Comparison of Major Differences between FAR and FAR/BAR Contracts

1. ComparisonofMajor DifferencesbetweenFARandFAR/BAR Contracts

2. Obligates buyer to accept rate of interest and loan costs prevailing at time of loan approval. If seller agrees to hold mortgage, seller may obtain credit and employment report on buyer and decide within 10 days whether to make loan. Either party may cancel if buyer, after using diligence and good faith, cannot obtain financing within the financing period, cannot meet the terms of the commitment, or is denied because the property appraises below the purchase price. Provides blank for buyer to specify the interest rate and loan costs buyer is willing to accept. None If buyer does not notify seller in writing by loan approval date that buyer has obtained loan approval or waived the financing contingency, then either party may cancel the contract by delivering written notice not later than 7 days prior to closing; buyer is allowed 3 days after receiving the cancellation notice to waive the financing contingency and to thereafter close the contract. FINANCING FAR FAR/BAR

3. Evidence of title is to be delivered “prior to closing” (literally, any time before the parties sit down at the closing table). Examination must be completed within 5 days of receipt, BUT NOT LATER THAN CLOSING. Provides blank for parties to specify when evidence must be delivered (or 5 days, if left blank). If seller is obligated to deliver evidence of title, buyer has a minimum of 5 days after receipt of the title evidence to examine it. Closing may be extended if necessary to give buyer the 5 days. TITLE EVIDENCE FAR FAR/BAR

4. Buyer must accept all covenants, easements and restrictions which have been recorded in the public records unless they prevent the property’s use as a residence. Buyer is required to accept only those matters of title which are imposed by public bodies or common to the subdivision; oil, gas and mineral rights without right of entry; certain unplatted public utility easements; taxes; and assumed mortgages. TITLE EXCEPTIONS FAR FAR/BAR

5. Definition includes all arthropods and plant life that cause damage or infects seasoned wood. Definition includes only those organisms required to be reported under the Florida Pest Control Act. These currently include: termites, powder-post beetles, old house borers, and wood-decaying fungi. WOOD DESTROYING ORGANISMS FAR FAR/BAR

6. Seller not obligated to treat the Property if : (a) no visible live infestation exists; (b) previous treatment has occurred; and (c) seller transfers a current “full treatment warranty” to buyer at closing. Presumably, “full treatment warranty” would cover treatment of both subterranean and dry wood termites. Seller required to treat only if active infestation exists or if there is any visible damage from infestation. WOOD DESTROYING ORGANISMS (Continued) FAR FAR/BAR

7. Seller’s “repair limit” is 1.5%, unless parties negotiate otherwise. Seller obtains estimate of costs for treatment and repair. Inspection to be performed prior to closing, unless the parties agree otherwise. Seller’s “repair limit” is 1.5%, unless parties negotiate otherwise Buyer obtains estimate of costs for treatment and repair. Inspection to be performed within 20 days of effective date. WOOD DESTROYING ORGANISMS (Continued) FAR FAR/BAR

8. If costs for treatment and repair exceed “repair limit” either party may elect to pay excess and contract will remain in effect. None. If costs for treatment and repair exceed “repair limit”, buyer has option of taking a credit at closing equal to the maximum contractual repair costs or canceling contract. Seller cannot force buyer to close if costs exceed the “repair limit”. Buyer may have a re-inspection performed at least 10 days prior to closing if required by the lender. WOOD DESTROYING ORGANISMS (Continued) FAR FAR/BAR

9. Seller represents that Property has all proper permits, but seller is expressly not obligated to bring any item into compliance with existing building code regulations unless it is necessary to do so to repair a warranted item. No mention of permits or building codes. PROPERTY CONDITION DISCLOSURE FAR FAR/BAR

10. In addition to the Johnson v. Davis disclosure, seller warrants that seller knows of no violations of governmental laws, rules, and regulations that materially affect the value of the Property that are not known or readily observable to buyer. Seller only warrants as to Johnson v. Davis disclosure (seller warrants that there are no facts known to seller materially affecting the value of the property which are not readily observable by buyer). PROPERTY CONDITION DISCLOSURE (Continued) FAR FAR/BAR

11. Buyer may cancel contract if buyer’s inspections determine that level of radon gas in home exceeds acceptable EPA standards and seller is unable or unwilling to reduce gas to an acceptable level. What methods seller may use to reduce radon gas levels are not specified (e.g., open windows). Buyer is given statutory radon gas disclosure. No automatic right to cancel by buyer if level of radon gas exceeds acceptable EPA standards. PROPERTY CONDITION DISCLOSURE (Continued) FAR FAR/BAR

