In this final episode of our series on the differences in the South Carolina REALTORS contract and the Central Carolina REALTORs Contract we examine tax adjustments, contract ratification and financing. Becki Ashby, Byron King and Austin Smallwood and I discuss how each provision is handled in the respective contracts and how it differs from the other contract.
Also, I discuss contract release and issues with the form. And of course, another segment of Gary's Good News Only.
Enjoy and share.
Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your jurisdiction for applicable legal advice germane to your issue.
Hey guys, and welcome back to yet another episode edition dirt. This is the only podcast about the real estate agents craft and I appreciate all of you tuning in every week we are now up to our 32nd episode of dishes. So I am your irreverent and opinionated, but rarely wrong host Gary picker and we're also coming from deep inside Blair Cato in downtown Columbia, South Carolina, where Blair Cato has its main office. But as you all know, we also have an office in Lexington and one in Malden. And we'd love to see you for closing. So even if you like our podcast or don't like our podcast, we'd love to see you come see us for real estate closing. Well over the past few weeks, we have been going over the differences with the South Carolina realtors Association and the Central Carolina realtor Association contract. So while this might not be the most exciting topic that you've ever heard, it is a very important one because you guys are being presented with multiple offers on every single house coming from multiple contracts or multiple contract forms. And so it's very important that you understand because I don't know how you could ever explain an offer in its entirety. If you don't know what's included in that offer, or how that offer is handling certain provisions differently. Even if you don't care about any of this and you never get an offer on a different contract. This podcast is still good for you because we are going to review certain topics in the contract and how that contract deals with that particular topic. So this is worth at least what 25 or 30 minutes of your time today while you're working out cooking or doing whatever that you'd like to do. So this week, we're going to review how the contracts deal with adjustments, additional terms in the contract, counting days in the contract, which is very different from contract to contract, how contracts are ratified. And lastly, financing provisions. We'll also do a quick hit this week on the release of a contract when the contract dfts as well as the problems that I'm seeing on the form and signatures on that form. Lastly, we're going to do one of Gary's good news on. But before we start, I do want to talk to you about again, a sighting resource that's for you that is absolutely free. This is a brilliantly written guide, it's called The Complete Guide to the south carolina residential property condition disclosure statement, it is downloadable as a PDF or as an ebook from Blair cato.com i do is click on the resource tab on the toolbar, and then select relative resources. And at the bottom of that page, you should be able to find the book and how to download you need to download this book, share it with your sellers, share it with your buyers with your big and other agents. Because this has everything you need to know about seller disclosure, in fact, is 59 pages of brilliant because I wrote it. But it does come with a robust index, which will make finding any matter that you have or any issue you have, with seller disclosure, very easy to find by simply looking at the index and then flip into the section that deals with your particular issue. You should need to read it once all the way through, highlight it and bookmark it. And then you can come back and visit any particular issue you have now all with our show that this week, as I mentioned is going over certain provisions in the ccra contract and the South kind of state contract for the road Association. And we're going to go over those differences and talk about how they apply to each one of the contracts. So in this first segment, I'm going to discuss how the contract deals with adjustment of taxes, homeowners insurance and utilities or any other types of adjustment. adjustments are very important under South Carolina realtors Association paragraph 22 rs and paragraph 19 ccra ccra does not prorate any utilities. The only time there is a proration of utilities is the East Richland sewer district because they have somehow negotiated with legislatively an automatic lien without having to follow it. So because it is automatic Wayne we have to prorate each Richland sewer, which is just one section of Richland County tax prices and a little bit different worded and ccra. We basically say you use last year's tax bill. The South Carolina Association uses the attorney can use the information they deem reliable. As an attorney, we think the only information that is reliable is last year's tax bill because the tax estimator on every one of their websites come to the big disclaimer, this may not be relied on for any purposes. This is only for information purposes. So as the CRA we just went ahead and said was gonna use last year's paxville. So there would not be an argument as to Well, this attorney will use an estimator this one won't. The last part I would say on this adjustment is and ccra contract, there is no repro ration. It is final at closing whatever it was, if there was a change in taxation, there was an increased tax bill there was a change from 6% to 4%. There is no reparations date contract allows for Reparations ccra decided we didn't want to do that because in my experience as an attorney was when the tax bill changes by $14 I would receive 74 phone calls and emails wanting to know why I haven't gotten the job and $14 back and then they start calling and bugging the real estate agents want to know and as you all know was that seller finishing the closing we have absolutely no control The seller or the buyer to demand that they do