The Contract to Buy and Sell Real Estate (Residential) that James discusses during most episodes of The James Orr Show™ is the Colorado Real Estate Commission approved contract to buy and sell real estate.
You can get a free copy of it (and other documents) directly from the Department of Regulatory Agencies – Division of Real Estate – Contracts.
I, and many others, feel that the Contract to Buy and Sell Real Estate (Residential) is pro-buyer. It is, by default, an Earnest Money contract for the buyer and Specific Performance for the seller.
Contract Date Guide
Contract Tips and Discussions With Attorney
The following are some contract tips and some suggested discussions you should have with your own Attorney to clarify and get legal advice on. I will be adding to this as I cover it live at the local Northern Colorado Real Estate Investor Group meetings starting in late 2013 and well into 2014.
If you’d like to jump to a specific division of the contract, click on the division link to jump directly to that division.
- Transaction Provisions
- Disclosure, Inspection and Due Diligence
- Closing Provisions
- General Provisions
- Additional Provisions and Attachments
- End of Contract to Buy and Sell Real Estate
If you’d like to jump to a specific section of the contract, click on the section link to jump directly to that section.
- Section 1. AGREEMENT.
- Section 2. PARTIES AND PROPERTY.
- Section 3. DATES AND DEADLINES.
- Section 4. PURCHASE PRICE AND TERMS.
- Section 5. FINANCING CONDITIONS AND OBLIGATIONS.
- Section 6. APPRAISAL PROVISIONS.
- Section 7. OWNERS’ ASSOCIATION.
- Section 8. TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE.
- Section 9. NEW ILC, NEW SURVEY.
- Section 10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY, INSURABILITY, DUE DILIGENCE, BUYER DISCLOSURE AND SOURCE OF WATER.
- Section 11. TENANT ESTOPPEL STATEMENTS.
- Section 12. CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING.
- Section 13. TRANSFER OF TITLE.
- Section 14. PAYMENT OF ENCUMBRANCES.
- Section 15. CLOSING COSTS, CLOSING FEE, ASSOCIATION FEES AND TAXES.
- Section 16. PRORATIONS.
- Section 17. POSSESSION.
- Section 18. DAY; COMPUTATION OF PERIOD OF DAYS, DEADLINE.
- Section 19. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH.
- Section 20. RECOMMENDATION OF LEGAL AND TAX COUNSEL.
- Section 21. TIME OF ESSENCE, DEFAULT AND REMEDIES.
- Section 22. LEGAL FEES, COST AND EXPENSES.
- Section 23. MEDIATION.
- Section 24. EARNEST MONEY DISPUTE.
- Section 25. TERMINATION.
- Section 26. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL; SUCCESSORS.
- Section 27. NOTICE, DELIVERY, AND CHOICE OF LAW.
- Section 28. NOTICE OF ACCEPTANCE, COUNTERPARTS.
- Section 29. GOOD FAITH.
- Section 30. ADDITIONAL PROVISIONS.
- Section 31. ATTACHMENTS.
- Section 32. COUNTER; REJECTION.
- Section 33. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
- Section 34. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (CBS1-6-15) (Mandatory 1-16)
This is the standard contract the Colorado Real Estate Commission insists we use as Realtors. If you’re an individual buying or selling for your own portfolio, you can chose to use it or other paperwork, but I’d recommend you have any and all of the paperwork you decide to use–including this one–reviewed by an attorney representing you and your best interests. Speaking of having it review by an attorney, it goes on to say:
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
So, it even says in capital letters and bold at the very top of the first page of the contract that you should your own legal and tax counsel. That should be a clue.
After the warning, it tells you the official title of the documents:
CONTRACT TO BUY AND SELL REAL ESTATE (RESIDENTIAL)
And then provides a blank for the date. This is the date you are filling out the contract typically.
It then has a title showing you that it is the start of the agreement.
Section 1. AGREEMENT.
Section 1, reads as followings:
1. AGREEMENT. Buyer agrees to buy and Seller agrees to sell, the Property described below on the terms and conditions set forth in this contract (Contract).
Section 1 (that’s the § symbol for section) Looks like it is describing what the agreement is about.
Section 2. PARTIES AND PROPERTY.
Then Section 2 goes on to describe:
2. PARTIES AND PROPERTY.
The first sub section to Section 2 reads:
2.1. Buyer. Buyer, ___________ , will take title to the Property described below as ☐ Joint Tenants ☐ Tenants In Common ☐ Other __________.
This is where you’d enter in the name of the buyer(s) and decide how the buyer will take title to the property. While you can research the difference between Joint Tenants, Tenants in Common, Severalty and other forms of taking title, you should get the advice of your own attorney before making that decision. It affects how the property will pass should one or more of the owners die.
You may also want to ask them about whether you should consider using “Other” and something like “to be determined by Buyer prior to closing” to give yourself time to consult with an attorney after you are under contract but before the Title Company requires it for preparing closing paperwork. If you opt to use “to be determined by Buyer prior to closing” some title companies may require that you complete an Amend/Extend Contract prior to close to document how you intend to take title. So if you decide to go that route, be prepared to sign the Amend/Extend Contract.
Something else some people get confused about and something to discuss and get clarification with from your legal team is the idea that while there may be more than one owner in your LLC or other business entity, it is probably considered a single entity for how you would take title. In other words, if you are buying in an LLC that has 3 owners, the title is held with the LLC as sole owner or in Severalty (meaning one owner).
Some people may also put the buyers name and add the phrase “AND/OR ASSIGNS” to show that the contract is either with the buyer named or can be assigned to additional people/entities or a different person, persons, entity or entities. In strong seller’s market, it may be very difficult to get a seller to go along with making a contract assignable. The next section actually addresses that very questions…
2.2. No Assignability. This Contract Is Not assignable by Buyer unless otherwise specified in Additional Provisions.
This is the section that discusses whether or not the contract is assignable. As of January 1, 2016, the contract no longer has a checkbox to make your contract assignable. Instead, starting January 1, 2016, it explicitly states that you cannot assign the contract unless otherwise specified in Additional Provisions. If you want the contract to be able to be assigned to additional or different buyers without the seller’s written consent you will now need to put that explicitly in the Additional Provisions section of the contract. Especially when making offers within the Multiple Listing Service where the seller has a Real Estate Agent to to talk to about this, many sellers are likely to object to this. If you’re wholesaling a property, this is often an important contract term to get.
2.3. Seller. Seller,__________, is the current owner of the Property described below.
This section seems simple enough since it essentially names the Seller. However, for those that might use this contract to sell a property you have under contract (think Wholesaling where you’re not assigning the contract but actually selling a property that you have under contract) I’d discuss the phrase “current owner of the Property” with your attorney. Technically, if you’ve got a contract to the buy the property and you’re trying to sell it before you actually close, I don’t think you are the current owner of the property. An attorney may choose to argue that you have an equitable interest in the property, but it is not a position I’d personally want to have argue.
2.4. Property. The Property is the following legally described real estate in the County of __________, Colorado: [ENTER LEGAL DESCRIPTION] known as No. _______________________________________________________ [Streeet Address, City, State and Zip], together with the interests, easements, rights, beneﬁts, improvements and attached ﬁxtures appurtenant thereto, and all interest of Seller in vacated streets and alleys adjacent thereto, except as herein excluded (Property).
This section describes the Property that is being sold. You’d enter in the county the property is located in, the legal description of the property and the street address.
It is critically important that you get the legal description right since it is my understanding that supersedes the street address in case they are different. In other words, if you enter the street address right, but the wrong legal description, the contract will actually be for the wrong legal description.
Some folks think it would be a good idea to use something like “LONG LEGAL” or “SEE PUBLIC RECORDS” or “AS DETERMINED BY TITLE COMPANY” in the blank for legal description. I personally think this is a bad idea and you should use the legal address you believe it to be. If you really don’t know, I could see using something like that, but be super careful doing that.
2.5. Inclusions. The Purchase Price includes the following items (Inclusions):
This starts section 2.5 that describes what is included with the property for the Purchase Price and what is explicitly not included (excluded).
2.5.1. Inclusions – Attached. If attached to the Property on the date of this Contract, the following items are included unless excluded under Exclusions: lighting, heating, plumbing, ventilating and air conditioning units, TV antennas, inside telephone, network and coaxial (cable) wiring and connecting locks/jacks, plants, mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler systems and controls, built-in vacuum systems (including accessories), garage door openers (including ____ remote controls).
First, I will point out that it is what is attached to the property as of the date of this contract (not at Closing). Sellers accepting a contract with a special lighting fixture they plan to take with them must make sure they exclude it. Otherwise, it is included. This may also be as good a time as any, to point out that just because you say it is not included in the MLS listing, if the contract does not say it is excluded it probably insn’t.
Also… please read that list again… it tells you what is included unless specifically excluded elsewhere in the contract.
As for garage door remote controls, I would usually recommend putting a number versus the word “any” or “all”. If, as a Buyer, you make an offer and list 2 and there is only 1, the Seller can counter and correct you that there is only 1. If you say “any” and you’re expecting 2 because there is a two car garage you may end up with none. Often you can get the number of garage door openers from the Seller’s Property Disclosure Statement if they’ve filled it out and provided it to you in advance of making an offer.
If checked, the following are owned by the Seller and included (leased items should be listed under Due Diligence Documents): ☐ None ☐ Solar Panels ☐ Water Softeners ☐ Security Systems ☐ Satellite Systems (including satellite dishes).
It goes on to talk about some other special things that may be owned by the Seller like solar panels, water softeners, security systems and satellite dishes. Be careful though… if these are not owned, but just leased, they should be in Due Diligence documents instead.
If any additional items are attached to the Property after the date of this Contract, such additional items are also included in the Purchase Price.
This is super important: if the Seller attaches something new to the property after the date of this Contract, those items are then included in the Purchase Price. For example, if the Seller decides to buy a new refrigerator for the new house they’re going to after they sell this one and decide… you know what… I am going to install my new refrigerator with an ice maker and use it for the next two weeks while I’m waiting for closing then that new refrigerator is included with the house. So, be super careful if you’re a seller about what you do after you go under contract and specifically what you install.
2.5.2. Inclusions – Not Attached. If on the Property, whether attached or not, on the date of this Contract, the following items are included unless excluded under Exclusions: storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings and treatments, curtain rods, drapery rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, carbon monoxide alarms, smoke/fire detectors and all keys.
This list covers the things that are included even if they were not “attached” to the property as long as they were on the property on the date of the Contract.
2.5.3. Personal Property – Conveyance. Any personal property must be conveyed at Closing by Seller free and clear of all taxes (except personal property taxes for the year of Closing), liens and encumbrances, except __________.
The Seller is making sure that all the personal property stuff they’re including with the sale are given to the Buyer without any taxes, liens or other encumrances except those that are listed here. In most cases, we’re leaving this blank or putting “N/A”.
