Revised Residential Lease Agreement
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Make Sure to Use the Most Current Forms
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Information & Updates on the Buyer Advisory
Updated December 2015
Updated: December 2015
Actualizado: Abril 2013
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Content and website addresses (links) within the Buyers Advisory were up-to-date at the time of posting, but may change periodically without notice. If you find a link that is broken, please email Jan Steward with the details.
REMINDER: This Advisory is supplemental to obtaining professional property inspections. Professional property inspections are absolutely essential; there is no practical substitute for a professional inspection as a measure to discover and investigate defects or shortcomings in a property.
Revisions as of December 2015 consist of:
- Website links have been updated throughout the Buyer Advisory
REALTORS®: To ensure your clients receive only the latest version of the Buyer’s Advisory, we recommend that you copy the link below and paste it into an email to your client. When your client clicks this link, they will automatically read the current version on file.
Buyer acknowledges that there may be other disclosure issues of concern not listed in this Advisory. Buyer is responsible for making all necessary inquiries and consulting the appropriate persons or entities prior to the purchase of any property.
The information in this Advisory is provided with the understanding that it is not intended as legal or other professional services or advice. These materials have been prepared for general informational purposes only. The information and links contained herein may not be updated or revised for accuracy. If you have any additional questions or need advice, please contact your own lawyer or other professional representative.
If you know of any websites that you feel would be beneficial for the Buyer Advisory, please contact Jan Steward.
RECONOCIMIENTO DEL COMPRADOR
El comprador reconoce que puede haber otras divulgaciones importantes que no aparezcan en esta Guía de Asesoría. El comprador tiene la responsabilidad de hacer todas las averiguaciones necesarias y consultar con las personas o entidades pertinentes antes de realizar la compra de cualquier propiedad.
Esta Guía de Asesoría se suministra con el entendimiento que estos consejos no constituyen servicios o consejos legales o de peritos. Estos materiales se han preparado únicamente como información general. La información y los enlaces que contiene esta Guía no pueden actualizarse ni revisarse para verificar su exactitud. Si usted tiene alguna pregunta adicional o necesita asesoría profesional, por favor contacte a un abogado u otro profesional de su elección.
Descargo de responsabilidad
Este documento ha sido traducido del idioma inglés al idioma español. Se proporciona esta traducción con el entendimiento expreso de que la Arizona Association of REALTORS® (“AAR”) no está prestando el consejo o servicios legales ni otro consejo o servicios profesionales. La AAR no hace ninguna exposición respecto a la exactitud o lo completo de la información contenido en esto y expresamente niega toda responsabilidad de cualquier pérdida o daño relacionado con el uso de esta traducción.
This document has been translated from the English language to the Spanish language. This translation is provided with the express understanding that the Arizona Association of REALTORS® (“AAR”) is not rendering legal or other professional services or advice. AAR makes no representations as to the accuracy or completeness of the information contained herein and expressly disclaims all liability for any damage or loss related to the use of this translation.
page updated 1/26/2016
Proper Use of Section 1d of the Residential Purchase Contract
Generally speaking, a contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in exchange for a valuable benefit known as consideration.
Although it may seem obvious, an essential element of a valid contract is that all parties agree on all major issues. While anyone can make an offer, a contract cannot be formed until the offer is accepted, resulting in a meeting of the minds.
Among the many critical terms to be addressed in a contract is time of performance. Parties to a contract should therefore identify the time of performance with as much specificity as possible, evidencing a common understanding.
Section 1d of the Residential Resale Real Estate Purchase Contract (the “Purchase Contract”) asks the parties to state a date upon which Close of Escrow (“COE”) will occur. Although contracts are not required to identify a specific date for close of escrow, a date certain is the best way to identify with particularity when this important event will occur. It will also ensure that the expectations of both the buyer and seller are the same, thereby avoiding a potentially costly dispute. Nonetheless, instances occur in which a day, month and year are not entered on line 18 of the Purchase Contract. In contradiction to what the date field requests, it has on occasion been populated with ambiguous terms such as “after Labor Day” or “upon completion of all repairs.”
In an effort to address this issue, zipForm® will now limit the field on line 18 of the Purchase Contract strictly to a day, month and year. When the field is being populated, REALTORS® will be presented with a calendar and asked to select a precise date on which escrow will close. While this date can subsequently be changed via an Addendum, limiting the manner in which the date field can be populated will help avoid ambiguity and uncertainty in regard to this important contractual term.
Scott M. Drucker, Esq., a licensed Arizona attorney, is General Counsel for the Arizona Association of REALTORS® serving as the primary legal adviser to the association.
This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.
