Q: Hi Jeff, if my client ends up wanting to put an offer for a 4 plex, do I use the commercial real estate purchase contract or the residential purchase contract? Also are the documents required the same as a regular residential contract? Such as MCA, BUYER ADVISORY, EXT... thanks and happy new year!!

A: You can use the AAR Residential Purchase Contract for that.  You will use all of the routine documents, and importantly you will also use the form titled "Residential Income Property Addendum to the Residential Purchase Contract."  

PAGE 3 OF HOA ADDENDUM:

NOTE:  You need to watch for this language on the HOA addendum or in the pc.  If there is an additional fee that is not being disclosed on the HOA Addendum (this is common, many sellers do not know there is a cap improvement fee for example), then the seller will be liable to pay if they agree to this stipulation.  LANGUAGE:  Line #’s 80-81 are hereby considered removed from the HOA Addendum which has been attached to this purchase contract.

 

Also be sure to remove any language such as noted here on line #’s 86-88.  Seller has no control as to when HOA disclosures will be sent/received. (unless <50 units in the subdivision). Also remove language regarding HOA repairs...better to say “due to possible scheduling conflicts, hold ups or delays, the parties agree that some repairs which are the responsibility of the HOA may be completed after COE.”

LANGUAGE:  “Line #’s 86-88 are hereby considered removed from the HOA Addendum which has been attached to this purchase contract.  (Maybe: Seller has no control as to when HOA disclosures will be sent/received).  Additionally, seller does not control when repairs which are the responsibility of the HOA will be completed.  The parties further acknowledge and agree that some HOA repairs may occur after close of escrow.  If this is the case, seller is hereby relieved of any further responsibility or liability for such repairs.”

BOTTOM OF PAGE 3:

 

BUYER SIGNS THE BOTTOM OF PAGE 3 AND ACKNOWLEDGES THAT THE EXACT AMOUNT OF FEE’S MAY NOT BE KNOWN UNTIL HOA DISCLOSURE DOCUMENTS ARE RECEIVED, AND THAT…..

 

BUYERS AGENT/ BROKER DID NOT VERIFY ANY OF THE HOA INFORMATION!

 

YOU AS AN AGENT COULD “TAKE THE FALL” AND THE BUYER COULD LOOK TO YOU FOR BEING LIABLE TO PAY IF YOU (AGENT) ASSUMED RESPONSIBILITY FOR VERIFYING THIS INFORMATION! 

PAGE 3 OF HOA ADDENDUM:

 

BE CAREFUL!  If buyer includes this type of language, seller will be responsible for paying whether they are aware of the fee or not!

 

Don’t let the other realtor slip one by you.  This is a tactic realtors who think they are “clever” will try to pull on you.  They don’t care that they are creating a “WIN-LOSE” scenario between seller & buyer. 

 

Always try to keep it at “WIN-WIN.”

PAGE 2 OF HOA ADDENDUM:

 

MAKE NOTE OF DISCLOSURE TIMELINES & REQUIREMENTS

 

 

 

Always try to keep it at “WIN-WIN.”

 

 

 

 

 

 

 

HOA RESALE DEMAND LETTER  WILL BE ORDERED BY TITLE COMPANY. 

 

BUYER WILL BE RESPONSIBLE FOR VIOLATIONS IF NOT CLEARED PRIOR TO COE.

HOA ADDENDUM:   Revised June 1, 2020

PLEASE READ THE INSTRUCTIONS

PAGE 1 INFORMATION TO BE COMPLETED BY SELLER!

SELLER SIGNS BOTTOM OF PAGE 1 CERTIFYING THE INFORMATION IS TRUE TO THE BEST OF THEIR KNOWLEDGE, AND...THAT BROKERS DID NOT VERIFY THE INFORMATION!

HOA VIOLATION ADDENDUM  LANGUAGE:  As addressed in the Dove Valley Ranch Community association resale demand letter of December 5, 2018, Seller agrees to replace weathered wood slats on yard gate in accordance with HOA requirements.  Paid receipts evidencing the repair shall be provided to buyer three (3) days prior to COE date.  Any related assessments, liens or fees shall be paid by the seller.  OR 

Seller agrees to provide documentation that any HOA violations are cleared prior to close of escrow.  Any and all costs and fee’s associated with HOA violations to be paid in full by seller no later than COE.”

Ok to use this LANGUAGE:  “Seller agrees to remediate and clear any HOA violations, if any, at sellers expense prior to COE.”

June 1, 2020 Forms Revisions:                                                                                    H.O.A. Condominium / Planned Community Addendum (HOA): The intended

use of this form is for: (i) sellers to disclose on page one those costs associated with the

H.O.A. that are payable at close of escrow; and (ii) buyers to identify on page three their

offer as to which party pays which fees. However, sellers have been improperly completing page three before providing the form to the buyers. To curb this behavior, the following revisions have been made: (i) line four now instructs the seller to complete the information on “page 1”; and (ii) line 72 now states: “NOTE: Lines 73-80 TO ONLY BE COMPLETED BY BUYER AND NOT SELLER!” Redline version here.