Conveyance of all personal property will be by bill of sale or other applicable legal instrument.
2.5.4. Other Inclusions. The following items, whether fixtures or personal property, are also included in the Purchase Price: __________
This is where we typically put the list of fixtures or personal property that is included with the purchase price.
It is common to put something like “Currently installed: refrigerator, clothes washing machine, clothes dryer.”
I’d encourage you to err on the side of listing things if you think there is any doubt about what is included or not included.
2.5.5. Parking and Storage Facilities. ☐ Use Only ☐ Ownership of the following parking facilities:__________;
This section allows us to list out whether the Buyer is getting use only or ownership of parking facilities with this sale.
Out of an abundance of clarity you could list garages that are attached and that are clearly included with the property here, but often this is used for condos where a parking spot (and in the next link storage facilities) are included by not necessarily attached to the unit. Sometimes with the complex, you get actual ownership of the parking spot, garage and/or storage unit. In other cases, you just get the use of it.
There is a blank to describe the parking.
This is where that is clarified.
and ☐ Use Only ☐ Ownership of the following storage facilities:__________.
Just like the parking above, this addresses whether you get ownership or use of a storage facility with your purchase. There is a blank to describe the storage facility.
2.6. Exclusions. The following items are excluded (Exclusions):__________
If something is specifically excluded from the sale–especially things that might have been on the property on the date of the contract–you should list them here.
It is really common for us to write: “Seller’s personal items.”
If there is a tenant, we might write “Seller’s and tenant’s personal items.”
2.7. Water Rights, Well Rights,Water and Sewer Taps.
Water rights are a real estate speciality and I don’t feel I am qualified to help with all but the most basic situations. For this section, I would strongly advise that you seek the help of a qualified attorney where water rights are concerned. With that being said, I’ll give you a very basic over of this section.
☐ 2.7.1. Deeded Water Rights. The following legally described water rights:__________
If you had deeded water rights included with the sale, you would check off the box and list the legal description of the water rights included here.
Any deeded water rights will be conveyed by a good and sufficient __________ deed at Closing.
If you were going to be including deeded water rights with the sale, you would list the type of deed that Buyer and Seller agree on using for the transferring ownership of the deeded water rights in the blank here.
☐ 2.7.2. Other Rights Relating to Water. The following rights relating to water not included in §§2.7.1, 2.7.3, 2.7.4 and 2.7.5, will be transferred to Buyer at Closing:__________
In the case where there are other rights relating to water that are included, you would check off this box and list these here. Again, this is not my area of expertise, but I would think that things like rights to use a private lake would be listed here.
☐ 2.7.3. Well Rights. Seller agrees to supply required information to Buyer about the well.
If there is a well and the rights are transferring with the purchase, then you’d check the box. The Seller is agreeing in advance to supply the required information the Buyer needs about the well.
Buyer understands that if the well to be transferred is a “Small Capacity Well” or a “Domestic Exempt Water Well”, used for ordinary household purposes, Buyer must, prior to or at Closing, complete a Change in Ownership form for the well.
If you’re the buyer and you’re getting a “Small Capacity Well” or a “Domestic Exempt Water Well”, then you’ve been notified, in writing, in the contract, that prior to or at Closing you need to complete a Change in Ownership form. Sounds reasonable to me, but again, I’m not an expert at water stuff.
If an existing well has not been registered with the Colorado Division of Water Resources in the Department of Natural Resources (Division), Buyer must complete a registration of existing well form for the well and pay the cost of registration.
Another obligation for the Buyer… I bet this is the Colorado Division of Water Resources trying to catch up with any wells that have not yet been registered by requiring Buyers to do it if it was not already done. Also, the Buyer, as a default in the contract, is responsible for paying that registration cost.
If no person will be providing a closing service in connection with the transaction, Buyer must file the form with the Division within sixty days after Closing.
If you’re not using a closing service like a title company (which is extremely rare), the Buyer would be the one that needs to file that form with the Colorado Division of Water Resources within 60 days of Closing.
The Well Permit # is __________.
This is the spot to enter in the Well Permit #.
☐ 2.7.4. Water Stock Certificates. The water stock certificates to be transferred at Closing are as follows:__________
If you have Water Stock Certificates, this is where you list out what they are. They are to be transferred at Closing by default.
2.7.5. Conveyance. If Buyer is to receive any rights to water pursuant to § 2.7.2 (Other Rights Relating to Water), § 2.7.3 (Well Rights), or § 2.7.4 (Water Stock Certificates), Seller agrees to convey such rights to Buyer by executing the applicable legal instrument at Closing.
This is telling the Buyer that any water rights in the sections listed, they will be transferred by the applicable legal instrument to them at Closing.
Again, in case you missed the several other times I mentioned it: water rights are not my area of specialization and I’d suggest you get an attorney involved if you have stuff relating to water rights; I’m not qualified.
Section 3. DATES AND DEADLINES.
3. DATES AND DEADLINES.
For the dates section, I will be showing you an image from the Contract so you can see how they’re formatted. Here is the image:
The column labeled “Reference” tells you which section of the contract that “Date or Deadline” actually refers it. As you’ll find out soon enough it also tells you which section is deleted if you put the word “Delete”, “N/A” in the “Date or Deadline” column or leave the “Date or Deadline” column blank. But more on that in a bit.
The column labeled “Event” tells you the name of the deadline.
And finally, the “Date or Deadline” column is where the actually date or deadline goes.
It is important for me to note that we don’t usually have dates for every Event. In most cases, we’re only using about half of the dates and deadlines in a typical contract.
Note: If FHA or VA loan boxes are checked in § 4.5.3 (Loan Limitations), the Appraisal deadlines do Not apply to FHA insured or VA guaranteed loans.
If the Buyer happens to be using FHA or VA financing, this note just below the block of dates and deadlines is important. It reiterates that for FHA and VA loans, the appraisal deadlines don’t apply. This is one reason why Sellers might prefer conventional financing to FHA or VA financing.
3.1. Applicability of Terms. Any box checked in this Contract means the corresponding provision applies.
This is where, out of an abundance of clarity, we learn that any box that is checked in the contract means that the provision next to applies. If it is unchecked, it does not.
Any box, blank or line in this Contract left blank or completed with the abbreviation “N/A”, or the word “Deleted” means such provision, including any deadline, is not applicable and the corresponding provision of this Contract to which reference is made is deleted.
To further clarify… if you leave a box, blank or line in this contract unfilled in or abbreviate it with “N/A” or “Deleted” then the provision, including the deadline is not applicable. Further, and this is important, the entire corresponding provision of the contract to which reference is made is deleted.
Why am I making a big deal out of this? Well, let’s say you leave the Alternative Earnest Money Deadline blank because you included the Earnest Money with your offer instead of having a deadline to deliver it. It means that the entire section 4.3 is deleted from the contract since that references that section. That’s kind of messed up because that’s the section that talks about who holds the earnest money and how interest on earnest money is handled among other things. So, be super careful.
As an aside to my example with the Alternative Earnest Money Deadline… you could write “Completed” in the blank to eliminate the issue.
If no box is checked in a provision that contains a selection of “None”, such provision means that “None” applies.
If you miss checking a box or intentionally don’t check a box, if there was an option for “None” that’s what gets applied.
The abbreviation “MEC” (mutual execution of this Contract) means the date upon which both parties have signed this Contract.
Often instead of putting in hard dates, we will use a certain number of days after the contract is signed by both Buyer and Seller. Why? What if a Buyer gives the Seller 5 days to accept the offer, but has Earnest Money due two days from now. That doesn’t really make a lot of sense. The Earnest Money could be due before the offer is accepted.
So, more often than not, we will say that Earnest Money is due 2 days after the contract is signed by both parties. The date that both parties (Buyer and Seller) have signed is abbreviated MEC. It stands for mutual execution of this contract. How do I know? Because the contract tells me (shown above).
Section 4. PURCHASE PRICE AND TERMS.
4. PURCHASE PRICE AND TERMS.
This section talks about the purchase price and the terms of purchase.
4.1. Price and Terms. The Purchase Price set forth below is payable in U.S. Dollars by Buyer as follows:
The contract tells you that you’ll be paying in US Dollars in case you were considering using the extra currency you had from your last trip to Mexico. I’ve included the image of the Price table:
The column labeled “Reference” tells you which section of the contract you can look at to find out more about that particular item.
The “Item” column describes what that money is.
And finally, the last two “Amount” columns are for showing the money for each of the items. The “Amount” column farthest to the right is typically used to show how the Purchase Price is divided up… in other words, how much of it is from Earnest Money, how much of it is from the New Loan, etc.
The TOTAL at the bottom should be the same for both “Amount” columns.
It is possible, although uncommon, to have a negative amount for Cash at Closing. This tends to happen when a Buyer is getting their Earnest Money back because their getting a USDA or VA loan or their Earnest Money is more than the down payment they’ll need to purchase the property.
In the rare cases where you might be buying a property “subject to” the existing financing, you could use lines 7 or 8.
4.2. Seller Concession. At Closing, Seller will credit to Buyer $__________ (Seller Concession).
Seller Concessions are extremely important–especially for real estate investors trying to minimize money out of pocket to improve their Cash on Cash Return. You would enter in the amount of Seller Concessions you’re asking the Seller to contribute toward your closing costs (more on that in a moment) in the blank.
The Seller Concession may be used for any Buyer fee, cost, charge or expenditure to the extent the amount is allowed by the Buyer’s lender and is included in the Closing Statement or Closing Disclosure, at Closing. Examples of allowable items to be paid for by the Seller Concession include, but are not limited to: Buyer’s closing costs, loan discount points, loan origination fees, prepaid items and any other fee, cost, charge, expense or expenditure. Seller Concession is in addition to any sum Seller has agreed to pay or credit Buyer elsewhere in this Contract.
Can you use Seller Concessions to pay down points on your loan to get a better interest rate? This is the part of the contract that tells you. By the way, the answer is yes… you can use Seller Concessions for that.
I will point out here that if the Buyer doesn’t use all the Seller Concessions, they are not credited to the Buyer. So, if you’re the Buyer, use your Seller Concessions even if it means increasing your pre-paid items like insurance.
If you can’t think of anything to spend it on, ask me. I might have an idea or two that may or may not involve increasing my commission. 🙂
4.3. Earnest Money. The Earnest Money set forth in this section, in the form of a __________, will be payable to and held by __________ (Earnest Money Holder), in its trust account, on behalf of both Seller and Buyer.
This section talks about everything Earnest Money. It tells the Buyer the form they’ll need to use to pay the Earnest Money. Usually we see “personal check” or “certified check” here.
It also says who will hold the Earnest Money. There are two common Earnest Money Holders: the seller’s real estate brokerage or a title company. Anything other than that, would be a little more unusual.