February 2016 Form Revisions
AAR Policy Statement P.30 states, “New or revised forms shall be released on or about February 1, June 1 and October 1 unless law or regulation mandates earlier release.” Pursuant to this Policy, at the beginning of February two of AAR’s standard forms have been revised as follows:
12 CFR 1026.19(e)(2)(ii) states:
Written information provided to consumer.If a creditor or other person provides a consumer with a written estimate of terms or costs specific to that consumer before the consumer receives the disclosures required under Paragraph (e)(1)(i) of this section, the creditor or such person shall clearly and conspicuously state at the top of the front of the first page of the estimate in a font size that is no smaller than 12-point font: “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.” The written estimate of terms or costs may not be made with headings, content, and format substantially similar to form H-24 or H-25 of Appendix H to this part.
To ensure compliance with this federal law, a sentence has been added to the top of the form stating “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.”
In cases of an automatic renewal provision, A.R.S. § 32-2173(A)(2)(a) requires a property management firm to send the owner a reminder notice at least 30 days before the renewal date. Based on this language, the Arizona Department of Real Estate (ADRE) has expressed that property management agreements cannot be for a term of less than 30 days. Consequently, the box for “days” that appeared on line 13 has been removed. Additionally, because the renewal notice is sent prior to each renewal date, for clarification line 14 has been revised as follows: “Broker shall send Owner a reminder notice at least thirty (30) days prior to
the each renewal date.”
Three additional forms will be revised effective mid-February. They are the Residential Resale Real Estate Purchase Contract, the Vacant Land/Lot Purchase Contract and the Commercial Real Estate Purchase Contract.
The reason behind these changes is that The Protecting Americans from Tax Hikes Act (The PATH Act) was signed into law on December 18, 2015 and includes a provision modifying the Foreign Investment in Real Property Tax Act (FIRPTA). The modification increases the tax withholding from 10% to 15% for homes over $1 million. The withholding tax rate increase is effective 60 days after the enactment of the PATH Act, which is February 16, 2016. Because of this federal law change, the FIRPTA section in AAR’s above-referenced purchase contracts will be revised to now refer to the FIRPTA withholding cap as “up to 15%.”
The forms below are fillable PDFs.
Purchase Contract for New Home (With Lot)
Note: As of October 3, 2015, the Purchase Contract for New Home (With Lot) has been removed from the Arizona Association of REALTORS® library of forms. This Contract was last updated in April 2005 and is not compliant with the TILA-RESPA Integrated Disclosure rules, effective October 3, 2015. If you would like to see this form updated and returned to AAR’s library of forms, please contact Jan Steward at (602) 248-7787 or email@example.com.
TRID Forms Webinar – Review of AAR Revised TRID Forms
This overview of August 2015 changes to AAR forms to comply with the October 3, 2015, implementation of TRID rules. This webinar is hosted with Martha Appel, Vice President & Designated Broker, Coldwell Banker Residential Brokerage and 2015 AAR Risk Management Committee and with Scott Drucker, Esq., AAR General Counsel.
Contact Information for Arizona County Assessors
Click the Arizona county below for its contact information:
Revised TILA-RESPA Compliance Forms FAQs and Sample Forms
Frequently Asked Questions
In September 2015, the Arizona Association of REALTORS® will release revised versions of the following four forms: (1) Pre-Qualification Form; (2) Loan Status Update; (3) Residential Resale Real Estate Purchase Contract; and (4) Vacant Land/Lot Purchase Contract. To better understand the changes made to these forms, the reason for the changes, and how the revised forms should be utilized, below are frequently asked questions (FAQs) followed by answers and pertinent analysis. Please read these FAQs carefully before viewing the sample forms below.
Q1. Why were these forms revised?
A1. The Consumer Financial Protection Bureau (CFPB) is implementing revised rules and forms that combine disclosures consumers receive in connection with applying for and closing on a mortgage loan. To ensure that AAR’s forms comply with these rules and follow the new timelines, revisions were required.
Q2. In revising the Residential Resale Real Estate Purchase Contract and the Vacant Land/Lot Purchase Contract, were any changes made that are unrelated to the new TILA-RESPA Integrated Disclosure (TRID) rules imposed by the CFPB?
A2. No. At this time, the only changes made to these two contracts are those necessitated by the new TRID rules.
Q3. When do I need to start using these new forms?
A3. The new forms should be used in conjunction with transactions in which the lender receives a loan application on or after October 3, 2015.
Q4. Line 54 of the Residential Resale Real Estate Purchase Contract now requires that an AAR Pre-Qualification Form be attached to the Contract. What should the buyer do if they have not yet obtained a Pre-Qualification form, but nonetheless wish to submit a purchase offer?