12. Buyer may cancel the contract if Property is in a Special Flood Hazard Area or Coastal High Hazard Area and buildings are built below minimum flood levels. Warns buyer not to execute until buyer has received and read the Homeowner’s Association Disclosure. None. Warns buyer not to execute until buyer has received and read the Homeowner’s Association Disclosure. PROPERTY CONDITION DISCLOSURE (Continued) FAR FAR/BAR

13. None. Buyer is responsible for property tax increase. Buyer is given disclosure that mold may cause health risks or damage to property. No contractual right to an inspection or remediation. Buyer is affirmatively warned that a change in ownership will trigger a reassessment of the property taxes. PROPERTY CONDITION DISCLOSURE (Continued) FAR FAR/BAR

14. None. Buyer expressly obligated to repair any damage to property caused by buyer’s inspections. Provides blank for parties to specify “Inspection Period”. If not specified, 10 days after Effective Date. Buyer may conduct own inspections. No express obligation. “Inspection Period” is 20 days after the Effective Date. INSPECTION, REPAIR & MAINTENANCE FAR FAR/BAR

15. Buyer must, within 5 days after Inspection Period: Report defects in writing; Deliver seller copy of inspection report. Buyer must, within Inspection Period: Report defects in writing; No obligation to deliver inspection report to seller. INSPECTION, REPAIR & MAINTENANCE (Cont’d) FAR FAR/BAR

16. Seller may have a second inspection and estimate of costs to repair made. If first and second reports differ and parties cannot agree to a resolution, then a third binding inspection and estimate is to be performed by an inspector chosen by both parties. None. INSPECTION, REPAIR & MAINTENANCE (Cont’d) FAR FAR/BAR

17. Seller required to assign all assignable repair and treatment contracts to buyer at closing. If costs of repairs exceed “repair limit,” buyer may elect to apply repair limit to designated repairs, accept the balance of the Property in an “as is” condition, and close. Seller required to assign all assignable repair and treatment contracts to buyer at closing. If costs of repairs exceed “repair limit,” buyer may elect to pay the excess but is not obligated to accept the balance of the property in an “as is” condition. INSPECTION, REPAIR & MAINTENANCE (Cont’d) FAR FAR/BAR

18. If buyer fails to conduct a walk-through inspection prior to closing, then Seller’s repair and maintenance obligations are deemed to have been fulfilled. Purpose of walk-through is limited to verification that required repairs have been made and buyer is prohibited from raising other issues which may be observed. Purpose of walk-through is to confirm the maintenance of the property and the repair obligations have been made and buyer may not raise other issues which may be observed. Failure to conduct a walk-through is not a waiver of seller’s repairs and maintenance obligations. INSPECTION, REPAIR & MAINTENANCE (Cont’d) FAR FAR/BAR

19. Buyer’s failure to deliver timely written notice to seller regarding anycontingency will result in that contingency being deemed null and void. None. However, time is of the essence. NOTICE FAR FAR/BAR

20. If fire or other casualty occurs and damage, regardless of amount, can be repaired within 45 days from closing date, then seller must make repairs and transaction will proceed to closing. If restoration cannot be completed in time, then Buyer may elect to either close and receive any insurance proceeds or cancel contract. If fire or other casualty occurs and cost of restoration does not exceed 1.5% of the purchase price of Property, then seller must repair and transaction shall proceed to closing. If damage exceeds 1.5%, then buyer may elect to either close and receive the 1.5% or any insurance proceeds, or cancel the contract. RISK OF LOSS FAR FAR/BAR

21. Only business days (no Saturdays, Sundays or holidays) are counted in computing time periods. If any deadline falls on a Saturday, Sunday or national legal holiday, then performance will be due the next business day. All calendar days are counted in computing time periods unless: period is less than 6 days, in which event business days are used; If last day of any period falls on a Saturday, Sunday or on a state or national legal holiday, then period is extended to next business day. CALCULATION OF TIME FAR FAR/BAR

22. If any provision is or becomes invalid or unenforceable, all remaining provisions will continue to be fully effective. None. SEVERABILITY OF CLAUSES FAR FAR/BAR

23. Expressly prohibited without seller’s written consent. Permits parties to choose whether contract will be assignable, and if permitted, whether buyer will be released from further liability. ASSIGNABILITY OF CONTRACT FAR FAR/BAR

