2012 VAR Standard Clauses - FINAL

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TABLE OF CONTENTS (click on topic or subsection to link to that page)

Agency Acknowledgement of Licensure, Ownership

Agency Disclosure

Appraisal Reimbursement for Appraisal

Contingencies Back‐up Offers – Non‐Contingent Backup

Contingency Upon Sale of Real Property

Sale of Purchaser’s Property

Third‐Party Approval

Income and Expense Statement for 1‐4 Unit Leased Property

Provision Regarding Proof of Certificate of Occupancy

Replacement Home for Seller

Financing / Escrow Escalation Clause

Like‐Kind Exchange Clause (1031 Exchange)

Seller Paying Closing Costs

Transfer of Deposit to New Purchase Contract (Inter‐office)

Home Inspection As‐Is Provision

Radon Test Clause – Alternate Language

Radon Contingency Addendum

Simple Inspection and Right to Terminate

Property / Legal Description Legal Description

Parcel Size

Miscellaneous Home Warranty Contract

For Sale By Owner

Settlement / Possession Settlement to Coincide

Risk Management Acknowledgements (not part of K) EMD Not Held by Agent

VAR Standard Clauses 2012

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AGENCY

Acknowledgements of Licensure, Ownership, etc. 1. LICENSEE BUYING AS PRINCIPAL

Seller acknowledges that the Purchaser is a licensed real estate broker/salesperson acting as a principal on his own behalf.

2. LICENSEE SELLING AS PRINCIPAL

Purchaser acknowledges that the Seller is a licensed real estate broker/salesperson acting as a principal on his own behalf.

3. SELLER'S RELATIONSHIP TO BROKER

Purchaser acknowledges that Seller is associated with, related by blood or marriage, or has a business relationship with the listing Broker.

4. PURCHASER'S RELATIONSHIP TO BROKER

Seller acknowledges that Purchaser is associated with, related by blood or marriage, or has a business relationship with the listing Broker.

Agency Disclosure Client acknowledges and agrees that Client has been advised of the benefits of [describe your advice here, subject examples: obtaining a survey, obtaining a home inspection, obtaining a termite and/or moisture inspection, buying the property sight unseen, etc.] by __________________________ [Listing Firm and Agent, Selling Firm and Agent] and that the Client has decided not to accept the advice and recommendation. Accordingly, Client agrees to release __________________________ [Listing Firm and Agent, Selling Firm and Agent] from any and all liability in connection with Client’s decision, and to hold harmless, defend and indemnify __________________________ [Listing Firm and Agent, Selling Firm and Agent] in connection therewith and from any and all claims, causes of action, demands, losses, costs, damages and expenses in any way arising from items or liabilities that would be revealed if Client followed __________________________ [Listing Firm and Agent, Selling Firm and Agent] advice and recommendation.


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APPRAISAL

Reimbursement for Appraisal In the event property does not appraise for Purchase Price and Seller elects not to reduce the purchase price to equal the appraised value, Seller agrees to reimburse Purchaser for the cost of the appraisal and home inspection within ___ days of receipt of Purchaser’s invoice.


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CONTINGENCIES

Back‐up Offers – Non‐Contingent Back‐ups Purchaser does hereby acknowledge that this Contract of Purchase is the “First Back‐up” which is inferior to the rights of another Contract of Purchase which is the “Primary”, previously accepted by the Seller from __________________dated_____________. The “First Backup” is contingent upon the “Primary” being lawfully terminated by a written release. Upon such termination of the Primary, the First Back up shall be in full force and effect. If the “Primary” is not terminated by ___________(time), ______________(date), the “First Back‐up” shall terminate and the earnest money deposit shall be returned to the Purchaser. Purchaser reserves the right to withdraw the “First Back‐up” at any time prior to the point where the “First Back‐up” becomes the “Primary” pursuant to these provisions and the earnest money deposit shall be returned to the Purchaser. Contingent Upon Sale of Real Property This Contract is contingent upon the sale and settlement of the Purchaser’s real property located at __________________________________________ (the “Contingency”) Purchaser agrees to list said property for sale with a licensed real estate broker within __________________ (___) calendar days from the date of the execution of this Contract and to make good faith efforts to market such property. Said property must be sold within _______________ (___) calendar days of this Contract and settlement must take place within ______________________ (___) calendar days of this Contract, or the Seller, at its option, may terminate this Contract by giving written notice to the Purchaser. If a bona fide non‐contingent offer (except for a financing contingency) is made on the Subject Property, the Purchaser shall have _____________________ (___) hours from written notification by Seller, excluding weekends and holidays, within which to remove the Contingency by (1) executing a written amendment to this Contract removing the Contingency; and, (2) if this Contract is contingent upon financing, by delivering to the Seller or the Seller’s broker, a letter from a lending institution that, in the opinion of the lender, the Purchaser has sufficient funds available to complete this transaction and is qualified for the proposed financing NOTWITHSTANDING the fact that the Purchaser has not sold and settled on the real property referenced above and might be liable for two loan payments concurrently.


