For you local NC agents that haven't yet taken your CE class to get up to speed on this new contract, I highly encourage you to do so! This is going to change the game in a lot of ways. Here are a few highlights as to what the new changes are:
- Now we have a Due Diligence period and Due Diligence Fee
- The Due Diligence fee is held by the "SELLER", (unless all parties agree to change that, per the contract, the seller holds the Due Diligence fee)
- No appraisal contingency any longer on the contract
- No Loan contingency any longer on the contract
- Basically the buyer will have to agree to earnest money and due diligence money. Due Diligence fee is NON REFUNDABLE
- Due Diligence fee can be zero, but seller might not be likely to take it.
- New contract makes the seller waive their rights to sue the buyer if they breach contract. All they get is the Due Diligence and earnest money but that's it.
Buyers Right to Terminate: Buyer can terminate the contract for any reason or no reason. If they do so during the Due Diligence period, then all the buyer loses is the due diligence fee and the earnest money can be returned. If they do so after, then they lose both earnest money and due diligence fee.
Basically, if the buyer wants to cancel at any time, they can!
If the buyer closes, just like the earnest money was a credit at closing, so will the due diligence be.
Now, if the seller breaches, then both the due diligence and the earnest money can be returned in addition to all reasonable costs that have been incurred by the buyer.
The contract also lists the settlement date but in addition address the Closing Date. The settlement date is when the papers are signed, the Closing date is when the loan funds.
Also, Buyer CANNOT get keys until the loan has been recorded (unless a buyers occupancy agreement has been completed and listed in the contract that there is one).
If there were any questions before, the range/oven/stove is considered a fixture and listed in the contract as such
IT IS SO IMPORTANT THAT BEFORE YOU WRITE A CONTRACT, YOU NEED TO BE TALKING TO YOUR LENDER. ASK THEM WHAT IS A REASONABLE TIMEFRAME FOR THE DUE DILLIGENCE PERIOD. THESE CONTRACTS ARE NO LONGER ALLOWING FOR LOAN CONTINGENCIES SO BUYERS CAN LOSE MONEY IF THEY ARE NOT A STRONG LOAN. STRONG RELATIONSHIPS WITH EDUCATED LENDERS IS KEY TO MAKEING THIS ALL WORK!
No longer does the loan information listed on the contract make it a condition of closing. It is merely for informational purposes now.
Sellers are also responsible to supply their previous title insurance information to the buyer so that a reissue rate on insurance can be given to the buyers! This is wonderful!
And finally, there is an automatic 14 day extension built into the contract. No longer will there be fines and penalties based on how many days they are late. Now, with FAIRWAY, we can close a loan in 14 days so this wouldn't apply to us but for the lenders that take 45-60 days to close a loan, this could be very helpful! :-)
If you would like more information on this new contract or have questions in general, give me a call and we can discuss it further.
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