The Earnest Money deposit must be tendered, by Buyer, with this Contract unless the parties mutually agree to an Alternative Earnest Money Deadline for its payment.
Back in the old days when we’d fill out contracts by hand and drive the contract over to the Seller’s office with the Earnest Money check paperclipped to the top of the stack of papers, it was really common to include Earnest Money when you submitted your offer.
Today, with the advent of digital signatures and services like DocuSign where we deliver a signed offer packet via email, we usually have the Seller accept the offer and then the Buyer has a few days to get the Earnest Money to the Earnest Money holder in the form specific above in the contract. The date they have to get it to the Earnest Money Holder is the Alternative Earnest Money Deadline.
The parties authorize delivery of the Earnest Money deposit to the company conducting the Closing (Closing Company), if any, at or before Closing.
In the cases where the Earnest Money Holder is not the title company, the Buyer and Seller authorize the delivery of the Earnest Money to the closing company at or before closing.
In the event Earnest Money Holder has agreed to have interest on Earnest Money deposits transferred to a fund established for the purpose of providing affordable housing to Colorado residents, Seller and Buyer acknowledge and agree that any interest accruing on the Earnest Money deposited with the Earnest Money Holder in this transaction will be transferred to such fund.
If you’re concerned that one party is collecting interest on the Earnest Money, fear not. The contract addresses that. If the Earnest Money Holder is getting interest on their Earnest Money account, they are crediting the interest to a special fund that provides affordable housing to Colorado residents. Buyers and Sellers are acknowledging that in this agreement.
4.3.1. Alternative Earnest Money Deadline. The deadline for delivering the Earnest Money, if other than at the time of tender of this Contract, is as set forth as the Alternative Earnest Money Deadline.
Do you remember I talked about the deadline for getting Earnest Money to the Earnest Money Holder? Well, that’s what is being defined here: the Alternative Earnest Money Deadline.
4.3.2. Return of Earnest Money. If Buyer has a Right to Terminate and timely terminates, Buyer is entitled to the return of Earnest Money as provided in this Contract.
What happens if the contract is terminated and the Buyer, according to the terms of the contract, is due to get the Earnest Money back? This section talks about returning the Earnest Money to the Buyer.
If this Contract is terminated as set forth in § 25 and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate, Seller agrees to execute and return to Buyer or Broker working with Buyer, written mutual instructions (e.g., Earnest Money Release form), within three days of Seller’s receipt of such form.
Can the Seller just not sign the Earnest Money Release form and never return the Earnest Money? Not according to this section where the seller agrees to sign and return the Earnest Money Release form within 3 days of receiving it if the buyer terminates according to section 25 (on Termination) and except as provided in section 24 (on Earnest Money Dispute).
4.4. Form of Funds; Time of Payment; Available Funds.
This section deals with the form of funds that can be used, the time of payment and whether the Buyer has the funds available.
4.4.1. Good Funds. All amounts payable by the parties at Closing, including any loan proceeds, Cash at Closing and closing costs, must be in funds that comply with all applicable Colorado laws, including electronic transfer funds, certified check, savings and loan teller’s check and cashier’s check (Good Funds).
If you are wondering what type of funds you can use to bring to closing, it is outlined and agreed to here right in the contract. I will point out that some title companies that close the transaction may have preferences that might further restrict and at least discourage the use of one type of payment. So, if you need to bring funds to closing (and that may be either buyer and/or seller), give yourself ample time to get funds in one of these acceptable forms.
And no: you can’t use a briefcase of cash.
4.4.2. Time of Payment; Available Funds. All funds, including the Purchase Price to be paid by Buyer, must be paid before or at Closing or as otherwise agreed in writing between the parties to allow disbursement by Closing Company at Closing OR SUCH NONPAYING PARTY WILL BE IN DEFAULT.
This one is more interesting than it may appear at first glance.
On the surface, it seems so straight forward. Buyer must pay before or at closing (unless agreed to otherwise). Cant’ pay after. That makes sense. But here’s the interetsing part and how it could be bad for the Buyer.
What happens if you’re the buyer and you really did everything you were supposed to do. You applied for the loan. You did your inspection. Your loan was approved. Everything looks great and you show up for closing. But… something is awry. You haven’t heard from your lender for a couple days, but last time you talked to them, they said everything looked great. What you did not know is that your lender was in a terrible car accident and hasn’t been in the office for the last 2 days. The last thing they were going to do was set up your loan to fund, but they did not do it before the accident. So, you show up for closing thinking everything is fine, but no money arrives. Who is at fault? The Lender? I don’t think so. Read it again… especially the part in ALL CAPS.
The “NONPAYING PARTY WILL BE IN DEFAULT”. Your lender is not a party to this contract. You are responsible for getting the money there to closing. The seller does not need to give you an extension. They can choose to and many will, but it is not an automatic guarnateed thing. They could keep your Earnest Money and not sell you the house. Might be yet another reason to stay friendly with the seller throughout the entire transaction and through closing, huh? Additionally… might be a good reason to use a reputable lender and be in good contact with your lender prior to closing.
Buyer represents that Buyer, as of the date of this Contract, ☐ Does ☐ Does Not have funds that are immediately verifiable and available in an amount not less than the amount stated as Cash at Closing in § 4.1.
This is the part where the Buyer tells the Seller if they have the funds in the “Cash at Closing” box where it lists all the money for the purchase. If you’re getting the money as a gift from mom and dad, we may not be able to check this box.
If you’re wholesaling and you don’t have the cash in your account “immediately veriable and available” then you can’t check that box either.
The seller’s agent and seller should be aware and look at this and ask questions if it is not checked. It is a orange flag… if not a red flag… that something is not quite right.
4.5. New Loan.
This is the section that deals with your new loan.
4.5.1. Buyer to Pay Loan Costs. Buyer, except as provided in § 4.2, if applicable, must timely pay Buyer’s loan costs, loan discount points, prepaid items and loan origination fees, as required by lender.
Nothing surprising here: buyer needs to pay their loan costs as required by the lender.
4.5.2. Buyer May Select Financing. Buyer may pay in cash or select financing appropriate and acceptable to Buyer, including a different loan than initially sought, except as restricted in § 4.5.3 or § 30 (Additional Provisions).
This is a little bit interesting. Buyer has an option here. They can pay in cash. Or, they can use any of the financing that they find appropriate and acceptable including loans that they did not originally apply for as long as it was checked off as a type of financing in section 4.5.3 (which is next). So, if you planned to get conventional 20% down financing, but decide… you know what… I want to get convnetional 10% down… as long as you have conventional checked, you’re fine to do that. If you decide… forget these loans… I’ll pay cash… you can do that without a change to the contract.
The tricky part is this example. If you had FHA checked because you were going to do 3.5% down, but then found out it would be better for you to do 3% down conventional you may have some challenges if you did not check off conventional. More often, you might find that you checked off conventional because maybe you suspected the Seller would not go for an FHA loan (and maybe you were right). You can’t switch from conventional to FHA because you did not have FHA checked off. Bummer, huh? Yes, that’s why we need to think this stuff through (and work with a great lender).
4.5.3. Loan Limitations. Buyer may purchase the Property using any of the following types of loans: ☐ Conventional ☐ FHA ☐ VA ☐ Bond ☐ Other __________.
This is where we disclose the type of financing the Buyer will use to purchase the property. You getting a conventional loan? Check it. FHA? Check it. VA Check it. Using bonds (which I’ve never seen used)? Check it and then call me to tell me about it. Other? Check it and write in the other.
Buyers: what kind of other financing might you be using? Maybe a private loan from dad. Maybe a hard money loan from a hard money lender. Maybe using your stock portfolio and doing a margin loan against your portfolio. Just some ideas. Remember, if you don’t click it, you can’t switch to it later (without getting the seller to sign off).
You might be thinking: heck… I’ll just mark off everything. Not so fast… astute agents representing sellers will probably see this as a weaker offer.
4.5.4. Good Faith Estimate – Monthly Payment and Loan Costs. Buyer is advised to review the terms, conditions and costs of Buyer’s New Loan carefully.
Hey buyer: look at the loan you’re being offered. And look carefully.
If Buyer is applying for a residential loan, the lender generally must provide Buyer with a good faith estimate of Buyer’s closing costs within three days after Buyer completes a loan application.
Hey buyer: your lender should give you an estimate of what it will cost within 3 days after completing an application. And in case you don’t remember the previous contract statement: review it… carefully.
Buyer also should obtain an estimate of the amount of Buyer’s monthly mortgage payment.
4.6. Assumption. Buyer agrees to assume and pay an existing loan in the approximate amount of the Assumption Balance set forth in § 4.1, presently payable at $__________ per __________ including principal and interest presently at the rate of %__________ per annum, and also including escrow for the following as indicated: ☐ Real Estate Taxes ☐ Property Insurance Premium ☐ Mortgage Insurance Premium and ☐ __________.
If you were assuming a loan–which is rare–you’d fill in this section. It is asking you for the payment and what period it is paid (monthly, yearly, etc). It asks you for the interest rate of it. It also clarifies whether there are real estate taxes, insurance and PMI escrowed. You’d check the box for each if they’re escrowed and included in the payment.
You even have a spot to add something else that might be escrowed by writing it in and checking the box.
Buyer agrees to pay a loan transfer fee not to exceed $__________.
We’re still talking about assuming the loan. If there is a transfer fee, the buyer is agreeing to pay it as long as it does not exceed the amount you put in there.
At the time of assumption, the new interest rate will not exceed %__________ per annum and the new payment will not exceed $__________ per principal and interest, plus escrow, if any.
If the buyer has a concern over the interest rate going up before they close or if they don’t know the exact interest rate, you can fill in the blank to document what the interest rate needs to be at or below. You can do the same with the new payment including escrow. That’s what those blanks are for.
If the actual principal balance of the existing loan at Closing is less than the Assumption Balance, which causes the amount of cash required from Buyer at Closing to be increased by more than $__________, then Buyer has the Right to Terminate under § 25.1, on or before Closing Date, based on the reduced amount of the actual principal balance.
This section protects the buyer from having to come to closing with too much additional cash than they expected because the balance of the loan was lower than was thought. It has a rememdy for the buyer in this case: they can terminate if it is too much all the way up to the closing date.
Seller ☐ Will ☐ Will Not be released from liability on said loan.
If you’re the seller this is kind of important. It says whether or not the seller will still be responsible for the loan. Check the appropriate box.
If applicable, compliance with the requirements for release from liability will be evidenced by delivery ☐ on or before Loan Transfer Approval Deadline ☐ at Closing of an appropriate letter of commitment from lender.
If it applicable and the seller needs to comply with requirements from the lender to release them from liability with this loan, that will need to be one of two times that is decided by your checking a box. Either Loan Transfer Approval Deadline or at closing. It is evidenced by an appropriate letter of commitment from the lender.
