Get the Scoop on the Latest Changes in the FAR/BAR “AS IS” Contract
The FAR/BAR “AS IS” Contract — so named because it was developed jointly by the Florida Bar and Florida Realtors — is an agreement form that standardizes most of the key elements of a property transaction, allowing individuals without a legal or real estate background to prepare, review, and fill out the document. As a result, it is widely used in real estate transactions across Florida, making it important for you to learn about the most recent changes and how they may affect your closing.
The FAR/BAR “AS IS” Contract Financing Clause
The financing clause has been changed to reflect new standards in the lending industry. For example, it substitutes the term “Loan Commitment” with “Loan Approval,” and in the same vein, the “Loan Commitment Period” is now the “Loan Approval Period.”
Moreover, because financial regulations such as TRID are no longer slowing down the amount of time it takes to approve a loan, the default time for the Loan Approval Period has been reduced from 45 days to 30 days. The buyer is required to notify the seller in writing when the Loan Approval is received, and failure to inform the seller means that the Loan Approval is considered obtained.
Buyer’s Right to Cancel the FAR/BAR “AS IS” Contract
The buyer no longer has the right to unilaterally terminate the contract for failing to obtain Loan Approval within the Loan Approval Period. Instead, the buyer must inform the seller in writing that the Loan Approvalwas not obtained, and can either terminate the contract or waive the Loan Approval. The seller has three days after the expiration of the Loan Approval Period to give the buyer written notice that the contract is cancelled. Failure to respond within that timeframe results in the right for unilateral termination being rescinded.
Closing Date Extension Due to “Force Majeure”
In the event of “force majeure” — an external circumstance beyond either party’s control, such as a hurricane — an extension to the closing date can now be made up to 30 days past the original closing date, compared to 14 days in the previous version. Commensurately, under the new terms the performance of various contract obligations, such as insurance and closing, can be extended to seven days after such services become available, up from three days.
Clarifying the Title Evidence and Insurance Requirement
The section on title evidence and title insurance has been expanded to include an explanation of what constitutes a “municipal lien search”, which is typically done at the same time as a title search yet is distinct in that it goes beyond what a title search usually covers.
The FAR/BAR “AS IS” Contract previously stated that the seller is unaware of any improvements made to the property besides what is disclosed in writing to the buyer. Additional language has been added requiring the seller to timely furnish to the buyer any information or written proof related to any improvements that have been made without closed permits.
Jurado & Farshchian Can Help Make Sense of the FAR/BAR “AS IS” Contract
Our real estate attorneys have successfully closed numerous real property transactions involving the FAR/BAR “AS IS” Contract, and are always up-to-date on the latest developments in the real estate world. We thoroughly review every contract that comes our clients’ way, and stop at nothing to ensure all parties understand and fulfill their obligations so as to ensure a smooth closing. Contact an experienced Jurado & Farshchian real estate attorney at 305–921–0440 or email us at firstname.lastname@example.org.