NEW California 2014 RPA Presented by: KEVIN HALL Broker Associate at Keller Williams Realty, Gary Kent Team & Instructor @ PALOMAR COLLEGE 760-758-5370 [email protected] Course Material Available here: www.garykent.com/2014/10/02/new-rpa RESIDENTIAL PURCHASE AGREEMENT (RPA) Highlights:
IF IT IS BLUE... it is NEW Assumptions: a. Presenting to Real Estate Practice students b. You have access to CAR.ORG and you are familiar with and using Zipforms c. Remember, Addendum "adds to" and
Amendment "changes" d. This is only a brief overview of the changes RESIDENTIAL PURCHASE AGREEMENT (RPA) Highlights: e. I'm not licensed to give legal or tax advice f. My advice, read it yourself, then re-read it. Take a class on it and then take another class on it. Talk to everyone in your industry, not just brokers, but your escrow, title, lenders, attorneys and qualified intermediaries (1031 QI) for their take on it.
g. This will be a "generational" change to real estate agents, just as the change from passive to active contingency made a landmark change in how real estate is done. RPA CHANGES Top Ten 1. Numbering system is changed - All contractual terms are moved forward, earlier in the contract. Table of contents will be automatically added to the RPA (optional now)
2. RPA will now be 10 pages and BIA will now be only 1 page RPA CHANGES Top Ten 3. New form called the Possible Representation of More than One Buyer or Seller - Disclosure and Consent (PRBS) takes the place of the DA (Disclosure and Consent For Representation of More Than One Buyer or Seller. 4. AD and PRBS will auto open with the RPA
5. Zipform will now automatically add a form if you check it in the RPA RPA CHANGES Top Ten 6. Some boxes will limit you to one choice ie: date or # of days in COE, Agency Confirmation 7. Overflow Addendum, allows you to start typing in the other terms box and if you run over will auto fill in an automatic addendum and attaches it to the RPA
RPA CHANGES Top Ten 8. Contingency removal is still active. 9. Removed several "Gotcha" NIGYYSOB" Including a big change to the Loan & Appraisal contingency 10. Wood Destroying Pest aka Termite Report (WPA) goes away and is no longer prenegotiated in the contract. RPA HIGHLIGHTS DATE has changed from right to left - now called
"Date Prepared" (still use this as the reference on counter offers). #1E - Buyer and Seller are now called "Parties" (Brokers ARE NOT Parties to the contract) #2B - Important to have agency information correct here, otherwise generate an Agency Confirmation (AC) # 2C - New name for DA form - PRBS RPA HIGHLIGHTS #3A - Default is to "electronically" send the
deposit (Remember when we used to call this an "Offer to purchase and deposit receipt). Move is away from trust fund handling. #3C - All Cash Offer is moved up into finance terms ( but it stills means the buyer can and will close with cash). #3F - Balance of Down Payment now "pursuant to Escrow Holder instructions." RPA HIGHLIGHTS #4D3- FHA/ VA Amendatory clause FVAC auto added to
the contract if FHA/VA financing (avoids trying to get it later) #3J1 - Deals with qualifying rate instead of start rate on ARMs (holds the buyer and lender to base prequalification on real rates, not teaser rates). #3J2-Loan Contingency is now removed fully from Appraisal Contingency. Don't remove Appraisal Contingency thinking that if it doesn't appraise you can back out even if the client would otherwise qualify. RPA HIGHLIGHTS #3J3 - Until Funding is removed as an option
(extend days longer if necessary) #3J5- Excess credits are not grounds for automatic price reduction, parties agree to disclose all credits to lenders. #3K - Buyer must pursue financing listed in the contract. Seller does not have to cooperate with alternative finance option. RPA HIGHLIGHTS #4. Contingency on sale of other property, (COP) is now based solely on the buyer, if the seller needs it the listing agent should
counter with it (new seller based form on finding suitable property). #5. Addendum and Advisories: Wood Destroying Pest Addendum WPA is NO LONGER LISTED - Must be added if wanted or dealt with during inspection period. WPA is still a form and can still be added. Request for repairs (RR) will have WPA verbiage, seller's response is called the Seller Response and Buyer's Reply to Repair Request (RRRR). #6. Other Terms - will auto fill overflow text in a new addendum (be careful, this is no time to start pretending to be an attorney).