Any cost payable for release of liability will be paid by __________ in an amount not to exceed $__________.
If there is a cost to releasing the seller from liability on the loan, it will be paid for by whoever you put in that box. Could be the buyer, seller, agent (probably not), your neighbor, your trust fund, etc. And it is not to exceed the amount you put in the second blank.
4.7. Seller or Private Financing.
If only we were seeing more seller financing, we’d use this section more. But alas… they’re really rare.
WARNING: Unless the transaction is exempt, federal and state laws impose licensing, other requirements and restrictions on sellers and private financiers.
This is the only place in the contract that actually warns you. You may want to pay attention to it.
If you’re the seller and offering seller financing, there are newish federal and state laws that you’ll need to research.
Contract provisions on financing and financing documents, unless exempt, should be prepared by a licensed Colorado attorney or licensed mortgage loan originator.
And despite me personally being pretty darn knowledgeable about seller financing, the contract explicits states it should be done by a Colorado attorney or licensed mortgage loan originator. Isn’t that interesting.
Brokers should not prepare or advise the parties on the specifics of financing, including whether or not a party is exempt from the law.
And in case, my explanation wasn’t clear enough: the contract says your broker should prepare the specifics of financing. Nor should they advise you on financing. I can’t even tell you if you’re except from the law. I know this because it tells us all right in the contract.
So… in case you were wondering if you’re Real Estate Broker could draft up or advise you on seller financing stuff for you, the answer is: no.
4.7.1. Seller Financing. If Buyer is to pay all or any portion of the Purchase Price with Seller financing, ☐ Buyer ☐ Seller will deliver the proposed Seller financing documents to the other party on or before __________ days before Seller or Private Financing Deadline.
If the buyer is going to use seller or private financing to buy, this tells us who will be providing the documents: buyer or seller. And when it must be delivered.
18.104.22.168. Seller May Terminate. If Seller is to provide Seller financing, this Contract is conditional upon Seller determining whether such financing is satisfactory to the Seller, including its payments, interest rate, terms, conditions, cost and compliance with the law.
If you’re a buyer thinking you’ve managed to get a seller to accept your offer to do seller financing and you’re jumping for joy and doing your Snoopy dance… wait a moment. The seller can still determine whether it is satisfactory. The seller can look at the payment, the interest rate, the terms, the conditions, the cost and compliance with the law.
If the seller don’t like it, the seller ain’t doing it.
Seller has the Right to Terminate under § 25.1, on or before Seller or Private Financing Deadline, if such Seller financing is not satisfactory to the Seller, in Seller’s sole subjective discretion.
They have up until the seller or private financing deadline to stop your Snoopy dance cold. Just in case the buyer wants to argue that the interest rate (or something else about the seller financing) is reasonable and that the seller shouldn’t able to object to it: it is in the sellers sold completely subjective discretion.
It is one of the few spots in this contract where the seller has all the power.
4.7.2. Buyer May Terminate. If Buyer is to pay all or any portion of the Purchase Price with Seller or private financing, this Contract is conditional upon Buyer determining whether such financing is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions and cost.
We just talked about with seller or private financing the seller can look at the terms and terminate. Well, now it is the buyer’s turn with seller or private financing. The buyer can terminate based on pretty much the same reasons.
Buyer has the Right to Terminate under § 25.1, on or before Seller or Private Financing Deadline, if such Seller or private financing is not satisfactory to Buyer, in Buyer’s sole subjective discretion.
And, just like with the seller being able to terminate, it is in the buyer’s sole completely subjective discretion.
Section 5. FINANCING CONDITIONS AND OBLIGATIONS.
5. FINANCING CONDITIONS AND OBLIGATIONS.
This is the section that talks about the financing conditions and what the obligations are (mostly for the buyer).
5.1. Loan Application. If Buyer is to pay all or part of the Purchase Price by obtaining one or more new loans (New Loan), or if an existing loan is not to be released at Closing, Buyer, if required by such lender, must make an application verifiable by such lender, on or before Loan Application Deadline and exercise reasonable efforts to obtain such loan or approval.
While I strongly recommend that buyers get as far through the loan application process before you make an offer, you’ll need a contract on a property to complete the loan application. Some agents might not understand this, so they may push back a little when we use 2 days after closing for loan application deadline.
I may need to explain to them that my buyer is completely qualified and they’ve applied and been pre-approved and are pretty far into underwriting, but for the lender to say an application is complete, we need to have the signed contract.
For buyers, that means we need to get the lender a copy of your contract and you need to be completely done with your loan application (not including loan conditions which we’ll get later) usually within a day or two after the contract has been mutually executed (that’s the MEC date thing again).
5.2. Loan Objection. If Buyer is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer’s sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan.
For buyers who are getting a loan, this is a very important statement. It means, if the buyer is getting a loan, the buyer… in their sole subjective discretion and say whether or not they like the loan. Think the payment is too high… that’s fine… the contract is conditional on that. Think the interest rate is too high… again fine. Think the lender is charging too much for the loan… no problem. Find out you can’t get the loan you wanted… got it. You’re covered.
This condition is for the sole benefit of Buyer.
In case it was not clear that sole subjective discretion meant that the buyer was the only one that mattered and it did not need to be backed by fact, but just in their opinion, this next statement tells us that this condition is for the buyer’s sole benefit.
Buyer has the Right to Terminate under § 25.1, on or before Loan Objection Deadline, if the New Loan is not satisfactory to Buyer, in Buyer’s sole subjective discretion.
So, what happens if you don’t like the loan? According to this you can terminate–as long as it is before the Loan Objection Deadline. If you wait too long that will be a problem. Dates are important.
IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER’S WRITTEN NOTICE TO TERMINATE, BUYER’S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey).
Something that is in all CAPS and bold…. might be important. You got to get your written notice to terminate to the seller if you want a chance of getting earnest money back. If you don’t, it is non-refundable except for the other objections in the contract (again only if you hit those deadlines and given written notice).
5.3. Credit Information. If an existing loan is not to be released at Closing, this Contract is conditional (for the sole benefit of Seller) upon Seller’s approval of Buyer’s financial ability and creditworthiness, which approval will be at Seller’s sole subjective discretion.
If one of the loans the Seller has on the property is not being paid off the Seller has the right to approve the Buyers credit. Makes sense, right? If the Seller is still responsible for the loan but the Buyer is coming in and maybe even going to be making payments on it then shouldn’t the Seller have the right to approve the Buyer’s ability to make the payments and their creditworthiness? I think so and so did the people making the standard contract.
And by the way… it is at the Seller’s sole subjective discretion. If the Seller looks at a Buyer’s credit and sees that they financed something they think is silly… they can say… no, I won’t sell and leave my loan in place for any Buyer silly enough to finance a [INSERT SOMETHING CRAZY HERE].
Accordingly: (1) Buyer must supply to Seller by Buyer’s Credit Information Deadline, at Buyer’s expense, information and documents (including a current credit report) concerning Buyer’s financial, employment and credit condition;
To further this idea… the Buyer must provide to the Seller their credit report and any other financial documents related to the Buyer’s financial situation, their employment situation and their credit condition.
(2) Buyer consents that Seller may verify Buyer’s financial ability and creditworthiness; and
If you’re the Buyer, you’re giving the Seller permission to verify the information you provided including your financial ability and creditworthiness.
(3) any such information and documents received by Seller must be held by Seller in confidence, and not released to others except to protect Seller’s interest in this transaction.
However, Sellers need to be sensitive to the Buyer’s information. They must keep it confidential… you can’t talk about or share the information except to protect the Seller’s interest in this transaction.
If the Cash at Closing is less than as set forth in § 4.1 of this Contract, Seller has the Right to Terminate under § 25.1, on or before Closing.
If while looking at the financial information the Buyer does not have the amount of money entered in the section on money that is the cash required at closing, then Seller has the right to terminate the contract. No money; no contract.
If Seller disapproves of Buyer’s financial ability or creditworthiness, in Seller’s sole subjective discretion, Seller has the Right to Terminate under § 25.1, on or before Disapproval of Buyer’s Credit Information Deadline.
So, what happens if the Seller doesn’t like what they found while checking into the financials and credit of the Buyer? The Seller can terminate on or before the Disapproval of Buyer’s Credit Information Deadline. Dates are important, so don’t wait until after if you’re a Seller and want to object based on this.
5.4. Existing Loan Review. If an existing loan is not to be released at Closing, Seller must deliver copies of the loan documents (including note, deed of trust, and any modifications) to Buyer by Existing Loan Documents Deadline.
If the Seller is keeping a loan in place and not releasing it, the Seller must get a copy of the note, deed of trust and any modifications and provide them to the Buyer by the Existing Loan Documents Deadline. Seems pretty straight forward. If you’re the Buyer, you’d want to know what the note for the loan said and you’d like to see the deed of trust and any other modifications.
For the sole benefit of Buyer, this Contract is conditional upon Buyer’s review and approval of the provisions of such loan documents.
Furthermore, not only should the Buyer be able to look at the loan documents, but they should be able to approve that they really do want to do buy the property and leave those in place. And in case you thought this was a benefit for the Seller, it explicitly states that this is for the sole benefit of the Buyer. Fair enough.
Buyer has the Right to Terminate under § 25.1, on or before Existing Loan Documents Objection Deadline, based on any unsatisfactory provision of such loan documents, in Buyer’s sole subjective discretion.
If the Buyer reviews the loan documents and finds anything in there unsatisfactory–again in the Buyer’s “sole subjective discretion”, then the Buyer can terminate.
If the lender’s approval of a transfer of the Property is required, this Contract is conditional upon Buyer’s obtaining such approval without change in the terms of such loan, except as set forth in § 4.6.
What happens if the loan that the Seller is leaving in place when they sell the property requires that the lender approve of the transfer (like most loans do)? Then, it is up to the Buyer to get approval of from the lender to do the transfer. The loan terms can change only as described in section 4.6.
If lender’s approval is not obtained by Loan Transfer Approval Deadline, this Contract will terminate on such deadline.
Seller has the Right to Terminate under § 25.1, on or before Closing, in Seller’s sole subjective discretion, if Seller is to be released from liability under such existing loan and Buyer does not obtain such compliance as set forth in § 4.6.
Section 6. APPRAISAL PROVISIONS.
6. APPRAISAL PROVISIONS.
6.1. Appraisal Definition. An “Appraisal” is an opinion of value prepared by a licensed or certified appraiser, engaged on behalf of Buyer or Buyer’s lender, to determine the Property’s market value (Appraised Value). The Appraisal may also set forth certain lender requirements, replacements, removals or repairs necessary on or to the Property as a condition for the Property to be valued at the Appraised Value.
6.2. Appraisal Condition. The applicable appraisal provision set forth below applies to the respective loan type set forth in § 4.5.3, or if a cash transaction (i.e. no financing), § 6.2.1 applies.