 

Note: No line numbers were harmed in the making of these revisions. In other words, even if an HOA were to identify their fees via an outdated HOA Addendum, the line numbers on both versions will still match.

zipForms Docs Res Inc. Prop. Add: To SPDS and PC

HOA ADDENDUM PROCESS: 

 

1) The listing agent should have the seller complete and sign page 1 of the HOA addendum and then upload all 3 pages to the docs tab of the MLS.

 

2) Once a buyer is ready to make an offer, they will get the HOA Addendum from the MLS (or call the listing agent and ask for the seller completed HOA Addendum), complete and sign page 3 of the HOA addendum and then submit all  3 pages along with the purchase contract.

 

3) All 3 pages should stay together as a package rather than just uploading 1 page.

 

10) LISTING INCOME PROPERTY WITH TENANT IN PLACE, CBS CODE, ADDENDUMS…..SEE CASE STUDIES…...

The sale is subject to the lease as follows:  RENTAL, SALE IS SUBJECT TO THE LEASE: WHAT HAPPENS IF PROPERTY IS SOLD?   

 

Residential Income Property Addendum: The parties should acknowledge in the purchase contract that the property is currently tenant occupied and that the sale is subject to the terms of underlying lease.  Arizona law says the tenant gets to stay in the property through the term of their current lease.  Terms and conditions of the lease cannot be modified so the tenant retains possession with no changes to the lease agreement.  The tenant will start paying rent to the new owner however, so as soon as practical the current owner should notify the tenant by registered or certified letter (or hand delivery) notifying tenant of the sale and include the information and address of the new owner so they know where to remit the monthly rent payments and who to contact if they are having any issues.

 

NOTE:  The tenant maintains their right to a 48 hour notice prior to entry or anyone showing the home.  You are not allowed to install a lockbox on the property without the tenants written authorization to do so.  If the tenant agrees to this, you should make sure the lockbox is programmed with a CBS code.

 

Anytime you’re dealing with residential income property, you should be using the Res Inc Prop Addendum (RIPA),  whether it’s a single family home, a single unit condominium or multi-family.  This addendum protects the buyer and requires the seller to provide additional disclosures to the buyer within 5 days of contract acceptance, such as providing copies of leases, rental agreements, rental applications, and also addresses how both refundable and non-refundable deposits will be handled at COE.  Use of the Residential Income Property Addendum will also trigger the seller to provide an additional, second SPDS "Residential Income Property Addendum to the Residential SPDS (see below):  I have attached a screenshot of both so you can see what they look like, both are in zipForms and Transaction Desk.  

DOMESTIC WATER WELL USE ADDENDUM:  DWWA,  Contract Review Note:  You have submitted a Domestic Water Well/Water Use Addendum to your file. Please be sure the Seller provides the Buyer with a completed AAR Domestic Water Well SPDS per lines 8-11 of the Addendum and upload the fully executed copy to your file. Thank you!  Use of this addendum will also trigger the seller to provide an additional, second SPDS (see below):

Q: Could you tell me if we (buyers) need to do an inspection or is this something that the sellers should have.  Could this be public record?  I have asked the sellers agent but he has not responded.  Just wanted to see if you could give me any guidance.  A: Hi X, If you are writing a contract for property that is served by a well you should attach the Domestic Water Well Addendum which is located in zipForms.  This will address questions such as water quality, well records, well inspections, etc AND importantly it will trigger the seller to provide a second SPDS called the "Domestic Water Well/Water Use Addendum SPDS" which is also on zipForms.  Both of these addendums will address the many questions that arise when purchasing property that is served by a well.  I have attached a snapshot view of these two forms with this email.  You should bring these addendums into play right away if you have not included them with your initial offer.  Let us know, thanks, Jeff.

Q:  I’m Selling a Tenant in place investment property. Do I Need any specific paperwork that states that they will keep tenant in place or just make an addendum to purchase contract (if they don’t include as instructed by MLS to include in offer paperwork ? ) 

How can we remove photos from a listing that closed in January of 2019?

Several steps in the process:

 

1) Open listing in MLS and click 3 dots in right upper corner (see screenshot)

2) Click on report an error (screenshot).

3) Click on I am reporting a self-reported error on my listing and enter "Homeowner is requesting the removal of listing photos." (screenshot).

4) Data Integrity will make the changes usually within one or two days.

REMOVE PHOTOS FROM MLS

ARIZONA DEPARTMENT OF WATER RESOURCES:

https://new.azwater.gov/

BACKUP OFFER:  Hi X, The seller should send written notice that the back-up buyer is now in the first position...see screenshot from additional clause addendum…

 

 

 

 

 

 

 

 

 

 

 

 

The "Notice/Disclosure" Form is available for the written notice, that form is available on both zipForms and TransactionDesk...see following screenshot:

 

 

 

 

 

 

 

 

 

 

 

 

You would write something like:  “Consider this to be your notice from the seller that the prior contract for 123 Main Street has been cancelled and your back-up contract is now in the first position.  Please open escrow immediately and have us copied on the escrow receipt."  Have the seller sign off and deliver to the back up offer.  Sometimes notice is given on an email, sometimes it might even be a phone call but the contract says "written notice", so the best practice is to use the Notice/Disclosure form although some agents will have seller and buyer sign an addendum of understanding.