ASK KATHY: A FEW FREQUENT QUESTIONS

RESIDENTIAL PURCHASE AGREEMENT — CALIFORNIA

Q. If a Buyer’s purchase offer includes a request for the Seller to pay for a home warranty with a specific dollar amount specified; but does not include any selections for optional coverage is the Buyer entitled to “spend” the entire amount set forth in the agreement and order any options they wish?

A. No; not unless the Seller agrees to permit the Buyer to add options after the fact. Paragraph 7. D. (10) sets a maximum ceiling on the amount a Seller may be required to pay for a home warranty plan; however, it is not a “gift card” that may be spent at the Buyer’s discretion. If a Buyer wishes to include upgraded policy and/or optional coverage the request should be made at the time of the offer.

Q. If the Multiple Listing data (or other means of advertising) includes remarks regarding personal property that is to be included in the sales prices or real property that is to be excluded from the sale; are the Parties bound to honor those terms?

A. No they are not. Paragraph 8 A. include a note to Buyer and Seller which makes it abundantly clear to the Parties; “Items listed as included or excluded in the MLS, flyers or marketing material are NOT included in the purchase price or excluded from the sale unless specified in paragraph 8 B. or C.

Tip: When in doubt spell it out! Managing the expectations of Buyers and Sellers is always a sound business practice.

Q. If property amenities are leased or liened and not owned by the Seller, is the Buyer at risk?

A. If the Buyer is not made aware that certain amenities are not owned by the Seller they can be at risk. The Residential Purchase Agreement includes language in paragraph 8. which sets forth the obligations of the Seller as well as the rights of the Buyer with respect to leased or liened items. Pursuant to 8. B. (5); the Seller is contractually obligated to provide copies of all lease / lien agreements to the Buyer.

Approval of these agreements is a contingency designed to allow the Buyer sufficient time for review and to determine whether or not they wish to assume responsibility and qualify for the added financial responsibilities.

Q. Are water features and fountains considered existing fixtures and are they automatically included in the sales price?

A. The Residential Purchase Agreement was revised to include a provision that specifies that water features and fountains are existing fixtures and as such, unless otherwise agreed in writing, are to be included in the sales price. Even so, there may be some debate between Buyers and Sellers as to whether or not a particular water fountain or feature is truly a fixture.

Rather than leave room for debate clarify the understanding of the parties in writing at the time the terms of the offer are negotiated.