ARKANSAS REALTORS® ASSOCIATION
SUMMARY OF CHANGES IN 2010 FORMS
Bill Olson, Batesville,
2009 Chairman Risk Reduction Committee
Karen Crowson, Benton
2010 Chairman Risk Reduction Committee
DISCLAIMER
Please note the Arkansas Realtors® Association is not an attorney and cannot give legal advice. Likewise, the Arkansas Realtors® Association is not a Broker and does not accept responsibility for your actions. Should any recommendation or suggestion given in this Training Guide conflict with the policy directed by your Broker or attorney, you should follow their directives, not those contained in this Training Guide.
Arkansas REALTORS® Association, 11224 Executive Center Drive,Little Rock, AR
501-225-2020 Local, 888-333-2206 Tollfree Statewide. 501-225-7131 Fax
11/5/09
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On the following pages the changes to the 2010 ARA Forms are shown.
The changes are shown in red
Rationales are shown in green.
Applicable to all forms: In the forms in which a paragraph is added or a paragraph is removed, there is a re-numbering or re-lettering of the subsequent paragraphs in the form.
Applicable to all forms: “Back-up contract” was changed to “subordinate” contract.”
Exclusive Right-to-Sell Agreement (Residential) Par. 2
Exclusive Right-to-Sell Agreement (Lots & Acreage) Par. 2
Exclusive Right-to-Sell Agreement (Commercial) Par. 2
Permission-to-Show Agreement Par. 2
2. ADDRESS AND LEGAL DESCRIPTION AND ADDRESS OF THE PROPERTY:
This reversal was made in the Real Estate Contracts in 2009 but was missed in the Exclusive Right-to-Sell and Permission-to-Show Agreements. This corrects the omission.
Exclusive Right-to-Sell Agreement (Residential) Par. 7
Exclusive Right-to-Sell Agreement (Lots and Acreage) Par. 7
7. CLOSING PROTECTION. Seller shall have the right to request that title insurer(s), if any, issue closing protection to indemnify against loss of closing funds because of acts of a Closing Agent, title insurer's named employee, or title insurance agent. Any cost for closing protection will be paid by the requesting party(ies). Listing Firm strongly advises Seller to inquire of the Closing Agent(s) about the availability and benefits of closing protection.
To insure all funds have been properly disbursed, Seller has been advised of the availability of purchasing a Closing Protection Letter, an additional binder to be added to the Title Insurance Policy at closing. The Closing Protection Letter may be required at the lender’s discretion.
__Seller accepts the Closing Protection Letter
__Seller declines the Closing Protection Letter
Rationale: The check boxes in this language were deleted in order to reduce liability on our members. It was thought that if a agent marked one of the checkboxes at the time of the listing, then at closing, the seller changed their minds about the CPL and after closing, funds were mishandled, it might create more liability to our membership. The change was made to make clients aware of the availability of the closing protection letter, and also avoid the appearance that we were “selling” an insurance product.
Exclusive Right-to-Sell Agreement (Residential) Par. 8 and 9
Exclusive Right-to-Sell Agreement (Lots and Acreage) Par. 8 and 9
8. LISTING FIRM'S FEE: If Listing Firm presents to Seller an offer in an amount equal to or during the Listing Period, Seller agrees to pay Listing Firm a professional fee of either:
A. (i) ______percent (______%) of the gross amount
of any accepted Real Estate Contract or value of any property exchanged
for the Property plus $______for professional services rendered; or
B.(ii) $______, for professional services rendered.
A.If co-brokerage applies, said fee shall be divided:
(i)A. _______ % of the Purchase Price plus $______to Listing Firm
and ______% of the Purchase Price to Selling Firm.
(ii) B. Other: (At least two blank lines here)
In consideration for Seller's promise contained within this paragraph 87, Listing Firm promises to Seller that it will use reasonable effort to market the property and solicit an offer regarding the Property withon terms and conditions acceptable to Seller,. provide additional marketing services as deemed appropriate by Listing Firm and coordinate the closing. Seller agrees that Listing Firm is not required to investigate the financial or other ability of a prospective buyer to consummate any proposed or accepted Real Estate Contract. Seller will not owe a fee to Listing Firm if Buyer does not remove any condition set forth in a Real Estate Contract and cannot close, unless failure to close is the result of breach of a Real Estate Contract by Seller.
Rationale: The paragraph regarding Broker Service Fee was completely eliminated from all contracts for 2010 and replaced with new language in the commission paragraph. New language in the co-brokerage paragraph was also added to eliminate confusion when information was being taken to the title companies on how the professional fee was to appear on the settlement statement.