24. Seller’s Default: Buyer may elect to receive return of deposit without waiving right to either seek damages or specific performance. Seller to pay broker’s full commission if seller fails to close for reasons other than failure after diligent effort to cure title. Seller’s Default Buyer may elect to seek specific performance or return of deposit without waiving right to seek damages. None. DEFAULT FAR FAR/BAR

25. Buyer’s Default: Broker to receive 50% of all defaulted deposits received by seller as a result of buyer’s default. Broker obligated to split such sums equally among cooperating brokers. Buyer’s Default: Does not mention broker’s commissions. It is assumed the amount and terms of payment of the commission are covered in the listing contract and MLS offer of cooperation and compensation. DEFAULT (Continued) FAR FAR/BAR

26. Requires parties to pursue settlement of disputes through mediation for 30 days, and, if unsuccessful, to submit it to binding arbitration. Licensees do not have to participate in mediation or arbitration to settle their disputes with parties unless they voluntarily choose to do so. Does not require mediation or arbitration of disputes. The prevailing party in litigation is entitled to recover attorneys fees from the other party. DISPUTE RESOLUTION FAR FAR/BAR

27. Each party must pay 50% of mediator’s and arbitrator’s fees and all of their respective attorney’s fees incurred in arbitration. Claims against escrow agent to be arbitrated if escrow agent consents. Does not require mediation or arbitration of disputes. The prevailing party in litigation is entitled to recover attorneys fees from the other party. DISPUTE RESOLUTION (Continued) FAR FAR/BAR

28. Buyer and seller to pay all costs and expenses incurred by broker arising from party’s misstatement or failure to perform. Buyer and seller hold harmless and release broker from liability, loss or damage based on Party’s misstatements or failure to perform. None. None. BROKER LIABILITY FAR FAR/BAR

29. Broker’s requested performance of any task not regulated by Chapter 475 including referral, recommendation or retention of any vendor; Vendor products or services; or Vendor expenses. None. BROKER LIABILITY (Continued) FAR FAR/BAR

30. Provides that seller and buyer direct the closing agent regarding split and payment of commissions. Allows brokers to specify commission split. Allows broker to retain the commission from the escrowed funds. Does not mention brokers commissions. It is assumed the amount and terms of payment of the commission are covered in the listing contract and MLS offer of cooperation and compensation. BROKERS FAR FAR/BAR

31. If repairs exceed the maximum cost the seller is required to pay, the seller will, within 3 days from receipt of notice of the excess cost, deliver written notice to buyer of seller’s intent to pay the excess or cancel the contract. If repairs exceed the maximum cost, seller must give written notice to buyer within 3 days of seller’s intent to pay some, all or none of the excess. If seller elects to pay less than the full amount of the excess, buyer may, within 3 days, provide written notice of buyer’s election to pay the excess or cancel the contract. COMPREHENSIVE RIDER – VA FINANCING FAR FAR/BAR

32. Replaces the Inspection Period and Maintenance, Inspections and Repair clauses (Paragraphs 6 and 8). Repair and Termite Repair limits are 0%. Buyer may have inspection within a time certain and may cancel contract if repairs exceed a specified dollar amount. Failure to timely report with a copy of the inspection report obligates buyer to purchase “as is”. Wood Destroying Organisms (Standard D) and Inspection, Repair and Maintenance (Standard N) are deleted. Maximum repair costs in Paragraph XII are deleted. Buyer may have inspection performed within a time certain and, in buyer’s sole discretion, determine property is not acceptable and cancel the contract. COMPREHENSIVE RIDER – “AS IS” CLAUSE FAR FAR/BAR

33. No separate clause; part of the “AS IS” clause. Separate clause. Allows buyer a time certain to inspect the property and, if buyer determines that property is not acceptable, buyer may cancel the contract. If buyer elects to proceed or fails to timely cancel, then the contract remains in effect and Paragraph XII (maximum repair costs) and Standards D and N apply. COMPREHENSIVE RIDER – RIGHT TO INSPECTION AND RIGHT TO CANCEL FAR FAR/BAR

34. None. Either party may enter into a like-kind exchange (Section 1031 of the IRS) and the other party shall cooperate provided: 1) the party incurs no liability related to the exchange, and 2) the closing is not contingent upon nor extended or delayed by the exchange. 1031 EXCHANGE FAR FAR/BAR