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If the Purchaser fails to remove the Contingency within the time period specified above, this Contract shall be deemed terminated and the parties shall execute a written release. Upon the execution of such release, the earnest money deposit shall be refunded to the Purchaser. Sale of Purchaser's Property 1. WITH KICK‐OUT PROVISION This Contract of Purchase is contingent upon the sale of Purchaser's property at _________________________________________________________________ __________________________________________________________. Seller reserves the right to continue to market the subject property and to receive offers to purchase same. If the Seller accepts another offer to purchase the subject property as a "First Back‐up", Seller will provide Purchaser written notice that Seller has received another offer on the subject property and Purchaser has _____ hours from the date and time stated on said notice to waive the said contingency. Purchaser will, in addition to waiving this contingency, provide Seller with written evidence satisfactory to Seller that Purchaser can comply with all terms and conditions, including financing, of this Contract by settlement. In the event Purchaser does not timely respond to Seller as specified herein, this Contract of Purchase shall be null and void and the earnest money deposit shall be returned to the Purchaser. 2. WITHOUT KICK‐OUT PROVISION This Contract of Purchase is contingent upon Purchaser's receiving and accepting a Contract of Purchase for the sale of his property at ___________________________________________________________________ _________________________________________________________ on or before _________________, _____, at _______ ___.m. (the “Kick Out Date”). The Purchaser agrees to immediately execute a standard listing agreement to place his property for sale and to maintain said listing agreement until the Kick Out Date. If no Contract of Purchase is entered into by such the Kick Out Date, this Contract of Purchase shall automatically terminate and the earnest money deposit shall be returned to the Purchaser.


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Third‐Party Approval The obligations of the Purchaser are contingent upon approval of the terms of this Contract by: ____________________________________________________________ (specifically state who will approve) ____________________________________________________________ Purchaser shall diligently pursue this approval in good faith and, unless Seller or Seller's Agent is notified in writing to the contrary on or before (time and date), this contingency shall be deemed automatically satisfied and this Contract of Purchase shall be in full force and effect. Income and Expense Statement for 1‐4 unit Leased Property Study Period of Leases (multifamily):

Seller represents that the Property is subject to certain residential leases. Within five

(5) days from the date that this Contract is fully executed by the parties, Seller shall provide Purchaser copies of the following: (i) all leases and lease applications for each tenant; (ii) rent rolls or rental summary for the most recent twelve month period; (iii) a statement of all tenants’ security deposits; and (iv) a summary of any threatened or pending legal action or defaults by or against any tenant or the Seller. If Purchaser is not satisfied with its review of the aforementioned leases or information, Purchaser may terminate this Contract by written notice to Seller within five (5) days after receipt of said leases and information, and thereupon Purchaser’s deposit shall be refunded to Purchaser and the parties shall have no further obligation under the Contract. If Purchaser fails to terminate the Contract within five (5) days after receipt of said leases and information, then this contingency shall be deemed waived.

At settlement, Purchaser shall take title to the Property subject to the said leases and

the rights of parties in possession thereunder. Seller shall transfer and assign the said leases and all security deposits to Purchaser by separate assignment of leases prepared by Seller’s attorney. Purchaser shall not be responsible for collecting any past due sums owed to Seller prior to settlement.


