Are you aware that the standard Florida Association of Realtors/Florida Bar Contract, often referred to as the “FAR/BAR Contract” has changed? Below is an overview of the revisions to the FAR/BAR Contract for Sale and Purchase, “AS IS” and other residential forms which were discussed earlier this year and have now become effective as of November 1, 2021.
Major Updates to the Standard Form
Section 8(b) – Loan Approval Period
Two tasks are to be completed during this period now. The first is that the buyer must obtain approval for financing as described in the section. This is consistent with the prior version of the contract. However, the new requirement is that the buyer’s lender must receive a satisfactory appraisal before the approval period expires.
This is the first time the FAR/BAR contract has actually specified this point. The reason for this change is to accelerate the receipt of the appraisal if it is required by the lender. Under the prior iteration of the contract, a low appraisal could ruin a transaction as late as the closing, if that’s when the appraisal was completed. Although a low appraisal can still derail a transaction, if it is received before expiration of the approval period, the property can be returned to the market much sooner and the seller can find a new buyer.
Section 8(b)(i) – Loan Approval
Section 8(b)(i) redefines what “Loan Approval” means. It has now been revised to include two parts:
- the buyer is approved for the financing provided for in the contract; and,
- the lender has received a satisfactory appraisal (if one is required).
Thus, if a buyer is approved for financing but the approval is conditioned upon an appraisal to be completed in the future, this will not be considered “Loan Approval” under the redefined meaning above.
Section 19, Standard O – Delivery Methods
Under the revised contract, methods for delivery notice have changed. While mail or personal delivery options remain in place, notices can now also be delivered by fax or email. However, certain electronic delivery methods have been deleted.
The relevance of this point is that text messaging cannot be used to provide notice under this new contract. Text messages can be erased or disappear, making them unreliable if required to provide evidence that notice was delivered.
Additional Updates to the FAR/BAR Contract
While the items above comprise the major substantive changes to the standard contract, other changes have been made as well. Some examples include:
- Redefining “Personal Property” to now include thermostats, doorbells, television wall mounts and television mounting hardware, mailbox keys, and storm protection items and hardware, while intercoms have been removed from the definition.
- The extension period for the closing date provided for under the CFPB (“Consumer Finance Protection Bureau”) delivery requirements has been reduced to seven (7) instead of the previous ten (10) days. It has also been clarified that this extension is automatic only if the loan was approved and through underwriting prior to the originally agreed upon closing date.
- Buyers can now wait until the end of the Loan Approval Period to notify the seller in writing that the loan has been approved rather than having to “promptly advise” the seller under the previous contract.
- FIRTPA withholding and reporting costs have been added as an item to be paid by the seller.
- The occupancy clause in the contract now includes disclosures tied to existing seasonal or short-term vacation rentals.
- The definition of closing now includes that “all funds required for closing are received by the closing agent and collected pursuant to STANDARD S”.
- As there has been confusion with regard to time calculations, the new version of the contract states that a calendar day will be based on where the property is located and clarifies calculations if a date or time period ends on a Saturday or Sunday, a day that is a national legal holiday, or on a day a national legal public holiday is observed.
- Due to the ongoing pandemic, Force Majeure has been revised to include “governmental actions and mandates, government shutdowns, epidemics or pandemics.”
In addition to these changes, several riders have also been updated and new riders have been added. These include Mold Inspection, Seasonal/Vacation Rentals/Pace Disclosure Riders. While we have discussed many of the changes to the FAR/BAR Contract above, we highly recommend you review the new contract and riders in their entirety and familiarize yourself with these changes. Being informed on these updates could help avoid contract headaches down the line.
Those needing assistance with residential closings may contact us at firstname.lastname@example.org or by phone at 239-344-1100.