9. BROKER SERVICE FEE: In addition to the fee defined in Paragraph 7 of this Exclusive Right-to-Sell Agreement, Seller agrees to pay Listing Firm a fee of $ ______, payable only if the subject Property is sold under terms and conditions acceptable to Seller. The fee is for costs to Listing Firm for services other than preparation of documents. By execution of this Exclusive Right-to-Sell Agreement, Seller hereby authorizes the Closing Agent to deduct said fee from the proceeds of the sale at Closing.
Exclusive Right-to-Sell Agreement (Commercial) Par. 7
7. LISTING FIRM'S FEE: Regardless of the scope of the listing as set forth in Paragraph 1 of this Exclusive Right-to-Sell Agreement, if said Property is sold, exchanged, leased, rented or otherwise disposed of by Listing Firm or any other person, association, corporation or by Seller during the Listing Period of this Exclusive Right-to-Sell Agreement, whether on terms set forth in this Exclusive Right-to-Sell Agreement or on other terms acceptable to Seller, Seller agrees to pay Listing Firm a professional fee of either:
A. ______percent (______%) of the gross amount of any accepted real estate contract or value of any property exchanged for the Property plus $______for professional services rendered; or
B. as specified on Exhibit ______or in Paragraph 12 17(“Special Conditions”) of this Exclusive Right-to-Sell Agreement, based on the gross amount of the sale or of the value at which it may be exchanged for other Property or on the rate at which the Property may be leased or rented.
If co-brokerage applies, said fee shall be divided:
(i).A. ___% of the Purchase Price plus $______to Listing
Firm and ______% of the Purchase Price to Selling Firm.
(ii).B. Other: (at least two blank lines here)
In consideration for Seller's promise contained within this Paragraph 7, Listing Firm promises to Seller that it will use reasonable effort to market the property and obtain an offer to purchase or lease (whichever applies) the Property withon terms and conditions acceptable to Seller, provide additional marketing services as deemed appropriate by Listing Firm and coordinate the closing. . Seller agrees that Listing Firm is not required to investigate the financial or other ability of a prospective buyer or tenant to consummate any proposed or accepted Real Estate Contract or Lease. Seller will not owe a fee to Listing Firm if a buyer or tenant does not meet all the conditions of the Real Estate Contract or Lease and is not contractually obligated to close.
Rationale:The language in this paragraph is the same as the language in the residential Exclusive Right to Sell Agreement.
Exclusive Right-to-Sell Agreement (Residential) new Paragraph 15
Exclusive Right-t0-Sell Agreement (Lots & Acreage) new Paragraph 15
Exclusive Right-to-Sell Agreement (Commercial) new Paragraph 13
15. MULTI- LIST SERVICE AND INTERNET: Seller warrants, represents and authorizes Listing Firm to offer the Property in a multi-list or co-op brokerage, subject to the options selected in Paragraph 12, and comply with all rules and regulations associated with multi-list or co-op brokerage.
Seller makes the following elections regarding the transfer of Property information by the Listing Firm’s Multiple Listing Service to other Internet websites: (Choose Option A or B)
- Seller elects to allow the transfer of Property information to other Internet
websites to be displayed on the Internet.
_Seller elects to allow the address of the Property to be displayed on
these Internet websites.
_Seller elects to allow the Property to have an auto valuation on these
Internet websites.
_Seller elects to allow written comments or reviews (blogging)
when this Property is displayed on these Internet websites.
(If checking A, check all above that apply)
- _Seller elects NOT to allow the transfer of Property information to other Internet websites.
Seller understands and acknowledges that consumers who conduct searches for listings on the Internet may not see information about the Property in response to their search.
This election covers the transfer of information to other Internet websites by the Listing Firm’s Multiple Listing Service. Listing Firm cannot control Property information appearing on Internet websites which obtain information from sources other than the Listing Firm’s Multiple Listing Service.
Rationale: The change to the Exclusive Right to Sell Agreements for all categories was made after a Department of Justice ruling that stated that sellers needed to be in control of how their property was being marketed. These check boxes allow sellers to be very specific to what formats their properties will be viewed from the general public, and how information is to be disseminated by their agent.