anything. And when you have a seller that has moved away to Idaho, and you have a buyer who feels that they're entitled to another $73, back on the tax proration, it was nearly not nearly it was simply impossible for us to get in contact with the seller, not a home and you couldn't do anything. So who would spend so much time going back and forth. And that's why we do that. In the second segment, today, Becky is going to discuss with you the use of additional terms in the contract. And the ccra contract on we have paragraph 18, where we can put in additional terms, you know, if you are going to attach some agenda to the contract, you'd write that in there. So str has that paragraph 28. So it's a nice kind of concise defined place where you would be identifying the agenda in that section. I do have a question for Austin. If you do have other terms, I know it says terms at the heading but it wouldn't be appropriate to say the listing agent is the mother of the seller. Is that something that would also go in this section? Or do you have an actual addendum that you need to attach stating that? Oh, give the caveat. I guess the barn gave the beginning what I call the punctuation rule that if you're writing something in the contract, the required punctuation, you need to stop before you put the punctuation a call to your attorney Call, call the hotline, etc. You know that really the intent of our paragraph 28 was to list like I said, to have sort of that checklist of Okay, what other agendas are there to this contract. Maybe you do a 390, which is sort of our blank agenda form for you know, you're chasing the closing dates, you say, Hey, we have 390 number one, maybe parentheses to change closing date 390 number two farmacia. Point 391 is all of our forum is a three page form. Over time, we sort of taken Hey, what are the most common attendance clauses two other terms, we see parties wanting to add to the contract, we sort of pre printed some language in there, most commonly used one on there, the backup clause. So sometimes a backup contract, that's where you'll find your backup clauses at the bottom of form 391. Disclaimer of the someone is your real estate. You're the seller or buyer is your mother, cousin, you know, under Article four, the code of ethics that you should make the disclaimer, I'm not sure you have to do that in the contract. I think a separate email would be suffice as long as you can proceed there. But he has sort of our recommendations. If you ever feel like you need to write something to give us call the hotline or have your client talk to their attorney. Completely different topic. I think everybody Bernie's understanding is again, the definition of days. And these contracts, everything goes back to Days and counting days and so forth. Remember, under ccra, a business day starts at 8am and runs a 24 hour period, it cannot begin or end and it's not counted as a Saturday, Sunday or legal holiday period. And that's very different than the state contract which has our dates, which we may look at doing that some and ccra is having hard days to the parties negotiate the draw along and write the date today and whatever. And then they use calendar days and business days. I understand also you said the current business day is no longer in your contract at all. There was there is no business days, and Are any of our residential contracts. Or in as of next, as of Monday, next Monday in our land contract, or an ad or any of our agenda, I will make a point when you see a hard date that actually requires a hard date. So do not write in there you date calendar days, nine business days. You know if it says a date, it needs to actually be a month, date and year. Do not write adult for I live that and do not use TBD, it needs to be an actual date a party needs to change it, you can always go back and do a pen and a change. Make sure you do a hard date and make sure that you're keeping track of those dates, especially if you're negotiating back and forth. Like I said that you don't end up boxing yourself. And if you go under contract and go oh, we just gave up now we only have two days for repairs. In this section, I'm going to discuss ratification of the contract and how contracts are ratified in the state contract as well as the CCR a contract that well the last thing was the ratification. Our ccra has that once the receiving agent. The last receiving agent receives the contract time and date stamp the last page and in return the whole contract back to the other agent. No need for that with the SCR contract. Right. But the legal concept the same for the state contract as it is for the ccra contract. You don't have a ratified contract and for the last person making the final offer that was accepted, received the contract back. The signed sealed delivered agent says that the r&b song from the 70 design sealed delivered says signing the contract does not make it the contract has to be signed and delivered back to the person who made the final offer that was accepted, whether it's an offer or accountable. And that's where the SCR that knows address email bats are super important because it's only considered delivered if you give it to the appropriate notice email address in fact, so make sure that you're sending it to Wherever it was, and under that buyer filler line on the last page and just a segment Becky's going to discuss the differences in financing under ccra, paragraph six and SCR paragraph number seven. Sure, we'll have a couple slides. A couple of differences here. And I think that everyone has probably heard from Austin, we have boilerplate timelines for different steps along the way in the in the financing. So I mean, the benefit there is we all know what it is, it's a it's efficient, you know how to explain it, you know, how to plan for it. So that's the difference there. And of course, then with the state contract, where you have the control of being able to identify the dates, and and really give reassurances, it almost seems like, you have more of a chance to make sure that you're staying on the ball, and that you're communicating that to the other