A4. Under these circumstances, the buyer should indicate on line three of the Pre-Qualification Form that “Buyer HAS NOT consulted with a lender.” The buyer should then print their name on line four and sign and date on line five. If the box on line three is marked, the buyer does not complete lines six through 42 of the Pre-Qualification Form.
Q5. When must the buyer first deliver to seller a completed Loan Status Update?
A5. As evidenced by Section 2e of the Residential Resale Real Estate Purchase Contract, an initial Loan Status Update must be delivered to the seller “within ten days after Contract acceptance.” This is a change from the prior Residential Resale Real Estate Purchase Contract, which required initial delivery of the Loan Status Update within five days after Contract acceptance.
Q6. What should a buyer do if their lender refuses to complete a Loan Status Update?
A6. As is currently the case, the buyer should complete, at a minimum, lines 1-40 of the Loan Status Update. The failure of the buyer’s lender to complete the Loan Status Update is not a potential breach and, therefore, not subject to a cure period notice because the lender is not a party to the Contract.
Q7. Line 39 of the Loan Status Update states “Buyer commits to work with the above referenced Lender on the terms described herein.” Is the term “commits to work with” synonymous with the term “intends to proceed” as used in 12 CFR §1026.19?
A7. No. Intends to proceed is a defined term of art by which a borrower communicates to the lender that they choose to proceed with the loan transaction after having received the Loan Estimate. A buyer can therefore commit to work with a lender via the Loan Status Update and not yet have given formal notice of intent to proceed. If that is the case, the buyer would sign on line 40 of the Loan Status Update, but the box on line 45 would be marked “NO” as that line asks if the “Buyer indicated to Lender an intent to proceed with the transaction after having received the Loan Estimate.”
Q8. Section 2f of the Residential Resale Real Estate Purchase Contract now requires the buyer, “within three days after Contract acceptance,” to provide the lender with “Buyer’s name, income, social security number, Premises address, estimate of value of the Premises, and mortgage loan amount sought.” Why was this requirement inserted?
A8. The CFPB has defined a loan application as the borrower’s submission to the lender of the above-referenced six pieces of information. Submission of the loan application triggers the lender’s delivery of the Loan Estimate to the borrower, thereby beginning the timeline that will be followed through close of escrow. To ensure a timely closing, it is important that the timeline commence as early as possible, and for that reason, the borrower is now required to submit these six pieces of information to the lender within three days after Contract acceptance.
Q9. As part of their Loan Application, the borrower is required to provide the lender with an “estimate of value of the Premises,” in addition to five other pieces of information. What does “estimate of value of the Premises” mean?
A9. The estimate of value of the Premises will typically be the contract price.
Q10. What action must the buyer take three days prior to close of escrow?
A10. Three days prior to close of escrow the Buyer must either: (i) sign all loan documents; or (ii) deliver to Seller or Escrow Company notice of loan approval without PTD conditions AND date(s) of receipt of Closing Disclosure(s) from Lender; or (iii) deliver to Seller or Escrow Company notice of inability to obtain loan approval without PTD conditions. See Section 2b of the Residential Resale Real Estate Purchase Contract.
Q11. Why is it important for the seller to know the date(s) on which the buyer received the Closing Disclosure(s) from their lender?
A11. This information is important to the seller because it will help the seller understand when the transaction may close escrow. More specifically, the loan cannot be consummated (i.e. – execution of the promissory note and deed of trust) less than three business days after the Closing Disclosure is received by the buyer.
Q12. What changes were made to page nine of the Residential Resale Real Estate Purchase Contract and page ten of the Vacant Land/Lot Purchase Contract? Why were these changes made?
A12. The last page of these two contracts now require the agent’s state license number and the brokerage’s state license number. Page five of the new Closing Disclosure contains a section titled “Contact Information.” Within that section, the lender must enter the “State License ID” for the real estate agent and the “State License ID” for their Brokerage. This is a new requirement as this information did not appear on the HUD-1. By identifying these license numbers in the Contract, it will ensure that the lender is in possession of the information needed to properly complete the Closing Disclosure.
Q13. Lines 397 and 409 of the Residential Resale Real Estate Purchase Contract ask for the “Firm Address.” If the agent works out of a branch location and not the corporate headquarters, which address should be entered?
A13. The address listed should be “the identified person’s place of business where the primary contact for the transaction is located (usually the local office) rather than a general corporate headquarters address.”
Sample Forms (changes highlighted in yellow)
To be used only in conjunction with transactions in which the lender receives a loan application after October 3, 2015.