6.2.1. Conventional/Other. Buyer has the right to obtain an Appraisal. If the Appraised Value is less than the Purchase Price, or if the Appraisal is not received by Buyer on or before Appraisal Deadline Buyer may, on or before Appraisal Objection Deadline, notwithstanding § 8.3 or § 13:
22.214.171.124. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or
126.96.36.199. Appraisal Objection. Deliver to Seller a written objection accompanied by either a copy of the Appraisal or written notice from lender that confirms the Appraisal value is less than the Purchase Price.
188.8.131.52. Appraisal Resolution. If an Appraisal Objection is received by Seller, on or before Appraisal Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Appraisal Resolution Deadline (§ 3), this Contract will terminate on the Appraisal Resolution Deadline, unless Seller receives Buyer’s written withdrawal of the Appraisal Objection before such termination, i.e., on or before expiration of Appraisal Resolution Deadline.
6.2.2. FHA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the purchaser (Buyer) shall not be obligated to complete the purchase of the Property described herein or to incur any penalty by forfeiture of Earnest Money deposits or otherwise unless the purchaser (Buyer) has been given, in accordance with HUD/FHA or VA requirements, a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender, setting forth the appraised value of the Property of not less than $__________. The purchaser (Buyer) shall have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value nor the condition of the Property. The purchaser (Buyer) should satisfy himself/herself that the price and condition of the Property are acceptable.
6.2.3. VA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the purchaser (Buyer) shall not incur any penalty by forfeiture of Earnest Money or otherwise or be obligated to complete the purchase of the Property described herein, if the Contract Purchase Price or cost exceeds the reasonable value of the Property established by the Department of Veterans Affairs. The purchaser (Buyer) shall, however, have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.
6.3. Lender Property Requirements. If the lender imposes any requirements, replacements, removals or repairs, including any specified in the Appraisal (Lender Requirements) to be made to the Property (e.g., roof repair, repainting), beyond those matters already agreed to by Seller in this Contract, Seller has the Right to Terminate under § 25.1, (notwithstanding § 10 of this Contract), on or before three days following Seller’s receipt of the Lender Requirements, in Seller’s sole subjective discretion. Seller’s Right to Terminate in this § 6.3 does not apply if, on or before any termination by Seller pursuant to this § 6.3: (1) the parties enter into a written agreement regarding the Lender requirements; or (2) the Lender Requirements have been completed; or (3) the satisfaction of the Lender Requirements is waived in writing by Buyer.
6.4. Cost of Appraisal. Cost of the Appraisal to be obtained after the date of this Contract must be timely paid by ☐ Buyer ☐ Seller. The cost of the Appraisal may include any and all fees paid to the appraiser, appraisal management company, lender’s agent or all three.
Section 7. OWNERS’ ASSOCIATION.
7. OWNERS’ ASSOCIATION. This Section is applicable if the Property is located within a Common Interest Community and subject to such declaration.
7.1. Common Interest Community Disclosure.
THE PROPERTY IS LOCATED WITHIN A COMMON INTEREST COMMUNITY AND IS SUBJECT TO THE DECLARATION FOR THE COMMUNITY.
THE OWNER OF THE PROPERTY WILL BE REQUIRED TO BE A MEMBER OF THE OWNERS’ ASSOCIATION FOR THE COMMUNITY AND WILL BE SUBJECT TO THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION.
THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS WILL IMPOSE FINANCIAL OBLIGATIONS UPON THE OWNER OF THE PROPERTY, INCLUDING AN OBLIGATION TO PAY ASSESSMENTS OF THE ASSOCIATION.
IF THE OWNER DOES NOT PAY THESE ASSESSMENTS, THE ASSOCIATION COULD PLACE A LIEN ON THE PROPERTY AND POSSIBLY SELL IT TO PAY THE DEBT.
THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS OF THE COMMUNITY MAY PROHIBIT THE OWNER FROM MAKING CHANGES TO THE PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE ASSOCIATION (OR A COMMITTEE OF THE ASSOCIATION) AND THE APPROVAL OF THE ASSOCIATION.
PURCHASERS OF PROPERTY WITHIN THE COMMON INTEREST COMMUNITY SHOULD INVESTIGATE THE FINANCIAL OBLIGATIONS OF MEMBERS OF THE ASSOCIATION.
PURCHASERS SHOULD CAREFULLY READ THE DECLARATION FOR THE COMMUNITY AND THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION.
7.2. Owners’ Association Documents. Owners’ Association Documents (Association Documents) consist of the following:
7.2.1. All Owners’ Association declarations, articles of incorporation, bylaws, articles of organization, operating agreements, rules and regulations, party wall agreements;
7.2.2. Minutes of most recent annual owners’ meeting;
7.2.3. Minutes of any directors’ or managers’ meetings during the six-month period immediately preceding the date of this Contract. If none of the preceding minutes exist, then the most recent minutes, if any (§§ 7.2.1, 7.2.2 and 7.2.3, collectively, Governing Documents); and
7.2.4. The most recent financial documents which consist of: (1) annual and most recent balance sheet, (2) annual and most recent income and expenditures statement, (3) annual budget, (4) reserve study, and (5) notice of unpaid assessments, if any (collectively, Financial Documents).
7.3. Association Documents to Buyer.
7.3.1. Seller to Provide Association Documents. Seller is obligated to provide to Buyer the Association Documents, at Seller’s expense, on or before Association Documents Deadline. Seller authorizes the Association to provide the Association Documents to Buyer, at Seller’s expense. Seller’s obligation to provide the Association Documents is fulfilled upon Buyer’s receipt of the Association Documents, regardless of who provides such documents.
7.4. Conditional on Buyer’s Review.
Buyer has the right to review the Association Documents.
Buyer has the Right to Terminate under § 25.1, on or before Association Documents Objection Deadline, based on any unsatisfactory provision in any of the Association Documents, in Buyer’s sole subjective discretion.
Should Buyer receive the Association Documents after Association Documents Deadline, Buyer, at Buyer’s option, has the Right to Terminate under § 25.1 by Buyer’s Notice to Terminate received by Seller on or before ten days after Buyer’s receipt of the Association Documents.
If Buyer does not receive the Association Documents, or if Buyer’s Notice to Terminate would otherwise be required to be received by Seller after
, Buyer’s Notice to Terminate must be received by Seller on or before Closing.
If Seller does not receive Buyer’s Notice to Terminate within such time, Buyer accepts the provisions of the Association Documents as satisfactory, and Buyer waives any Right to Terminate under this provision, notwithstanding the provisions of § 8.6 (Right of First Refusal or Contract Approval).
Section 8. TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE.
8. TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE.
8.1. Evidence of Record Title.
☐ 8.1.1. Seller Selects Title Insurance Company. If this box is checked, Seller will select the title insurance company to furnish the owner’s title insurance policy at Seller’s expense. On or before Record Title Deadline, Seller must furnish to Buyer, a current commitment for owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price, or if this box is checked, ☐ an Abstract of Title certified to a current date. Seller will cause the title insurance policy to be issued and delivered to Buyer as soon as practicable at or after Closing.
☐ 8.1.2. Buyer Selects Title Insurance Company. If this box is checked, Buyer will select the title insurance company to furnish the owner’s title insurance policy at Buyer’s expense. On or before Record Title Deadline, Buyer must furnish to Seller, a current commitment for owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price.
If neither box in § 8.1.1 or § 8.1.2 is checked, § 8.1.1 applies.
8.1.3. Owner’s Extended Coverage (OEC). The Title Commitment ☐ Will ☐ Will Not contain Owner’s Extended Coverage (OEC). If the Title Commitment is to contain OEC, it will commit to delete or insure over the standard exceptions which relate to: (1) parties in possession, (2) unrecorded easements, (3) survey matters, (4) unrecorded mechanics’ liens, (5) gap period (period between the effective date and time of commitment to the date and time the deed is recorded), and (6) unpaid taxes, assessments and unredeemed tax sales prior to the year of Closing. Any additional premium expense to obtain OEC will be paid by ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller ☐ Other __________. Regardless of whether the Contract requires OEC, the Title Insurance Company may not provide OEC or delete or insure over any or all of the standard exceptions for OEC. The Title Insurance Company may require a New Survey or New ILC, defined below, among other requirements for OEC. If the Title Insurance Commitment is not satisfactory to Buyer, Buyer has a right to object under § 8.4 (Right to Object to Title, Resolution).
8.1.4. Title Documents. Title Documents consist of the following: (1) copies of any plats, declarations, covenants, conditions and restrictions burdening the Property, and (2) copies of any other documents (or, if illegible, summaries of such documents) listed in the schedule of exceptions (Exceptions) in the Title Commitment furnished to Buyer (collectively, Title Documents).
8.1.5. Copies of Title Documents. Buyer must receive, on or before Record Title Deadline, copies of all Title Documents. This requirement pertains only to documents as shown of record in the office of the clerk and recorder in the county where the Property is located. The cost of furnishing copies of the documents required in this Section will be at the expense of the party or parties obligated to pay for the owner’s title insurance policy.
8.1.6. Existing Abstracts of Title. Seller must deliver to Buyer copies of any abstracts of title covering all or any portion of the Property (Abstract of Title) in Seller’s possession on or before Record Title Deadline.
8.2. Record Title. Buyer has the right to review and object to the Abstract of Title or Title Commitment and any of the Title Documents as set forth in § 8.4 (Right to Object to Title, Resolution) on or before Record Title Objection Deadline. Buyer’s objection may be based on any unsatisfactory form or content of Title Commitment or Abstract of Title, notwithstanding § 13, or any other unsatisfactory title condition, in Buyer’s sole subjective discretion. If the Abstract of Title, Title Commitment or Title Documents are not received by Buyer on or before the Record Title Deadline, or if there is an endorsement to the Title Commitment that adds a new Exception to title, a copy of the new Exception to title and the modified Title Commitment will be
320 delivered to Buyer. Buyer has until the earlier of Closing or ten days after receipt of such documents by Buyer to review and object to: (1) any required Title Document not timely received by Buyer, (2) any change to the Abstract of Title, Title Commitment or Title Documents, or (3) any endorsement to the Title Commitment. If Seller receives Buyer’s Notice to Terminate or Notice of Title Objection, pursuant to this § 8.2 (Record Title), any title objection by Buyer is governed by the provisions set forth in § 8.4 (Right to Object to Title, Resolution). If Seller has fulfilled all Seller’s obligations, if any, to deliver to Buyer all documents required by § 8.1 (Evidence of Record Title) and Seller does not receive Buyer’s Notice to Terminate or Notice of Title Objection by the applicable deadline specified above, Buyer accepts the condition of title as disclosed by the Abstract of Title, Title Commitment and Title Documents as satisfactory.
