Starting January, 1, 2009, using the new Real Estate Purchase Contract (REPC), was mandatory for all real estate transactions involving a licensed real estate agent or broker. This form could be used starting August 27, 2008, but most people opted to wait until the mandatory date. There are a number of changes to this form, but I will focus on what I think is the most important change in this post. I will look at other changes in upcoming posts, so check back.

Section 10.2 of the REPC

The old REPC, 10.2 provided Seller Warranties:

10.2: Condition  of  Property.   Seller  warrants  that  the  Property  will  be  in  the  following  condition  ON  THE  DATE SELLER DELIVERS PHYSICAL POSSESSION TO BUYER: (a) the Property shall be broom-clean and free of debris and personal belongings.  Any Seller or tenant moving-related  damage to the Property shall be repaired at Seller’s expense; (b)  the heating, cooling, electrical, plumbing and sprinkler systems and fixtures, and the appliances and fireplaces will  be in working order and fit for their intended purposes; (c) the roof and foundation shall be free of leaks known to Seller; any private well or septic tank serving the Property shall have applicable permits, and shall be in working order and  fit for its intended purpose; and the Property and improvements, including the landscaping, will be in the same general condition as they were on  the date of Acceptance.

The New REPC, 10.2 is in AS_IS Condition:

10.2: Condition of Property/Buyer Acknowledgements.   Buyer acknowledges  and agrees  that  in  reference  to  the  physical condition of the Property: (a) Buyer is purchasing the Property in its “As-Is” condition without expressed or implied  warranties of any kind; (b) Buyer shall have, during Buyer’s Due Diligence as referenced in Section 8.1, an opportunity to  completely inspect and evaluate the condition of the Property; and (c) if based on the Buyer’s Due Diligence, Buyer elects  to proceed with the purchase of the Property, Buyer is relying wholly on Buyer’s own judgment and that of any contractors  or inspectors engaged by Buyer to review, evaluate and inspect the Property. 
 

What is the difference?

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Basically, the old REPC provided some protections for the buyer, which at the time seemed like a good idea. The problem started when sellers were not aware of some of the problems discovered about their homes by a potential Buyer. After the discovery of a defected warranted item, it was mandatory for the seller to fix the specific warranted item. In some cases this was an extreme hardship for a seller if the repair ran into thousands of dollars and the seller didn’t have the money. The seller could NOT cancel the contract and could be in default.

What the Buyer needs to do now…

photo:loraineritchey

Caveat Emptor, meaning, let the buyer beware!  Seller’s are still required to disclose any known defects about the property, but it is the unknown defects that a buyer needs to discover. It is more important than ever for the Buyer to inspect the property. If you find a defect, you may request that the seller repair the item, but now, the seller is not required to repair a defect. The buyer can cancel the contract if the seller does not agree to repair an item.

If you are not sure how this change and all other changes will affect you when purchasing or selling your home, contact a professional who will help you navigate this process.