referrals are appreciated.

The Porch weblog and all contents herein are © 2008 Mike Ballif. All rights reserved.