8.3. Off-Record Title. Seller must deliver to Buyer, on or before Off-Record Title Deadline, true copies of all existing surveys in Seller’s possession pertaining to the Property and must disclose to Buyer all easements, liens (including, without limitation, governmental improvements approved, but not yet installed) or other title matters (including, without limitation, rights of first refusal and options) not shown by public records, of which Seller has actual knowledge (Off-Record Matters). Buyer has the right to inspect the Property to investigate if any third party has any right in the Property not shown by public records (e.g., unrecorded easement, boundary line discrepancy or water rights). Buyer’s Notice to Terminate or Notice of Title Objection of any unsatisfactory condition (whether disclosed by Seller or revealed by such inspection, notwithstanding § 8.2 and § 13), in Buyer’s sole subjective discretion, must be received by Seller on or before Off-Record Title Objection Deadline. If an Off-Record Matter is received by Buyer after the Off-Record Title Deadline, Buyer has until the earlier of Closing or ten days after receipt by Buyer to review and object to such Off-Record Matter. If Seller receives Buyer’s Notice to Terminate or Notice of Title Objection pursuant to this § 8.3 (Off-Record Title), any title objection by Buyer and this Contract are governed by the provisions set forth in § 8.4 (Right to Object to Title, Resolution). If Seller does not receive Buyer’s Notice to Terminate or Notice of Title Objection by the applicable deadline specified above, Buyer accepts title subject to such rights, if any, of third parties of which Buyer has actual knowledge.
8.4. Right to Object to Title, Resolution. Buyer’s right to object to any title matters includes, but is not limited to those matters set forth in §§ 8.2 (Record Title), 8.3 (Off-Record Title) and 13 (Transfer of Title), in Buyer’s sole subjective discretion. If Buyer objects to any title matter, on or before the applicable deadline, Buyer has the following options:
8.4.1. Title Objection, Resolution. If Seller receives Buyer’s written notice objecting to any title matter (Notice of Title Objection), on or before the applicable deadline, and if Buyer and Seller have not agreed to a written settlement thereof on or before Title Resolution Deadline, this Contract will terminate on the expiration of Title Resolution Deadline, unless Seller receives Buyer’s written withdrawal of Buyer’s Notice of Title Objection (i.e., Buyer’s written notice to waive objection to such items and waives the Right to Terminate for that reason), on or before expiration of Title Resolution Deadline. If either the Record Title Deadline or the Off-Record Title Deadline, or both, are extended to the earlier of Closing or ten days after receipt of the applicable documents by Buyer, pursuant to § 8.2 (Record Title) or § 8.3 (Off-Record Title), the Title Resolution Deadline also will be automatically extended to the earlier of Closing or fifteen days after Buyer’s receipt of the applicable documents; or
8.4.2. Title Objection, Right to Terminate. Buyer may exercise the Right to Terminate under § 25.1, on or before the applicable deadline, based on any unsatisfactory title matter, in Buyer’s sole subjective discretion.
8.5. Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND TAX TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYERS SHOULD INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH THE PROPERTY IS LOCATED BY CONTACTING THE COUNTY TREASURER, BY REVIEWING THE CERTIFICATE OF TAXES DUE FOR THE PROPERTY, AND BY OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY ASSESSOR.
Buyer has the Right to Terminate under § 25.1, on or before Off-Record Title Objection Deadline, based on any unsatisfactory effect of the Property being located within a special taxing district, in Buyer’s sole subjective discretion.
8.6. Right of First Refusal or Contract Approval. If there is a right of first refusal on the Property, or a right to approve this Contract, Seller must promptly submit this Contract according to the terms and conditions of such right. If the holder of the right of first refusal exercises such right or the holder of a right to approve disapproves this Contract, this Contract will terminate. If the right of first refusal is waived explicitly or expires, or the Contract is approved, this Contract will remain in full force and effect. Seller must promptly notify Buyer in writing of the foregoing. If expiration or waiver of the right of first refusal or approval of this Contract has not occurred on or before Right of First Refusal Deadline, this Contract will then terminate.
8.7. Title Advisory. The Title Documents affect the title, ownership and use of the Property and should be reviewed carefully. Additionally, other matters not reflected in the Title Documents may affect the title, ownership and use of the Property, including, without limitation, boundary lines and encroachments, set-back requirements, area, zoning, building code violations, unrecorded easements and claims of easements, leases and other unrecorded agreements, water on or under the Property, and various laws and governmental regulations concerning land use, development and environmental matters.
8.7.1. OIL, GAS, WATER AND MINERAL DISCLOSURE. THE SURFACE ESTATE OF THE PROPERTY MAY BE OWNED SEPARATELY FROM THE UNDERLYING MINERAL ESTATE, AND TRANSFER OF THE SURFACE ESTATE MAY NOT NECESSARILY INCLUDE TRANSFER OF THE MINERAL ESTATE OR WATER RIGHTS. THIRD PARTIES MAY OWN OR LEASE INTERESTS IN OIL, GAS, OTHER MINERALS, GEOTHERMAL ENERGY OR WATER ON OR UNDER THE SURFACE OF THE PROPERTY, WHICH INTERESTS MAY GIVE THEM RIGHTS TO ENTER AND USE THE SURFACE OF THE PROPERTY TO ACCESS THE MINERAL ESTATE, OIL, GAS OR WATER.
8.7.2. SURFACE USE AGREEMENT. THE USE OF THE SURFACE ESTATE OF THE PROPERTY TO ACCESS THE OIL, GAS OR MINERALS MAY BE GOVERNED BY A SURFACE USE AGREEMENT, A MEMORANDUM OR OTHER NOTICE OF WHICH MAY BE RECORDED WITH THE COUNTY CLERK AND RECORDER.
8.7.3. OIL AND GAS ACTIVITY. OIL AND GAS ACTIVITY THAT MAY OCCUR ON OR ADJACENT TO THE PROPERTY MAY INCLUDE, BUT IS NOT LIMITED TO, SURVEYING, DRILLING, WELL COMPLETION OPERATIONS, STORAGE, OIL AND GAS, OR PRODUCTION FACILITIES, PRODUCING WELLS, REWORKING OF CURRENT WELLS, AND GAS GATHERING AND PROCESSING FACILITIES.
8.7.4. ADDITIONAL INFORMATION. BUYER IS ENCOURAGED TO SEEK ADDITIONAL INFORMATION REGARDING OIL AND GAS ACTIVITY ON OR ADJACENT TO THE PROPERTY, INCLUDING DRILLING PERMIT APPLICATIONS. THIS INFORMATION MAY BE AVAILABLE FROM THE COLORADO OIL AND GAS CONSERVATION COMMISSION.
8.7.5. Title Insurance Exclusions. Matters set forth in this Section, and others, may be excepted, excluded from, or not covered by the owner’s title insurance policy.
8.8. Consult an Attorney. Buyer is advised to timely consult legal counsel with respect to all such matters as there are strict time limits provided in this Contract (e.g., Record Title Objection Deadline and Off-Record Title Objection Deadline).
Section 9. NEW ILC, NEW SURVEY.
9. NEW ILC, NEW SURVEY.
9.1. New ILC or New Survey. If the box is checked, ☐ a New Improvement Location Certificate (New ILC) ☐ New Survey in the form of __________ is required and the following will apply:
9.1.1. Ordering of New ILC or New Survey. ☐ Seller ☐ Buyer will order the New ILC or New Survey. The New ILC or New Survey may also be a previous ILC or survey that is in the above-required form, certified and updated as of a date after the date of this Contract.
9.1.2. Payment for New ILC or New Survey. The cost of the New ILC or New Survey will be paid, on or before Closing, by: ☐ Seller ☐ Buyer or: __________
9.1.3. Delivery of New ILC or New Survey. Buyer, Seller, the issuer of the Title Commitment (or the provider of the opinion of title if an Abstract of Title), and __________ will receive a New ILC or New Survey on or before New ILC or New Survey Deadline.
9.1.4. Certification of New ILC or New Survey. The New ILC or New Survey will be certified by the surveyor to all those who are to receive the New ILC or New Survey.
9.2. Buyer’s Right to Waive or Change New ILC or New Survey Selection. Buyer may select a New ILC or New Survey different than initially specified in this Contract if there is no additional cost to Seller or change to the New ILC or New Survey Objection Deadline. Buyer may, in Buyer’s sole subjective discretion, waive a New ILC or New Survey if done prior to Seller incurring any cost for the same.
9.3. New ILC or New Survey Objection. Buyer has the right to review and object to the New ILC or New Survey. If the New ILC or New Survey is not timely received by Buyer or is unsatisfactory to Buyer, in Buyer’s sole subjective discretion, Buyer may, on or before New ILC or New Survey Objection Deadline, notwithstanding § 8.3 or § 13:
9.3.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or
9.3.2. New ILC or New Survey Objection. Deliver to Seller a written description of any matter that was to be shown or is shown in the New ILC or New Survey that is unsatisfactory and that Buyer requires Seller to correct.
9.3.3. New ILC or New Survey Resolution. If a New ILC or New Survey Objection is received by Seller, on or before New ILC or New Survey Objection Deadline, and if a Buyer and Seller have not agreed in writing to a settlement thereof on or before New ILC or New Survey Resolution Deadline, this Contract will terminate on expiration of the New ILC or New Survey Resolution Deadline, unless Seller receives Buyer’s written withdrawal of the New ILC or New Survey Objection before such termination, i.e., on or before expiration of New ILC or New Survey Resolution Deadline.
Disclosure, Inspection and Due Diligence
Section 10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY, INSURABILITY, DUE DILIGENCE, BUYER DISCLOSURE AND SOURCE OF WATER.
10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY, INSURABILITY, DUE DILIGENCE, BUYER DISCLOSURE AND SOURCE OF WATER.
10.1. Seller’s Property Disclosure. On or before Seller’s Property Disclosure Deadline, Seller agrees to deliver to Buyer the most current version of the applicable Colorado Real Estate Commission’s Seller’s Property Disclosure form completed by Seller to Seller’s actual knowledge, current as of the date of this Contract.
10.2. Disclosure of Latent Defects; Present Condition. Seller must disclose to Buyer any latent defects actually known by Seller. Seller agrees that disclosure of latent defects will be in writing. Except as otherwise provided in this Contract, Buyer acknowledges that Seller is conveying the Property to Buyer in an “As Is” condition, “Where Is” and “With All Faults.”
