REAL ESTATE CONTRACTS
A real estate contract, by definition, is a legally binding document between parties, that states the terms and conditions of the purchase and sale of real property. A real estate contract is also known as a real estate purchase and sale agreement.
A Florida Real Estate Contract must be in writing and contain the following, to be legally binding:
- Named Parties to contract - Buyer's and Seller's Identification
- Identify the Real Property by way of legal description and street address
- Identify any Personal Property, if applicable to the transaction
- Purchase Price of the Property
- Effective Date - Last date all parties have signed all counter offers
- Consideration - Escrow Deposit provided by buyer
- Closing Date - When final balance(s) will be paid and the title of the property will be transferred to the buyer
- Signatures - by all parties involved in the real estate transaction
There are four standard purchase contracts used in Collier County, and two in Lee County and almost every other county in Florida.
- NABOR Sales Contract (Residential Improved Property)
- NABOR Sales Contract AS IS (Residential Improved Property)
- FAR BAR SALES CONTRACT (Residential Contract For Sale And Purchase)
FAR BAR SALES CONTRACT AS IS ("AS IS" Residential Contract For Sale And Purchase)
Collier County Realtors normally use the NABOR Contracts. NABOR Contracts were written by local attorneys and the contracts were written different than the FARBAR (Florida Association of Realtors and Florida Bar Association) contracts.
Both contracts have an inspection period that defaults to 15 days. Within that 15 day period, a buyer has the right to perform all inspections - general, mold, radon, pool, and any other additional inspection that may be recommended by the results of the general inspection such as roof, AC, or other systems or equipment that may need further inspections by a specific trade.
In the standard contract, a buyer can request the seller remedy defective items by remedial action, a credit at closing, or a combination of the two. If a buyer requests a credit, estimates from licensed trades are required to support the request. The contract calls fro the election of defective items and specifically excludes cosmetic items:
- cosmetic condition, which is defined as an aethetic imperfection which does not affect the Working Condition of the item, including corrosion; tears, worn spots; discloloration of floor covering or wallpaper or window treatments; missing or torn screens; nail holes; dents; chips; caulking; pitted pool surfaces; minor cracks in windows, driveways, sidewalks, pool/spa decks and garage, tile, lanai and patio floors and cracked roof tiles, curling or worn shingles, and limited roof life, so long as there is no evidence of structural damage or leakage.
A seller has the option to accept a buyer's inspection election requests, counter the inspection election requests, or reject all requests. If a seller counters the buyer's inspection election, then the buyer can counter back or accept the seller's counter. If the buyer does not respond, then the buyer is accepting the sellers counter. If the buyer does not want to move forward with a seller's counter regarding the inspection election, the buyer has a right to terminate the contract within the time frame allotted per contract.
TIME FRAMES FOR INSPECTIONS
- Buyer has 15 days to perform inspections and an additional 5 days to prepare an inspection election
- Seller has 10 days to respond to buyer inspection election (this is to all the seller to have time to gather estimates in the event the seller wants to remedy all items or verify a credit request is not inflated)
- Buyer has 5 days to respond to a seller's counter
AS IS CONTRACT
An AS IS Contract is where a buyer is purchasing the property in the current condition "AS IS" and the SELLER shall have no obligation to make any repairs or replacements to the Property. If BUYER determines, in BUYER’s sole discretion, that the Property, Systems and Equipment are not acceptable to BUYER for any reason, BUYER may terminate the Contract prior to expiration of the Due Diligence Period.
AS IS contracts are beneficial for the seller in the respect the buyer will not be requesting the seller to repair anything or requesting any credits. However, the AS IS contract allows the buyer to terminate the contract for any reason which could result in lost marketing time while the property is under contract.