Contract Tips

This page will have a list of different sales contract tips.

 

Subject to Finance Contract (SCFR 310)    SCR 310 contract

  • Be sure all changes on contract have Initials and Dates on a Contract.

  • Be sure the contract has a NOTICE address for the buyer and the seller. Typically, this is the address for the listing agent and buyer agent -- not the specific buyer and seller address.

  • Due Diligence contracts are best for all parties:
    • The buyer has a certain amount of time to perform all inspections and get out of the contract if they don't like something.
    • The seller after the certain length of time for the buyer to perform all inspections that they want can feel good that the contract is going to close
    • Also, the seller should receive a termination fee if the buyer decides to terminate the contract -- this fee is to reward the seller for keeping the house off the market during the due diligence time.

  • If the contract is a Repair Procedure contract, be aware that the seller only has to repair anything that isn't working to a state where it is working --- only covers roof is there is a leak and only to fix the leak. Fogged windows do NOT fall under the Repair Procedure.

  • If The contract is "as is" contract, be careful about the Cl-100 paragraph. If this paragraph is checked that the contract is contingent upon the CL-100, the buyer can still get out of the contract if seller is not willing to make any necessary repairs to give a clear CL-100. Typically, the "as is" contract would not be contingent on a CL-100.

  • All days mentioned in this contract are calendar days.

Earnest Money 

  • Earnest money should never be over $7500 -- why?  because if there is a dispute between buyer and seller as to gets the earnest money, one can take it to small claims court if the amount is under $7,500. Otherwise, one has to get involved in the big courts.

  • A reminder that earnest money cannot be returned to the Buyer or the Seller without both parties agreeing or court order

How to terminate a Subject to Finance Contract

  • Release of Contract -- both parties agree to the release -- this form states who gets the earnest money and both parties are released of any liability to the transaction.

  • Notice of Termination -- this is typically used with a Due Diligence contract -- this form simply terminates the contract -- does not release the earnest money or liability.  

  • Disbursement Form -- this form is used in connection with a Notice of Termination --- this form is simply to state who gets the earnest money.