10.3. Inspection. Unless otherwise provided in this Contract, Buyer, acting in good faith, has the right to have inspections (by one or more third parties, personally or both) of the Property and Inclusions (Inspection), at Buyer’s expense. If (1) the physical condition of the Property, including, but not limited to, the roof, walls, structural integrity of the Property, the electrical, plumbing, HVAC and other mechanical systems of the Property, (2) the physical condition of the Inclusions, (3) service to the Property (including utilities and communication services), systems and components of the Property (e.g., heating and plumbing), (4) any proposed or existing transportation project, road, street or highway, or (5) any other activity, odor or noise (whether on or off the Property) and its effect or expected effect on the Property or its occupants is unsatisfactory, in Buyer’s sole subjective discretion, Buyer may, on or before Inspection Objection Deadline:
10.3.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or
10.3.2. Inspection Objection. Deliver to Seller a written description of any unsatisfactory physical condition that Buyer requires Seller to correct.
10.3.3. Inspection Resolution. If an Inspection Objection is received by Seller, on or before Inspection Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Inspection Resolution Deadline, this Contract will terminate on Inspection Resolution Deadline unless Seller receives Buyer’s written withdrawal of the Inspection Objection before such termination, i.e., on or before expiration of Inspection Resolution Deadline.
10.4. Damage, Liens and Indemnity. Buyer, except as otherwise provided in this Contract or other written agreement between the parties, is responsible for payment for all inspections, tests, surveys, engineering reports, or other reports performed at Buyer’s request (Work) and must pay for any damage that occurs to the Property and Inclusions as a result of such Work. Buyer must not permit claims or liens of any kind against the Property for Work performed on the Property. Buyer agrees to indemnify, protect and hold Seller harmless from and against any liability, damage, cost or expense incurred by Seller and caused by any such Work, claim, or lien. This indemnity includes Seller’s right to recover all costs and expenses incurred by Seller to defend against any such liability, damage, cost or expense, or to enforce this section, including Seller’s reasonable attorney fees, legal fees and expenses. The provisions of this section survive the termination of this Contract. This § 10.4 does not apply to items performed pursuant to an Inspection Resolution.
10.5. Insurability. Buyer has the right to review and object to the availability, terms and conditions of and premium for property insurance (Property Insurance). Buyer has the Right to Terminate under § 25.1, on or before Property Insurance Objection Deadline, based on any unsatisfactory provision of the Property Insurance, in Buyer’s sole subjective discretion.
10.6. Due Diligence.
10.6.1. Due Diligence Documents. If the respective box is checked, Seller agrees to deliver copies of the following documents and information pertaining to the Property (Due Diligence Documents) to Buyer on or before Due Diligence Documents Delivery Deadline:
☐ 10.6.1.1. All current leases, including any amendments or other occupancy agreements, pertaining to the Property. Those leases or other occupancy agreements pertaining to the Property that survive Closing are as follows (Leases): __________
☐ 10.6.1.2. Other documents and information: __________
10.6.2. Due Diligence Documents Review and Objection. Buyer has the right to review and object to Due Diligence Documents. If the Due Diligence Documents are not supplied to Buyer or are unsatisfactory in Buyer’s sole subjective discretion, Buyer may, on or before Due Diligence Documents Objection Deadline:
10.6.2.1. Notice to Terminate. Notify Seller in writing that this Contract is terminated; or
10.6.2.2. Due Diligence Documents Objection. Deliver to Seller a written description of any unsatisfactory Due Diligence Documents that Buyer requires Seller to correct.
10.6.3. Due Diligence Documents Resolution. If a Due Diligence Documents Objection is received by Seller, on or before Due Diligence Documents Objection Deadline, and if Buyer and Seller have not agreed in writing to a settlement thereof on or before Due Diligence Documents Resolution Deadline, this Contract will terminate on Due Diligence Documents Resolution Deadline unless Seller receives Buyer’s written withdrawal of the Due Diligence Documents Objection before such termination, i.e., on or before expiration of Due Diligence Documents Resolution Deadline.
10.7. Conditional Upon Sale of Property. This Contract is conditional upon the sale and closing of that certain property owned by Buyer and commonly known as __________. Buyer has the Right to Terminate under § 25.1 effective upon Seller’s receipt of Buyer’s Notice to Terminate on or before Conditional Sale Deadline if such property is not sold and closed by such deadline. This § 10.7 is for the sole benefit of Buyer. If Seller does not receive Buyer’s Notice to Terminate on or before Conditional Sale Deadline, Buyer waives any Right to Terminate under this provision.
10.8. Source of Potable Water (Residential Land and Residential Improvements Only). Buyer ☐ Does ☐ Does Not acknowledge receipt of a copy of Seller’s Property Disclosure or Source of Water Addendum disclosing the source of potable water for the Property. ☐ There is No Well. Buyer ☐ Does ☐ Does Not acknowledge receipt of a copy of the current well permit.
Note to Buyer: SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE GROUND WATER. YOU MAY WISH TO CONTACT YOUR PROVIDER (OR INVESTIGATE THE DESCRIBED SOURCE) TO DETERMINE THE LONG-TERM SUFFICIENCY OF THE PROVIDER’S WATER SUPPLIES.
10.9. Carbon Monoxide Alarms. Note: If the improvements on the Property have a fuel-fired heater or appliance, a fireplace, or an attached garage and include one or more rooms lawfully used for sleeping purposes (Bedroom), the parties acknowledge that Colorado law requires that Seller assure the Property has an operational carbon monoxide alarm installed within fifteen feet of the entrance to each Bedroom or in a location as required by the applicable building code.
10.10. Lead-Based Paint. Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, this Contract is void unless (1) a completed Lead-Based Paint Disclosure (Sales) form is signed by Seller, the required real estate licensees and Buyer, and (2) Seller receives the completed and fully executed form prior to the time when this Contract is signed by all parties. Buyer acknowledges timely receipt of a completed Lead-Based Paint Disclosure (Sales) form signed by Seller and the real estate licensees.
10.11. Methamphetamine Disclosure. If Seller knows that methamphetamine was ever manufactured, processed, cooked, disposed of, used or stored at the Property, Seller is required to disclose such fact. No disclosure is required if the Property was remediated in accordance with state standards and other requirements are fulfilled pursuant to § 25-18.5-102, C.R.S. Buyer further acknowledges that Buyer has the right to engage a certified hygienist or industrial hygienist to test whether the Property has ever been used as a methamphetamine laboratory. Buyer has the Right to Terminate under § 25.1, upon Seller’s receipt of Buyer’s written Notice to Terminate, notwithstanding any other provision of this Contract, based on Buyer’s test results that indicate the Property has been contaminated with methamphetamine, but has not been remediated to meet the standards established by rules of the State Board of Health promulgated pursuant to § 25-18.5-102, C.R.S. Buyer must promptly give written notice to Seller of the results of the test.
Section 11. TENANT ESTOPPEL STATEMENTS.
11. TENANT ESTOPPEL STATEMENTS. [Intentionally Deleted]
Section 12. CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING.
12. CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING.
12.1. Closing Documents and Closing Information. Seller and Buyer will cooperate with the Closing Company to enable the Closing Company to prepare and deliver documents required for Closing to Buyer and Seller and their designees. If Buyer is obtaining a new loan to purchase the Property, Buyer acknowledges Buyer’s lender is required to provide the Closing Company, in a timely manner, all required loan documents and financial information concerning Buyer’s new loan. Buyer and Seller will furnish any additional information and documents required by Closing Company that will be necessary to complete this transaction. Buyer and Seller will sign and complete all customary or reasonably required documents at or before Closing.
12.2. Closing Instructions. Colorado Real Estate Commission’s Closing Instructions ☐ Are ☐ Are Not executed with this Contract.
12.3. Closing. Delivery of deed from Seller to Buyer will be at closing (Closing). Closing will be on the date specified as the Closing Date or by mutual agreement at an earlier date. The hour and place of Closing will be as designated by __________.
12.4. Disclosure of Settlement Costs. Buyer and Seller acknowledge that costs, quality, and extent of service vary between different settlement service providers (e.g., attorneys, lenders, inspectors and title companies).
Section 13. TRANSFER OF TITLE.
13. TRANSFER OF TITLE. Subject to tender of payment at Closing as required herein and compliance by Buyer with the other terms and provisions hereof, Seller must execute and deliver a good and sufficient __________ deed to Buyer, at Closing, conveying the Property free and clear of all taxes except the general taxes for the year of Closing. Except as provided herein, title will be conveyed free and clear of all liens, including any governmental liens for special improvements installed as of the date of Buyer’s signature hereon, whether assessed or not. Title will be conveyed subject to:
13.1. Those specific Exceptions described by reference to recorded documents as reflected in the Title Documents accepted by Buyer in accordance with Record Title,
13.2. Distribution utility easements (including cable TV),
13.3. Those specifically described rights of third parties not shown by the public records of which Buyer has actual knowledge and which were accepted by Buyer in accordance with Off-Record Title and New ILC or New Survey,
13.4. Inclusion of the Property within any special taxing district, and
13.5. Any special assessment if the improvements were not installed as of the date of Buyer’s signature hereon, whether assessed prior to or after Closing, and
13.6. Other __________.
Section 14. PAYMENT OF ENCUMBRANCES.
14. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid will be paid at or before Closing from the proceeds of this transaction or from any other source.
Section 15. CLOSING COSTS, CLOSING FEE, ASSOCIATION FEES AND TAXES.>
15. CLOSING COSTS, CLOSING FEE, ASSOCIATION FEES AND TAXES.
15.1. Closing Costs. Buyer and Seller must pay, in Good Funds, their respective closing costs and all other items required to be paid at Closing, except as otherwise provided herein.
15.2. Closing Services Fee. The fee for real estate closing services must be paid at Closing by ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller ☐ Other __________.
15.3. Status Letter and Record Change Fees. Any fees incident to the issuance of Association’s statement of assessments (Status Letter) must be paid by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller. Any record change fee assessed by the Association including, but not limited to, ownership record transfer fees regardless of name or title of such fee (Association’s Record Change Fee) must be paid by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller.
15.4. Local Transfer Tax. The Local Transfer Tax of __________% of the Purchase Price must be paid at Closing by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller.
15.5. Private Transfer Fee. Private transfer fees and other fees due to a transfer of the Property, payable at Closing, such as community association fees, developer fees and foundation fees, must be paid at Closing by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller. The Private Transfer fee, whether one or more, is for the following association(s):__________ in the total amount of __________% of the Purchase Price or $__________.
15.6. Water Transfer Fees. The Water Transfer Fees can change. The fees, as of the date of this Contract, do not exceed $__________ for: __________ ☐ Water Stock/Certificates ☐ Water District ☐ Augmentation Membership ☐ Small Domestic Water Company ☐ __________ and must be paid at Closing by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller
15.7. Sales and Use Tax. Any sales and use tax that may accrue because of this transaction must be paid when due by ☐ None ☐ Buyer ☐ Seller ☐ One-Half by Buyer and One-Half by Seller.
Section 16. PRORATIONS.