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Provision regarding Proof of Certificate of Occupancy The Contract is subject to Seller providing Purchaser with a valid certificate of occupancy or a certificate of zoning compliance from the local governing authority that the Property is zoned for use as a [insert as applicable: single/two family residence, etc.]. If Seller is unable to provide Purchaser with said certificate within fifteen (15) days after this Contract is fully executed by the parties, then Purchaser may terminate the Contract by providing written notice to Seller, and thereupon Purchaser’s Deposit shall be refunded in full to Purchaser, and neither party shall have any further obligation hereunder.

[Note, can also substitute: that the Property’s finished attic [basement, bonus room, etc.] has been approved for use as part of the residence.] Replacement Home for Seller Seller’s duty to perform hereunder is contingent upon Seller contracting to purchase a suitable replacement home. In the event Seller has not contracted for the purchase of a suitable replacement home by 12:00 noon on _____________ (date and time) then Seller shall have the right to terminate this contract without further obligations and refund Purchaser’s deposit; provided, however, that if Seller does not exercise this right to terminate the contract in writing by 12:00 noon on ____________(same date as above) then this contingency shall be deemed waived and satisfied, and Seller shall be obligated to perform hereunder. Any and all “trigger” dates (e.g. home inspection, loan application, association disclosures, etc.) provided by this Contract shall run from (a) the date that Selling Firm is notified in writing by Listing Firm that Seller has contracted to purchase a suitable replacement home or (b) 12:00 noon on ____________(same date as above), whichever first occurs.


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FINANCING / ESCROW

Escalation Clause

If Seller receives one or more bona fide written offers to purchase the Property prior to acceptance of this Contract, then the Purchase Price shall be increased by ______________ ($_______) over the highest bona fide offer, net of concessions, received by Seller, not to exceed ______________ ($_______). The parties intend this Contract to be a binding contract, and not an offer to enter into a contract at a later date. The price determination will take place as set forth herein, but the fact that the price is not determined as of the time this Contract is fully executed by both parties shall not defeat the existence of this Contract. Listing firm shall provide Selling Firm with a copy of the highest bona fide purchase offer. Like‐Kind Exchanges: Sample provision for Seller entering into a 1031 Exchange: Seller may elect to include the sale of the Property in an IRS Section 1031 Like Kind Exchange (a tax‐deferred exchange). In the event Seller makes such an election, Purchaser agrees to execute such documents necessary to effectuate such an Exchange, but in no event shall such Exchange affect the terms of the transaction or Seller’s responsibilities to Purchaser under the Contract. Seller shall bear the sole costs as a result of this election. Sample provision for Purchaser entering into a 1031 Exchange: Purchaser may elect to include the purchase of the Property in an IRS Section 1031 Like Kind Exchange (a tax‐deferred exchange). In the event Purchaser makes such an election, Seller agrees to execute such documents necessary to effectuate such an Exchange, but in no event shall such Exchange affect the terms of the transaction or Purchaser’s responsibilities to Seller under the Contract. Purchaser shall bear the sole costs as a result of this election. Seller Paying Closing Costs

1. Seller agrees to pay the following itemized closing costs in connection with the settlement of this transaction:


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2. Seller agrees to pay up to the sum of $ ___________ [or _______% of the loan amount/ or purchase price] towards the closing costs incurred by the Purchaser in connection with transaction, including allowable prepaid items, discount points and other closing costs. (NOTE: It is advisable to check with each lender to determine allowable Seller concessions, the maximum amounts, and any specific wording a particular loan program requires.) Transfer of Deposit to New Purchase Contract (Inter‐office) _________________________ (Name of Purchaser) does hereby authorize and direct the escrow holder __________________________________(name of party or firm holding the escrow) to transfer, assign and to continue to hold as an earnest money deposit on the purchase of real property located at ________________________________________ in _______________________ (City or County), Virginia, certain funds in the amount of $__________________ ($_____________) which were placed in escrow to a contract to purchase real property located at __________________________________ (City or County), Virginia. Note: This clause applies only to inter‐office transfers and is to be used only after or in conjunction with the executed release of the first contract of purchase to which original deposit applies.


