NEW 7 DAY WINDOW UNDER THE FINANCING CONTINGENCY CLAUSE IN THE REVISED 8/13 FLORIDA REALTORS/FLORIDA BAR CONTRACT FORMS
Under the financing contingency provision of the FR/BAR-1 and FR/BAR AS-IS-1 contract forms, a Seller could have their moving van packed and ready to go and the Buyer could notify Seller on the Closing Date that Buyer is unable to obtain financing and is terminating the Contract. In which event, Buyer would get their deposit returned and the contract would be terminated despite that the Loan Commitment Date had expired under the Contract. Likewise, the Seller could terminate the contract after the Loan Commitment Date all the way up to the Closing Date if Buyer had not notified the Seller that Buyer obtained their financing or waived the financing contingency. Many realtors did not like that either party could terminate all the way up to Closing under the financing contingency provision.
Consequently, the FR/BAR Joint Committee revised the financing contingency provision in the FR/BAR-2 and FR/BAR ASIS-2 contract forms that were introduced early this week on September 3rd.
In the financing contingency provision of the newly approved FR/BAR-2 and FR/BAR AS-IS-2 contract forms, after the Loan Commitment Date, neither party can terminate the Contract within a 7 day window prior to Closing. For instance, if the Loan Commitment Date was September 2, 2013 and the Closing Date was September 30, 2013, then commencing September 23, 2013 neither Buyer nor Seller could terminate the contract under the financing contingency. Further, Buyer’s deposit would be at risk if Buyer fails to close on September 30, 2013. However, if the Effective Date of the Contract was August 15, 2013, Loan Commitment Date was 45 days after Effective Date, and Closing Date was September 16, 2013, Buyer could still terminate the Contract on September 16, 2013 if Buyer was unable to obtain a loan commitment in which event the Deposit would be returned to the Buyer.
As always, should you have any questions in regards to the foregoing, please consult with your local real estate attorney.
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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