Changes are Coming to the Mission Viejo Real Estate Contract
As of November 24, 2014 changes are coming to the Mission Viejo real estate contract that will have an impact on Realtors, buyers, sellers, lenders, Termite Companies, and Escrow companies. In just a few weeks, the California Association of Realtors will introduce a new version of the Mission Viejo real estate contract, or officially titled the Residential Purchase Agreement or RPA for short. CAR is also introducing some new forms and eliminating some old forms as a part of the Mission Viejo real estate contract.
There is no shortage of changes to the home buying and selling process in Mission Viejo based on the new real estate purchase contract. Let me just give you a highlight of a handful of changes and make a prediction about what’s going to happen beginning in December.
There will now be a due date for the return of escrow instructions. Both the buyer and the seller are obligated to return their completed escrow instructions within five days of receipt of said instructions. This will mean your Realtor as well as the Escrow Officer will be contacting you to hurry you along with those forms. Also, don’t be surprised if you get a more substantial “nudge” in the form of a Notice to Perform.
If you are served a Notice to Perform (there’s one for buyers and another one for sellers – nobody gets a free pass here) you usually only have two days to submit your paperwork. Failure to complete your part of the bargain with the time allotted will give the other party the right to cancel the contract. Any of you who have been in a situation, especially when there’s a back up offer in the wings, knows that this is serious business.
There will now be a requirement that the loan pre-approval letter (listen up buyers and lenders) must state that the buyers are qualified to purchase based on the qualifying rate, not the initial loan rate. You can read between the lines on the purpose of this new requirement given the resurgence of adjustable rate home loan options with so-called “teaser” rates.
There will now be a provision, that if the appraisal contingency has been waived or removed, the buyer is not entitled to exercise the right to cancel pursuant to the loan approval contingency. This simply means that if you are waiving the appraisal as a tactic to make your offer more appealing to a seller, if the appraiser says the house is worth less than what the you agreed to pay, you will have to make up the short fall – or find someone to make up the shortfall, which may include pleading with the seller to reduce the price.
Regardless, the buyer cannot fall back on the loan approval contingency as a solution to this situation. Waiving or removing the appraisal contingency is typically seen in a seller controlled market where there are rapidly rising home values and fewer homes for sale, wherein the seller may look for any reason to cancel your offer in order to move on to another, perhaps more appealing buyer.
There will now be a requirement for the designation of the payment for Home Owners Association – HOA – documents and payment of these fees up front. Apparently, there have been too many cases where the seller agreed to pay for the HOA documents, then escrow used the buyer’s deposit funds to cover the upfront fee, and when the contract was cancelled, the buyer’s deposit was returned minus the cost of the HOA docs. All of this for a house the buyer is now not buying. Apparently most buyers didn’t take to kindly to this situation.
I predict there will be some finger pointing, escalating to management, bent relationships, plenty of drama, and near tragedies this December as everyone adjusts to the new forms.
Whether you are looking to buy or sell, I offer weekly advice via my expert real estate articles. If you are currently trying to find a home, search these listings, and then be sure to get in contact with me by calling (949) 678-3373 or emailing me at Leslie@LeslieEskildsen.com.
Leslie Eskildsen is the Real Deal REALTOR specializing in South Orange County real estate.
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This blog originally appeared here: http://www.eskildsengroup.com/2014/11/07/changes-are-coming-to-the-orange-county-real-estate/