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HOME INSPECTION

“AS IS” provision: The parties acknowledge that the Property is sold in “AS IS” condition as determined as of the date of this Contract and Purchaser agrees to accept the Property at settlement in such condition. Seller makes no representation or warranty, express or implied, as to the condition of the Property, or any system, equipment or appliance therein. All clauses regarding any repairs to the Property by Seller or any representations or warranties relating to the physical condition of the Property by Seller (including without limitation, paragraphs 12, 14, 15, 17 and 22) are hereby deleted from the Contract and of no legal effect. Seller shall have no obligation to make repairs to the Property or any system, equipment or appliance therein, except to conform the Property to the condition as of the date of this Contract. If, at or prior to settlement, Seller refuses to repair any damage to the Property occurring after the date of this Contract, then Purchaser shall have the right to terminate this Contract by written notice to Seller and receive a refund of the Deposit, or waive the damage and proceed to settlement with no adjustment to the Purchase Price.


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Radon Test Clause – Alternate Language This contract is contingent until _______ (time) on ____________, 20__, upon the Purchaser, at Purchaser’s expense, having the Property inspected for the presence of radon by a testing firm listed with the U. S. Environmental Protection Agency (“EPA”) using an EPA‐approved screening test method. This contingency will terminate at the deadline unless the Purchaser delivers to the Seller a written and signed addendum stating that radon was found to be present at levels which exceed the action level established by the EPA and that such levels are unsatisfactory to the Purchaser, together with a copy of the radon inspection report. The Seller may, at the Seller’s option, within _____ (___) calendar days after receipt of the addendum, state in writing whether or not the Seller will correct the condition. If the Seller will correct the condition, the Seller shall furnish the Purchaser with certification from the inspecting company demonstrating that the condition has been remedied before the date of settlement. This certification must be delivered within 14 days after delivering to Purchaser or seller’s agreement to correct the condition. If the Seller will not correct the condition, the Purchaser shall have _______ (___) calendar days after notice from the Seller to remove this contingency and accept the radon condition or this contract shall terminate. The Parties agree to the execution of a written release, after which the earnest money deposit shall be returned to the Purchaser. Radon Contingency Addendum This Addendum, which is attached to and made a part of a Contract of Purchase by and between _____________________________(Seller) and _____________________(Purchaser) for Property located at____________________________________ and dated ____ provides: Purchaser, at its expense, will have the property inspected for the presence of radon by a testing firm listed with the Environmental Protection Agency, using as a minimum the charcoal canister testing method of the continuous working monitor. The inspection shall be completed and the Seller notified of the results within ____________ (___) calendar days of the Purchaser’s receipt of a fully executed copy of the Purchase Contract. If radon is found to be present at levels which exceed 4 pci/L (picocuries per liter), the action level established by the EPA, the Purchaser may void the Contract or ask that the Seller correct the condition and furnish the Purchaser with a certification demonstrating that the condition has been remedied to a level at or below the EPA action level. The re‐mediation shall be completed before the date of settlement or


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within ____________________ (___) days of ratification of the Purchase Contract, whichever shall occur first. If the Seller refuses to satisfactorily re‐mediate the radon level, the Purchaser may, at its option, terminate the Purchase Contract or waive this contingency by providing written notice to the Seller within ____________ (___) calendar days of the Seller’s refusal. In the event the Purchase Contract is terminated, ALL PARTIES, INCLUDING BROKERS, AGREE TO EXECUTE A WRITTEN RELEASE OF THE PURCHASE CONTRACT WHICH INCLUDES A RETURN OF ALL DEPOSIT MONIES TO THE PURCHASER.

PURCHASER DATE

PURCHASER DATE

SELLER DATE

SELLER DATE

Simple Inspection and Right to Terminate This Contract is contingent upon Purchaser being satisfied with the results of an inspection of the Property. Seller grants Purchaser ten (10) days from the date that this Contract is fully executed by the parties (the “Study Period”) to conduct such inspections of the Property as Purchaser deems necessary. If Purchaser is not satisfied with the results of said inspection, Purchaser may terminate this Contract by written notice to Seller within the Study Period. In such event, Purchaser’s deposit shall be refunded to Purchaser and the parties shall have no further obligation under the Contract. If Purchaser fails to terminate the Contract within the Study Period, this contingency shall be deemed waived.