agents. So, you know, it's more deliberate with the state. The we do have sections, I mean, we didn't print out everything, but entire paragraph six, but our paragraph six is, is pretty comprehensive. It includes everything about the appraisal, that was a cash sale, seller, financing all kind of bundled together. So, so anyway, so those are the key differences there on those slides, the financing, contingency expiration date. And as Austin said, No financing contingency expiration, so got to be mindful of that. Put in the ccra contract, our financing contingency expires at closing runs all the way to closing. So there's not a there's not a there's not an expiration date prior to it the it essentially is satisfied when the warning when the window opens. And that's that's quite a difference. That's more beneficial to the buyer force. Oh, the changing of lenders. Now I don't know our car caught ccra contract may be addressing this in the next draft change. But currently there there's no required notice for that. So it is I like that it's in there with the state contract because sometimes agents may forget that they need to keep the other party informed. So it's a good good to on making sure that you do that. And the appraisal contingency terms we have here in our financing section, essentially are kind of the same, but the number of days and and I don't know if Austin can go more into that appraisal portion. I think is it the seller, the seller gets notified they have the right to say within the five business days if they agree to lower the price, or is that something the buyer issues like what does that process look like? Essentially the seller is you know, so my example the houses the purchase price, this contract price is 250,000. The seller is notified, hey, the appraisal came in at 240. The seller has five calendar days to lower that contract price to 240. If they fail to do so then the buyer has the option of either purchasing the house anyway. or terminate. If the seller lowers the price to 240, the buyer has no recourse to walk away and can't walk away without potential legal recourse. And they praise Okay, and she also does not work if the house appraises for 260, the purchase price still remains stupid. So it only works down it does not work. And essentially is the seller determination of whether or not to change the price. The big difference in our contract the ccra and yours is that if a hap contract is for 260 and it appraises at 200. The buyer has the right to walk they do not have to buy it if the house price is less they have the right to terminate contract, even if the seller agreed to lower the costs. That's a big difference in our contract. Yeah, definitely. I said I did have since we are talking about financing. Now, with those fine details that you have more about the loan itself, like what the maximum loan the value is, is that then a contractual obligation whereby they said they were going to do 80% maximum financing they ended up doing end? I mean is that how does that come into play? Just notice just need to be given on there. So and then buying premium for I think if you were to put 80 and then you end up doing not a venue say, hey, actually, I'm gonna want to be 90 that would need to be a pin any change agreed upon by both parties. So it may have relied on that when making the contract. That sort of the recommendation videos on that button. Yes, exactly. And this is really going to come into effect if the deal goes south, right. You don't get to closing the closes a lot of just kind of everybody moves on with their lives. Austin's giving you the best rep risk management recommendation. Going to a higher loan to value seller might have relied on saying hey, you're putting 20% down saying a multiple offer, right? They're like, Hey, this is a strong buyer. They're putting 20% cash down. Now we find out that you're really not pursuing a 20% cash down. Sellers can feel like they were not told the truth during the multiple offer negotiations to try to be accurate and then drive update it as Austin says, if the deal doesn't close, your buyer could be facing seller losses. And that's the same thing at the loan type changes. So we do have in the language in there that if you change the lender and it doesn't affect the closing date, then that's completely fine. But if you switch from loan type, that is one of those checkboxes will also require a pin and a change, both parties have to agree because the seller may have chosen your offer based on your loan type. So that is a term that would have parties. And that would be similar in our contract. Also, no difference there. I think that's good on the on the financing section. So there you have it. Those are the main differences between the CCR a and the SCR contract. Please keep in mind, these are just the main differences. There are many, many more differences. But in these last two to three podcasts, we just wanted to make sure we hit the highlights so that you would know what the main differences are. Of course, if you have any questions about this, you can always email me at Gary at Blair Cato calm. Now let's move right on over to our quick take section. And today we're going to discuss releases, had a broker in charge called me a couple of days ago talking about releases specifically, what they were talking about was getting state releases when the contract was a ccra. contract, or vice versa. We've mentioned this before Austin's mentioned this as well, this is not a good practice. Austin from the state association mentioned this in our last podcast when he said you need to stay consistent in the form that you're using, you should not write a contract on ccra form, and then use a denden or contingency forms from the state. And vice versa. I would also agree with him on that and say you shouldn't use release forms from the state. When you're using a ccra contract, you should not be using ccra release forms when you're using the state contract, do not mix and match state and ccra contract forms. The main reason is there are different terms that are used and defined differently in each