Here we go again!

Susan Plage - Re/Max of Boulder

As real estate professionals, there's certainly one thing that we deal with daily.Change. It's for sure that the day could start and/or end a lot different than we expected. Many of us might feel the same about CREC (Colorado Real Estate Commission) rules or, the CREC approved contracts, disclosures, checklists.the forms.

October 1, 2004

The Contract to Buy and Sell Real Estate (CBS), The Exclusive Right to Buy Contract and the Exclusive Right to Sell Listing Contract have some changes. The effective date on their use is October 1, 2004; however, brokerage firms may begin using the forms now.

Contrary to some circulating comments, brokerage firms are not required to create "forms" for printing as 8 ½ x 11 or letter size.

CBS Version 2004

If you're like me, you're thinking, "here we go again"! Licensed in 1996, it feels as if those forms have changed quite a bit.

Actually, the last overhaul for the Contract to Buy and Sell Real Estate (CBS) occurred in 1999; before that in 1995 according to Debbie Campagnola Director, Division of Real Estate. The Division's Forms Committee monitors the trends and every 4-5 years, by design, addresses those trends in the changes we are seeing in Colorado's standardized forms. One goal is to have "less free-form drafting (i.e. Additional Provisions paragraph) and more standardized language," adds Campagnola. Changes to the listing and buyer contracts generally mirror changes in legislation; namely Agency in 1993 and Designated Brokerage in 2003.

Software readiness

For those of us using the www.iresis.com contracts function, the new contracts will be posted as of August 10. The forms are already posted at the CREC website www.dora.state.co.us/real-estate. At the time of this writing, a release time has not be set for RealFast or other contract wiring software packages, so check with your software provider.

Two points of 'interest'

While they are not the only changes, there are certainly two "interesting" changes in the revised Contract to Buy and Sell Real Estate (CBS). This new version brings the Purchase Price upfront to page 1; just below the date. Listing brokers, there will be no more discreet turning of that page to peek at the price as you accept the offer on the buyers' behalf. You can eyeball it quickly! Buyer brokers, this front-page purchase price will hopefully match the price you've entered in the paragraph 4 grid. If it doesn't, the "note:" on page 2 indicates that the paragraph 4 purchase price prevails.

The second "interesting" change is in paragraph 2(e) and it's the MEC. Mutual Execution of this Contract or MEC means the latest date upon which both parties have signed the contract. If you'll be using that in a CBS the "you've got to be thinking," cautions Jon Goodman (Frascona, Goodman, Joiner and Greenstein). Typically MEC works in tandem with dates and deadlines that are established under the language "xx days after MEC." Goodman contends that MEC should not be used to establish the acceptance deadline for the CBS nor for the closing and possession dates. He further cautions that the MEC language in the CBS does not provide for what happens when a date lands on a weekend or holiday. Understand that you are not required to use MEC to establish dates and deadlines.

Two new 'objection' deadlines

It's now official for the "Property Insurance Objection" deadline. Insurability is its own paragraph, 10(c), and it is formally presented as a date/deadline in the paragraph 2 © grid. If you opt to request a C.L.U.E. report for your buyer then you'll need to provide language in additional provisions.

This CBS revision adds to the Survey deadline is a "Survey Objection" deadline. The language in paragraph 8(c) states that the Buyer shall have the right to inspect Survey. In fact paragraph 8 in the CBS has been changed to read Title and Survey Review. Any objection to the survey is "deemed as an unsatisfactory title condition."

The best advise that I have heard on both deadlines is this: bring them forward in the contract deadlines, and possibly in tandem with the property inspection objection deadline. Neither insurance nor survey inquiries should be items handled just minutes before closing, as has been the norm in real estate transactions.

Two new clarifications

While Megan's Law is not new to our transactions and disclosures, it is a new feature within the CBS in paragraph 10(f).

Also in paragraph 10 is a Buyer Disclosure paragraph, 10(e), which establishes whether the buyer does or does not need to sell and close a property to complete the transaction. This does not preclude the real estate professional from fine-tuning contingency dates, etc. in the additional provisions paragraph.

'Physical delivery' and physical geography

Within the CBS, there is now specific language that requires all notices to be in writing. Notices are effective when received by buyer/seller or brokerage firm. Dates and times are viewed as crucial to the validity of an offer, terms of a contract and, especially, in a multiple offer scenario. Be on time; in writing!

Endnote

That's just the highlights, to my eye, in the revised Contract to Buy and Sell Real Estate or CBS. The May 2004 version of the required CREC Update class includes the se new/revised Real Estate Commission rules as well as an overview of 10 new Commission-approved forms (CBS, Listing, Buyer, etc.) including the new Common Interest Community Disclosure. Check with the BARA office for the schedule.

Susan Plage - CAR Faculty