Exclusive Right-to-Sell (Residential) Paragraph 16
Exclusive Right-to-Sell (Lots and Acreage) Paragraph 16
Exclusive Right-to-Sell (Commercial) Paragraph 14
16. SELLER WARRANTY, REPRESENTATION AND AUTHORIZATION: Seller warrants and represents to Listing Firm that no other exclusive representation or exclusive agency agreement is in force. Seller understands that if the warranty representation contained herein is not true, Seller is strongly encouraged to seek legal advice concerning the possibility of liability for two or more commissions before signing this Exclusive Right-to-Sell Agreement.
Unless otherwise specified, Seller warrants, represents and authorizes Listing Firm to take the following actionsas deemed appropriate by Listing Firm:
A. in response to inquiries from potential buyers or cooperating brokers, Listing Firm shall, with Seller's approval, divulge the existence of offers on the Property;
B. display a For Sale and Sold sign as deemed appropriate by Listing Firm;
C. use a key or lock box for entry when Seller is absent, and access the Property by using a keyed or keyless lock-box system;
D. offer the Property in a multi-list or co-op brokerage, subject to the options selected in Paragraph 10, and comply with all rules and regulations associated with multi-list or co-op brokerage;
D.E. acquire loan, utility and other financial information reasonably necessary to market the Property;
(No changes in remaining paragraph except for re-lettering.)
Rationale: The language in this paragraph was added to allow a listing broker to offer services included in the language in this paragraph, and to expand services or not be \required to offer some services listed in this paragraph, especially if they are not offered in their area.
Exclusive Buyer Agency Agreement Paragraphs 6 ,7 and (new) 12
6. SELLING FIRM'S FEE: In consideration of the services to be performed by Selling Firm, Buyer shall pay Selling Firm a professional fee of either:
A.(i)______percent (__ %) of the gross amount of any accepted real
estate contract entered into by Buyer (or value of any property exchanged
for the Property) plus $______for professional services rendered; or
B.(ii) $ ______for professional services rendered.
This fee will be due at the scheduled Closing of the transaction. Buyer is obligated to pay Selling Firm's fee. However, Selling Firm is authorized to accept partial or complete payment of Selling Firm's fee from the Seller or from Listing Firm.
7. BROKER SERVICE FEE: Unless Buyer obtains an FHA or VA loan, in addition to the fee defined in Paragraph 6 of this Exclusive Buyer Agency Agreement, Buyer agrees to pay Selling Firm a fee of $ ______payable only if Buyer enters into any accepted real estate contract for the purchase of a property. The fee is for costs to Selling Firm for services other than preparation of documents. By execution of this Exclusive Buyer Agency Agreement, Buyer hereby authorizes the Closing Agent to add said fee to the Closing of the sale.
Rationale: With the elimination of the Broker Service Fee paragraph, the language in paragraph 6 reflects the option of a fee to be added at the discretion of the listing broker.
12.13. BUYER WARRANTY, REPRESENTATION AND AUTHORIZATION: Unless otherwise specified, Buyer warrants, represents and authorizes the following as deemed appropriate by Selling Firm:
(Remaining part of paragraph is unchanged)
Rationale: Same language as it appears in the Exclusive Right-to –Sell Paragraphs.
Non-Exclusive Buyer Representation Agreement
Paragraphs 5, (new) 6, and (new) 8
5. BROKER SERVICE FEE: Unless Buyer obtains an FHA or VA loan, in addition to the fee defined in Paragraph 7 of this Non-Exclusive Buyer Representation Agreement, Buyer agrees to pay Selling Firm a fee of $______payable only if Buyer enters into any accepted real estate contract for the purchase of a property. The fee is for costs to Selling Firm for services other than preparation of documents. By execution of this Non-Exclusive Buyer Representation Agreement, Buyer hereby authorizes the Closing Agent to add said fee to the Closing of the sale.
5.6. COST OF SERVICES OR PRODUCTS OBTAINED FROM OUTSIDE SOURCES: Selling Firm will not obtain
nor order products or services from outside sources unless Buyer has agreed to pay for them when payment is due.
6.7. SELLING FIRM'S FEE: In consideration of the services to be performed by Selling Firm, Buyer agrees Selling Firm shall be compensated as follows:
A. Selling Firm shall collect a fee from Listing Firm or Seller. Buyer shall not be responsible for Selling Firm's compensation; or
B. Buyer shall pay to Selling Firm a professional fee of either:
(i). ______% of the gross amount of any accepted real estate
contract entered into by Buyer and procured by Selling Firm (or
value of any property exchanged for the Property)
plus $______for professional services rendered, or
(ii). $______for professional services rendered.