one of the contracts. The best example that Alston use was when you count days, we use a business day starting at 8am and running till 759 59. The next day, they use calendar days, tremendously different way of counting. So you need to be using the same form. The second question the broker asked me was that there was a large company in town that is using the state form for the release, because in the ccra form, it has a place with a big design. And they said since they're not holding the earnest money, they don't want their brokers to sign it. I also believe that's an incorrect use of the form. Remember, the release form is a couple of parts. Part of it is earnest money who is getting the release. It's not saying that the broker is releasing the money. It's simply saying that the parties have agreed that either the seller or the buyer or a combination will be getting the earnest money the brokerage is signing, saying they understand that that is the actions of the party. Secondly, the fact that an attorneys hold the earnest money is completely irrelevant to the purpose of the form as to who's getting the earnest money. The last part of this form also system to let you know that the contract is being released that obligations under the contract are hereby released or terminated and neither party is going to move forward with the contractual obligations. This is also an important aspect of the release form. And again, having your broker sign that has no bearing on who's holding the earnest money. So I don't agree with that, as well. Now, lastly, people ask us all the time Well, once the contracts going to fall through, can we relist the property if the parties cannot agree as to the release of their earnest money? This is a very specific question was that really reliant on the specific facts of each matter? But the general answer to this is yes, once the buyer expresses the intent not to purchase the property, the seller may relist that property, even if the buyer refuses to sign the release. And even if the buyer refuses to determine who's going to get the earnest money, and buyer cannot hold the property and the seller hostage by simply refusing to sign the release. I've seen that a lot where they're like, well, I just won't sign the release and you can't sell the property. Once the buyer expresses their refusal to buy the property, the seller has a duty to mitigate their damages, if any, and the mitigation would include require them to go ahead and re list the property. So the buyer cannot hold the property hostage. Now this is entirely different if the buyer is still wanting to perform and close on the property but the seller does not or the seller believes that the buyer is in default and now is refusing to sell the property to the buyer. This is a wholly different situation in which you may find yourself with a buyer falling Liz pendens against the property trying to force the sell the property through specific performance. And now if you were to go out and get another contract, you have competing contracts. That's a situation where you're absolutely going to need to consult an attorney. But in the general situation where the buyer and the seller have agreed the closings off buyer can't perform or is refusing to perform and there's no ifs ands or buts. The buyer is not going to buy property, the seller may go ahead and relist the property, and they can fight about the earnest money at a later date. And that's Gary's quick tip. Now to Gary's good news only, according to the M report, homebuyers are happier moving to a new Metro. According to what they state we know that a large number of homeowners we located here in the covid 19 pandemic, but how are these movers faring now as the world reopens the majority eight out of every 10 according to the red fin report seems satisfied with a decision to make a new metropolitan area home and are reporting improvement to their financial status. We know that very well here in South Carolina is seems that half of the North East and the West seem to be moving to South Carolina due to the extreme lockdown nature of their states versus South Carolina. So we're happy to see that there are enjoying it here as they are quite welcome. In 2002 were expecting 2022 home price growth to slow to a quarter of the current pace. According to the National Mortgage news. The ongoing housing inventory crunch created a stand off between buyers and sellers leading to a surge in April home prices. According to core logic, the home price index showed up 13% annually in April and 2.1. for March. It represents the third straight month of double digit year over year growth as the index largest since February 2006. So they're expecting this to start slowing down in 2022. What the current housing market looks like so far in 2021. And what it means for the rest of the year is a headline from Yahoo Finance. When the pandemic hit the US in the first quarter of 2020. The economy stalled in home buying and selling grinded to a halt, except here in South Carolina. People spent more time at home shielding themselves from the uncertainties of the COVID virus and by the time the real estate market came alive, people were ready to so they believe the rest of the year is going to be a strong year people will continue to be able to want to buy any slowdown will not happen until 2022. But the good news for all of us in the real estate industry. According to Chicago agent magazine, COVID had a booming housing market have fueled a record record number of realtors, the COVID pandemic has caused a shake up and where and how many people work that has helped propel a thriving housing market. The results were a record 1.4 8 million members up from 1.4 million in 2019 of your national association realtors at the end of 2020 according to associations recently released 2020 member profile I totally believe that and now to Coronavirus News, Coronavirus, Coronavirus. Now, this next section is a little bit difficult because I know a lot of people like falchi I personally don't. And I don't want this to be a political thing, because it's certainly not has nothing