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PROPERTY / LEGAL DESCRIPTION

Legal Description When a Contract of Purchase is being prepared by the REALTOR, great care must be given to making sure a complete and accurate legal description of the subject real property is used. If you have any questions about the accuracy of a particular legal description, you should consult an attorney at law. It is common, for example, to find a “Tax Map” reference used in a Contract of Purchase as the legal description. Many times, the “Tax Map” referenced is an old tax map and not the current tax map designation used by a particular locality. Other times, one will find the legal description listed as “Lot 25 of Section 3 of Holiday Acres Subdivision” when really the proper legal description is “Lot 25, Block B, Section 3 of Holiday acres Subdivision”. Make sure you put a complete and accurate legal description in the Contract of Purchase. If the so‐called “metes and bounds” description is to be used as the legal description, you are better off attaching a “Schedule A” referencing the legal description. This “Schedule A” should be the properly prepared legal description from the Seller’s deed, for example. The REALTOR should be extremely careful since the omission of any part of the legal description “100;E;55, etc.” can result in the legal description being totally wrong. It is recommended to you that more than a street address is necessary for a proper legal description to be placed in a Contract for Purchase. Again, if you have any questions, you should consult an attorney at law. Parcel Size

1. The obligations of the Purchaser are contingent upon the property conveyed hereby consisting of at least (acres) (square feet). 2. This is a sale in gross and not by the (acre) (square foot). 3. This is a sale by the (acre) (square feet) at the rate of $(amount) per (acre) (square feet) and the obligations of the Purchaser are contingent upon said property consisting of at least (acre) (square feet). In the event said property is less then the (acre) (square feet) referenced herein, Purchaser may (marked where indicated):


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_______A. Declare this Contract of Purchase null and void and all parties shall be released, and the earnest money deposit shall be returned after all parties execute a release agreement. _______B. Provide written notice to Seller that Purchaser hereby makes an offer to purchase the subject real property for the sum of $________ which offer must be accepted by Seller on or before ______________, 20_____, at ____________, ____.m., or this Contract of Purchase will be null and void. 4. Purchaser automatically waives this contingency unless Purchaser provides Seller written notice as provided herein on or before ________________, 20_____, at ____m. (NOTE: Paragraph 4 should be used in conjunction with paragraph 1 and 3, Paragraph 4 is not applicable to sales in gross as provided in paragraph 2.)


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MISCELLANEOUS

Home Warranty Contract

Seller agrees to furnish Purchaser a Home Warranty Contract to be effective as of the date of settlement, or as otherwise provided therein. The Home Warranty Contract shall be paid for by _________________________ and will be delivered to Purchaser at settlement or as otherwise provided therein.

For Sale By Owner

Purchaser is a party to a written brokerage agreement with Selling Firm. Seller agrees to pay Selling Firm a brokerage fee equal to _____% of the Purchase Price. Such brokerage fee is in addition to any other fees that may be paid to Selling Firm by Purchaser.


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SETTLEMENT / POSSESSION

Settlement to Coincide

Settlement on this Contract of Purchase shall coincide with settlement on a certain other Contract of Purchase for real property located at ________________________, upon which the subject Contract of Purchase is contingent. All parties agree to cooperate so that settlements pursuant to the said Contract of Purchase will occur simultaneously. or Settlement on this Contract of Purchase shall not take place until receipt of funds from the settlement pursuant to the another Contract of Purchase, for real property located at ____________________________________________ upon which the subject Contract of Purchase is contingent.


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RISK MANAGEMENT ACKNOWLEDGEMENTS

Earnest Money Deposit Not Held by Agent Purchaser acknowledges that _____________________________ is holding the earnest money deposit and that the Broker has no control over the disposition of funds in the event the transaction is not consummated. NOTE: Consult with your Broker before using this clause and make sure your client understands the ramifications of this action. Strike through any additional language in the contract which suggests that the Broker is holding the deposit.

Documents

2012 VAR Standard Clauses - FINAL