This fee will be due at the scheduled Closing of the transaction. Buyer is obligated to pay Selling Firm's fee. However, Selling Firm is authorized to accept partial or complete payment of Selling Firm's fee from the Seller or from Listing Firm.
Selling Firm may not have access to any information concerning properties for sale and not listed with a real estate licensee. Buyer agrees Selling Firm shall not have any duty to review or learn of any “For Sale By Owners” or properties not listed with real estate licensees that may suit the desires or needs of Buyer.
8.9. BUYER WARRANTY, REPRESENTATION AND AUTHORIZATION: Unless otherwise specified, Buyer warrants, represents and authorizes the following as deemed appropriate by Selling Firm:
(Remaining Paragraph unchanged)
Rationale: Same language as it appears in the Exclusive Right-To-Sell Agreements
Exclusive Buyer Agency Agreement Par. (new) 13
Non-Exclusive Buyer Representation Agreement Par. (new) 9
13.14./9.10. CLOSING PROTECTION. Buyer shall have the right to request that title insurer(s), if any, issue closing protection to indemnify against loss of closing funds because of acts of a Closing Agent, title insurer's named employee, or title insurance agent. Any cost for closing protection will be paid by the requesting party(ies). Selling Firm strongly advises Buyer to inquire of the Closing Agent(s) about the availability and benefits of closing protection.
Buyer has been advised of the availability of purchasing a Closing Protection Letter, an additional binder to be added to the Title Insurance Policy at closing., cost not to exceed $25.00 The Closing Protection Letter may be required at the lender’s discretion..
__Buyer accepts the Closing Protection Letter
__Buyer declines the Closing Protection Letter
Notwithstanding the option chosen by Buyer, the Closing Protection Letter may be required at the lender’s discretion.
Rationale:Same language as it appears in the Exclusive Right-To –Sell Agreements
Seller Property Disclosure
Typo corrections made to “mortgages” in question 6 and removing the extra “there” in question 24.
Real Estate Contract (Residential) Par. 2
2. This Property is
Detached Single family detached home with land
One-to-four attached dwelling with land
Manufactured/Mobile Home with Land
Condominium/Town Home
(See Condominium Town Home Addendum Serial No.______)
Rationale: The language in the Real Estate Contract Residential was changed for several reasons. The language “detached” left many people confused, and the check box was left blank in most instances. It was also determined that if a townhome, duplex, tri-plex or quad-plex was being marketed, there was no indicator for that choice.
Real Estate Contract (Residential ) Par. 9
9. TITLE REQUIREMENTS:
Buyer and Seller understand thatListing Firm and Selling Firm are notlicensed title insurance agents as defined by Arkansas law and do not and cannot receive direct or indirect compensation from any Closing Agent regarding the closing process or the possible purchase of title insurance by one or more of Buyer and Seller. An enhanced version of title insurance coverage may be available to Buyer for this transaction. Discuss enhanced title insurance coverage with your title insurance provider to determine availability and features.
A. Seller shall furnish, at Seller's cost, a complete abstract reflecting merchantable title to Buyer or Buyer's Attorney; or,
B. Seller shall furnish, at Seller's expense, an owner's policy of title insurance in the amount of the Purchase Price. If a loan is secured for the purchase of the Property, Buyer agrees to pay mortgagee's portion of title policy. An enhanced version of title insurance coverage may be available to Buyer for this transaction. Discuss enhanced title insurance coverage with your title insurance provider to determine availability and features. If Buyer elects to obtain enhanced title insurance coverage, Buyer shall pay for anythe increase in title insurance cost in excess of the cost of a standard owner’s title policy.
C. Buyer and Seller to equally split the cost of a combination owner's and mortgagee's policy title insurance ordered by Seller in the amount of the Purchase Price, including the cost of a title search, title examination, title insurance binder, final closeout of the title policy and any other related title insurance charges. An enhanced version of title insurance coverage may be available to Buyer for this transaction. Discuss enhanced title insurance coverage with your title insurance provider to determine availability and features. If Buyer elects to obtain enhanced title insurance coverage, Buyer shall pay only the increase in title insurance cost in excess of the equally divided standard title insurance and other costs set forth above in this Paragraph 9C.Buyer and Seller to equally split the cost of a combination owner’s and mortgagee’s policy of title insurance, either standard or enhanced (if enhanced coverage is desired by Buyer and available), in the amount of (as to owner’s) the Purchase Price and (as to mortgagee’s) the loan amount (not to exceed the Purchase Price).