Navigating the Waters
A real estate contract can be confusing for both buyers and sellers, especially for first-timers. Not only is there plenty of jargon that many may not be familiar with, there are also many deadlines stipulated that must be met. Failure for these deadlines to be satisfied can result in a dead deal, which is why it’s essential that all necessary parties do their due diligence to meet these milestones. Our team is here to make sure both parties fulfill their obligations to ensure a smooth transaction.
Although there are many dates and deadlines in a real estate contract, most of the time they’re not all used. The following are some of the more common deadlines that will be stipulated in a real estate contract that both buyers and sellers need to stick to.
If the buyer does not submit the earnest deposit check with the offer, there will be a certain timeframe within which it will need to be handed in. Usually, this deadline would be anywhere between 24 hours to a few days after offer acceptance. By law, an agent is not able to retain any escrow funds in their possession beyond the legal time limit. There may be a requirement for a second deposit to be made into escrow, which will be stipulated in the contract. Some buyers in Florida require a 5 to 10% total escrow deposit, some lower. Keep in mind, the higher the escrow deposit, indicates to the seller the you are a serious buyer.
The seller is obligated to submit the existing title insurance policy or title abstract within two to three weeks after the date of the real estate contract and before closing. If not, the seller will be obligated to issue a credit to the buyer.
Real estate contracts can come with any number of contingencies, depending on what the buyer or seller agree to. That said, the more common contingencies tend to be for financing, home inspections, and appraisals. These contingencies need to be either fulfilled or waived before a specific date, or the deal can fall through. In addition specifying the contingencies in the offer, the contract will also stipulate specific deadlines for each.
For instance, the default home inspection contingency deadline for the buyer in Florida is 15 days, which is when the inspection will need to be completed and the contingency waived. However, the buyer can specify another date in which the inspection will be completed by. We are beginning to see many sellers requesting a 10 day inspection period, which allows the sellers more flexibility to get the home back on the market should the sellers not meet the buyers demands.
HOA Disclosure Summary
If the property in question is run by a homeowner’s association, then the HOA documents need to be delivered by the seller to the buyer within a certain timeframe. This will provide the buyer with enough time to review the documents to ensure they are satisfactory. If purchasing a condo, villa, or townhome in Florida, your lender will request these documents to ensure the property is "warrantable".
The real estate contract also requires the seller to request these documents from the HOA within 3 days following offer acceptance. By default, the buyer has 15 days from acceptance to waive the HOA disclosure contingency, or cancel the contract altogether.
The buyer may obtain any survey of the property to identify if there are any setback violations or encroachments on the property. The seller will have a deadline to deliver the survey, after which the buyer has a certain amount of time to review the survey and notify the seller of any issues before the contract closing date.
If the buyer does not obtain a survey from the seller or communicate any grievances within the time frame specified in the contract, the buyer can no longer make any objections to issues that probably would have been evident in a survey.
When the buyer initially submits an offer, the seller will have a certain amount of time to either accept or counter it. Usually, the deadline to communicate offer acceptance or a counter offer is 11:59 pm of the same day, or even a day or two later depending on the day of the week. If the offer is accepted within the time frame specified, the contract now enters an escrow period. If acceptance or a counter is not communicated within this timeframe, the contract is null and void. If the seller counters the offer, a new deadline is established.
This is the date that title is transferred from the seller to the buyer and the keys are handed over. If either party does not successfully close on the specified closing date, that party is considered to be in default of the contract. At this point, the other party may choose to seek out legal options. If the buyer defaults, the earnest deposit may be forfeited to the seller. If the seller defaults, the buyer may sue for damages.
The Bottom Line
While the standard NABOR Contract for Sale and Purchase, or, the “AS IS” is common in Collier and Lee Counties, both will include deadline suggestions for various components, these deadlines can be negotiated between the buyer and seller. That said, it’s important to consider what would be an appropriate amount of time needed to ensure each deadline is comfortably met without each party having to either be rushed to meet these dates or have to wait an unnecessarily long time. Once deadlines are inserted in the contract, both parties should do their best to make sure they’re met, or else the contract could be either delayed or killed altogether.
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