RPA HIGHLIGHTS #7A. Allocation of costs focuses on requested reports, it does not identify who will be responsible for repairs, that is moved to the RR. - NOTE: SEPTIC, WELL & WPA, has been removed from the checklist. NHD is default to statutory reports, need to check to add environmental and tax reports. #7B - Adds CO detectors and makes some other changes including possible government inspections #7C(1)(c) Requires all parties to sign and return Escrow instructions in 5 or _ days (VERY KEY ADDITION, REMOVES
A FOOT-DRAGGING OPPORTUNITY). RPA HIGHLIGHTS #7D4 - (Required) now makes it the seller's responsibility for statutory HOA docs (and to put money in escrow to get them - para 20a) #7D5 - (Requested) now optional who pays for "other requested" HOA docs #7D9 - option for the buyer to waive Home Owner Warranty
RPA HIGHLIGHTS #8 - ITEMS INCLUDED AND EXCLUDED ( Greatly Expanded) #8B 2,3 & 4 makes added options for the included personal property #8C - fine tunes what is to be excluded and the condition to be left behind - and what to do with brackets. RPA HIGHLIGHTS #9C - Seller remaining in possession, new
verbiage and options to add other forms to identify change from seller to tenant, etc. Along with a lot of warnings. #9F - Seller to give access and certain included items for home automation RPA HIGHLIGHTS #10 A2 - TDS and AVID are considered complete when Seller and Listing Agent sign them and deliver them as complete ( no sandbagging by the buyer agent to treat it as a new disclosure). And confirms
that the BA needs to do a visual inspection, either on the TDS or an AVID. #10A 4 - Contractually obligates seller to provide SPQ or SSD #10F3- Buyer or seller may have to deposit funds to pay for HOA RPA HIGHLIGHTS #12A - WPA language is added to Buyer's inspections and defines limits of WPA inspections. Also adds finding insurance and reviewing leases.
#13E Makes a Homeowner's policy the norm, if not available then the buyer will pay any increase in costs. #14A adds the NSP for non action by the seller (makes it equal with the buyer "NBP") adds Seller to the notice to perform along with time frames RPA HIGHLIGHTS #14D Expands to allow for destructive testing by Wood Destroying Pest inspection. #14F Adds the Demand to Close Escrow DCE to
options on both parties, similar rules to NBP/NSP #14G "AT ESCROW'S DISCRECTION" they may be able to release deposits if the other party fails to give mutual instructions within 10 days of notice from escrow. RPA HIGHLIGHTS #18B- Long list of stuff we're not responsible for. Defines Broker Scope of Duties #19- Representative Capacity - (related form RCSA) will
allow principals to sign and the signature addendum will define their capacity. For use in situations of Trustees, corporate officers, POA's etc. AND that they will provide PROOF within 3 days, showing they have the power to sign on behalf of the entity. See the block of text right before the buyer's signature block to elect this provision "Additional Signature Addendum (ASA). RPA HIGHLIGHTS #20A Confirms that the paying party will deposit or otherwise pay for HOA fees upfront
#20B Deals with FIRPTA requirements if seller provides Escrow the correct FIRPTA info, Escrow can/will issue a qualified substitute form. #20D Escrow must notify if deposit is not received or bounces. RPA HIGHLIGHTS #21A Addresses automatic releases of deposits, changing deposits to non refundable, or other forfeiture, is not allowed unless it
contains other Liquidated Damages requirements #22C2 Allows one party to file an action if necessary to allow for recording of a Lis Pendens or other notices without violating the mediation/arbitration provision. RPA HIGHLIGHTS #26 - Requires seller's "reasonable" and written approval before any assignment. Assignment does not automatically release
the buyer from the contract. (new form coming, AOAA). VERY IMPORTANT TO ASSIST WITH 1031 QI's " Qualified Intermediaries " to complete delayed exchanges. RPA HIGHLIGHTS #30B - Redefines the meaning of "agreement" to cover all related documents. #30I - Allows for multiple forms of delivery. Form RDN is phasing out. (Receipt and Delivery of Notices).
Past the signature block is the option for the ASA Additional Signature addendum. Same options for the seller, RCSA and ASA
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