to do where you are politically. Well this has to do with is this week BuzzFeed came out with the emails that they received from Fauci through part of a FOIA request. This was a Freedom of Information request, it took about a year for them to fail. And what happened was all of the emails that Fauci has emailed from his his professional email, were subpoenaed and then provided to BuzzFeed. BuzzFeed is a weird website is mainly about celebrities and who they're dating and what you know what dogs they own, and stupid stuff like that isn't even a political website or a news website. But for some reason, they did what the media refused to do, which was to ask questions. And in doing so there has been a bombshell of emails, the worst part of this whole thing is that it clearly shows that falchi belief in the very beginning that the virus was manmade, and it was not, in fact, from a bat in a wet market. That's pretty much been completely debunked. Of course, Facebook, which is very interesting, what was it last year, if you posted on Facebook, that the virus was manmade and leaked from the Wu Han lab, they immediately shut that down and put it was a conspiracy conspiracy theory, and they would knock it off of Facebook turns out now they're allowing that on there. So who made Facebook the arbiter of truth, I have no idea because they've been wrong more than they've been right, just as your media has. But it's clear now that Fauci knew. It had strong reason to believe that the virus was manmade include he was being told that all the markers in it are inconsistent with any other type of virus unless it was manmade. So there's a lot of inconsistency. The thing that really makes you upset is when you read these two, this is from Karl lamb, and I'll let y'all read you read your own emails, y'all read these emails, if you agree with me, that's great. If you don't, I don't care, that's fine. But you know, as a lawyer, we always look to see where the other side is. And you know, when you look at the things that Fauci has said and what he's done, it does cause you to start questioning stuff. So this is from Kyle lamb on phone, Instagram. Actually, I think this was on Twitter. He says, Remember, Fauci said his flip on mass was a lot of say, precious resources for healthcare workers. Well, first of all, when a bureaucrat government person tells you they're lying for your own good, that should make you start thinking about everything they told you and how much of it it all is truthful and how much of it's been complete laws. Now, he also said this at the same time where he could have recommended cloth masks to say those precious resources But he didn't recommend cause mass because he knew they didn't work. And how do we know they don't work? Because two things he said he said, it's He said it was due to a sub symptomatic spread, which we had previously said had never been a driver of the spread. Remember, that's why we had to wear masks because asymptomatic spread. Well, now there's an email from Fauci that was just shared in which they say, he says, says, this is a quote, era. And my statement to you, I meant to say transmission occurred from someone who is symptomatic, not asymptomatic. So it turns out the whole asymptomatic spread was a huge law too. And then here's the big doozy. This is Fauci to Sylvia Burwell, who's also one of these COVID Nazis mask are really for infected people to prevent them from spreading to people who are not infected, rather than protecting uninfected people from acquiring infection. That's his quote, that's not anybody else's. Here's what he also says. And this is exact quote, The typical masscue by the drugstore is not really effective in keeping out virus, which is small enough to pass through material, well, the mark particles didn't get any bigger, they've always been the exact same size, I'm just saying. So clearly, we never should have been wearing masks, the whole mass thing was a charade. They don't work. He says right here, they aren't big enough to they're too big to keep out the viruses. And he also said, if you're an asymptomatic person, you're not spreading it anyway. So the only person who might even consider be wearing a mask would be an infected person who has symptoms. But remember, if you had symptoms, you were quarantined, so that didn't make a lot of sense either. So all I'm doing again, pointing it out to you, you make your own decisions. Now as of 6am, on June 2, we have 168 point 7 million people who've received one vaccine dose 136, you've received both, that means 50.8% of the population has received at least one dose. Now instead of doing the seven day rolling average, I want to give you the two week average, because this also speaks volume, new cases are down 40% in the last two weeks, overall cases now are down 93%. Guys, this is over we're talking 7% of the number of cases are still around, deaths are also down 7.5%. The last two weeks logic just tells you if these cases are down 40% last two weeks, the deaths are going to start plummeting as well. So that's Gary's good news. Hope you like it, take it for what it's worth. And that's our show for today, as well as our three podcasts on the differences between the CCR a and the state contracts. I hope everybody got something out of that next week, we're going to shift gears again, and talk about how you get contracts signed when there's a trustee involved. When there's a power of attorney companies, corporations, churches, and so forth. A lot of real estate agents are making a lot of mistakes in this, we see a lot of information coming through to our desk that just quite frankly wrong. And we need to help try to eliminate some of these issues which could cost you your commission. And lastly, don't forget to like us, subscribe to us and share us and if you are listening to our podcast on Apple or one of the other platforms that allows you to leave comments, please go up there and click the button and give us five stars because of course that would be the only appropriate rating for this wonderful podcast. hope everybody has a wonderful weekend and see you next week.