16. PRORATIONS. The following will be prorated to Closing Date, except as otherwise provided:
16.1. Taxes. Personal property taxes, if any, special taxing district assessments, if any, and general real estate taxes for the year of Closing, based on ☐ Taxes for the Calendar Year Immediately Preceding Closing ☐ Most Recent Mill Levy and Most Recent Assessed Valuation, adjusted by any applicable qualifying seniors property tax exemption, qualifying disabled veteran exemption or ☐ Other __________.
16.2. Rents. Rents based on ☐ Rents Actually Received ☐ Accrued. At Closing, Seller will transfer or credit to Buyer the security deposits for all Leases assigned, or any remainder after lawful deductions, and notify all tenants in writing of such transfer and of the transferee’s name and address. Seller must assign to Buyer all Leases in effect at Closing and Buyer must assume Seller’s obligations under such Leases.
16.3. Association Assessments. Current regular Association assessments and dues (Association Assessments) paid in advance will be credited to Seller at Closing. Cash reserves held out of the regular Association Assessments for deferred maintenance by the Association will not be credited to Seller except as may be otherwise provided by the Governing Documents. Buyer acknowledges that Buyer may be obligated to pay the Association, at Closing, an amount for reserves or working capital. Any special assessment assessed prior to Closing Date by the Association will be the obligation of ☐ Buyer ☐ Seller. Except however, any special assessment by the Association for improvements that have been installed as of the date of Buyer’s signature hereon, whether assessed prior to or after Closing, will be the obligation of Seller. Seller represents that the Association Assessments are currently payable at approximately $__________ per __________ and that there are no unpaid regular or special assessments against the Property except the current regular assessments and __________. Such assessments are subject to change as provided in the Governing Documents. Seller agrees to promptly request the Association to deliver to Buyer before Closing Date a current Status Letter.
16.4. Other Prorations. Water and sewer charges, propane, interest on continuing loan, and __________.
16.5. Final Settlement. Unless otherwise agreed in writing, these prorations are final.
Section 17. POSSESSION.
17. POSSESSION. Possession of the Property will be delivered to Buyer on Possession Date at Possession Time, subject to the Leases as set forth in § 10.6.1.1.
If Seller, after Closing, fails to deliver possession as specified, Seller will be subject to eviction and will be additionally liable to Buyer for payment of $__________ per day (or any part of a day notwithstanding § 18.1) from Possession Date and Possession Time until possession is delivered.
Buyer represents that Buyer will occupy the Property as Buyer’s principal residence unless the following box is checked, then Buyer ☐ Does Not represent that Buyer will occupy the Property as Buyer’s principal residence.
☐ If the box is checked, Buyer and Seller agree to execute a Post-Closing Occupancy Agreement.
Section 18. DAY; COMPUTATION OF PERIOD OF DAYS, DEADLINE.
18. DAY; COMPUTATION OF PERIOD OF DAYS, DEADLINE.
18.1. Day. As used in this Contract, the term “day” means the entire day ending at 11:59 p.m., United States Mountain Time (Standard or Daylight Savings as applicable).
18.2. Computation of Period of Days, Deadline. In computing a period of days, when the ending date is not specified, the first day is excluded and the last day is included (e.g., three days after MEC). If any deadline falls on a Saturday, Sunday or federal or Colorado state holiday (Holiday), such deadline ☐ Will ☐ Will Not be extended to the next day that is not a Saturday, Sunday or Holiday. Should neither box be checked, the deadline will not be extended.
Section 19. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH.
19. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH. Except as otherwise provided in this Contract, the Property, Inclusions or both will be delivered in the condition existing as of the date of this Contract, ordinary wear and tear excepted.
19.1. Causes of Loss, Insurance. In the event the Property or Inclusions are damaged by fire, other perils or causes of loss prior to Closing in an amount of not more than ten percent of the total Purchase Price (Property Damage), and if the repair of the damage will be paid by insurance (other than the deductible to be paid by Seller), then Seller, upon receipt of the insurance proceeds, will use Seller’s reasonable efforts to repair the Property before Closing Date. Buyer has the Right to Terminate under § 25.1, on or before Closing Date if the Property is not repaired before Closing Date or if the damage exceeds such sum. Should Buyer elect to carry out this Contract despite such Property Damage, Buyer is entitled to a credit at Closing for all insurance proceeds that were received by Seller (but not the Association, if any) resulting from damage to the Property and Inclusions, plus the amount of any deductible provided for in the insurance policy. This credit may not exceed the Purchase Price. In the event Seller has not received the insurance proceeds prior to Closing, the parties may agree to extend the Closing Date to have the Property repaired prior to Closing or, at the option of Buyer, (1) Seller must assign to Buyer the right to the proceeds at Closing, if acceptable to Seller’s insurance company and Buyer’s lender; or (2) the parties may enter into a written agreement prepared by the parties or their attorney requiring the Seller to escrow at Closing from Seller’s sale proceeds the amount Seller has received and will receive due to such damage, not exceeding the total Purchase Price, plus the amount of any deductible that applies to the insurance claim.
19.2. Damage, Inclusions and Services. Should any Inclusion or service (including utilities and communication services), system, component or fixture of the Property (collectively Service) (e.g., heating or plumbing), fail or be damaged between the date of this Contract and Closing or possession, whichever is earlier, then Seller is liable for the repair or replacement of such Inclusion or Service with a unit of similar size, age and quality, or an equivalent credit, but only to the extent that the maintenance or replacement of such Inclusion or Service is not the responsibility of the Association, if any, less any insurance proceeds received by Buyer covering such repair or replacement. If the failed or damaged Inclusion or Service is not repaired or replaced on or before Closing or possession, whichever is earlier, Buyer has the Right to Terminate under § 25.1, on or before Closing Date, or, at the option of Buyer, Buyer is entitled to a credit at Closing for the repair or replacement of such Inclusion or Service. Such credit must not exceed the Purchase Price. If Buyer receives such a credit, Seller’s right for any claim against the Association, if any, will survive Closing. Seller and Buyer are aware of the existence of pre-owned home warranty programs that may be purchased and may cover the repair or replacement of such Inclusions.
19.3. Condemnation. In the event Seller receives actual notice prior to Closing that a pending condemnation action may result in a taking of all or part of the Property or Inclusions, Seller must promptly notify Buyer, in writing, of such condemnation action. Buyer has the Right to Terminate under § 25.1, on or before Closing Date, based on such condemnation action, in Buyer’s sole subjective discretion. Should Buyer elect to consummate this Contract despite such diminution of value to the Property and Inclusions, Buyer is entitled to a credit at Closing for all condemnation proceeds awarded to Seller for the diminution in the value of the Property or Inclusions but such credit will not include relocation benefits or expenses, or exceed the Purchase Price.
19.4. Walk-Through and Verification of Condition. Buyer, upon reasonable notice, has the right to walk through the Property prior to Closing to verify that the physical condition of the Property and Inclusions complies with this Contract.
Section 20. RECOMMENDATION OF LEGAL AND TAX COUNSEL.
20. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing this Contract, Buyer and Seller acknowledge that the respective broker has advised that this Contract has important legal consequences and has recommended the examination of title and consultation with legal and tax or other counsel before signing this Contract.
Section 21. TIME OF ESSENCE, DEFAULT AND REMEDIES.
21. TIME OF ESSENCE, DEFAULT AND REMEDIES. Time is of the essence for all dates and deadlines in this Contract. This means that all dates and deadlines are strict and absolute. If any payment due, including Earnest Money, is not paid, honored or tendered when due, or if any obligation is not performed timely as provided in this Contract or waived, the non-defaulting party has the following remedies:
21.1. If Buyer is in Default:
☐ 21.1.1. Specific Performance. Seller may elect to cancel this Contract and all Earnest Money (whether or not paid by Buyer) will be paid to Seller and retained by Seller. It is agreed that the Earnest Money is not a penalty, and the Parties agree the amount is fair and reasonable. Seller may recover such additional damages as may be proper. Alternatively, Seller may elect to treat this Contract as being in full force and effect and Seller has the right to specific performance or damages, or both.
21.1.2. Liquidated Damages, Applicable. This § 21.1.2 applies unless the box in § 21.1.1. is checked. Seller may cancel this Contract. All Earnest Money (whether or not paid by Buyer) will be paid to Seller, and retained by Seller. It is agreed that the Earnest Money specified in § 4.1 is LIQUIDATED DAMAGES, and not a penalty, which amount the parties agree is fair and reasonable and (except as provided in §§ 10.4, 22, 23 and 24), said payment of Earnest Money is SELLER’S ONLY REMEDY for Buyer’s failure to perform the obligations of this Contract. Seller expressly waives the remedies of specific performance and additional damages.
21.2. If Seller is in Default: Buyer may elect to treat this Contract as canceled, in which case all Earnest Money received hereunder will be returned and Buyer may recover such damages as may be proper. Alternatively, Buyer may elect to treat this Contract as being in full force and effect and Buyer has the right to specific performance or damages, or both.
Section 22. LEGAL FEES, COST AND EXPENSES.
22. LEGAL FEES, COST AND EXPENSES. Anything to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Contract, prior to or after Closing Date, the arbitrator or court must award to the prevailing party all reasonable costs and expenses, including attorney fees, legal fees and expenses.
Section 23. MEDIATION.
23. MEDIATION. If a dispute arises relating to this Contract, (whether prior to or after Closing) and is not resolved, the parties must first proceed, in good faith, to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. Before any mediated settlement is binding, the parties to the dispute must agree to the settlement, in writing. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The obligation to mediate, unless otherwise agreed, will terminate if the entire dispute is not resolved within thirty days of the date written notice requesting mediation is delivered by one party to the other at that party’s last known address (physical or electronic as provided in § 27). Nothing in this Section prohibits either party from filing a lawsuit and recording a lis pendens affecting the Property, before or after the date of written notice requesting mediation. This section will not alter any date in this Contract, unless otherwise agreed.
Section 24. EARNEST MONEY DISPUTE.
24. EARNEST MONEY DISPUTE. Except as otherwise provided herein, Earnest Money Holder must release the Earnest Money following receipt of written mutual instructions, signed by both Buyer and Seller. In the event of any controversy regarding the Earnest Money, Earnest Money Holder is not required to release the Earnest Money. Earnest Money Holder, in its sole subjective discretion, has several options: (1) wait for any proceeding between Buyer and Seller; (2) interplead all parties and deposit Earnest Money into a court of competent jurisdiction, (Earnest Money Holder is entitled to recover court costs and reasonable attorney and legal fees incurred with such action); or (3) provide notice to Buyer and Seller that unless Earnest Money Holder receives a copy of the Summons and Complaint or Claim (between Buyer and Seller) containing the case number of the lawsuit (Lawsuit) within one hundred twenty days of Earnest Money Holder’s notice to the parties, Earnest Money Holder is authorized to return the Earnest Money to Buyer. In the event Earnest Money Holder does receive a copy of the Lawsuit, and has not interpled the monies at the time of any Order, Earnest Money Holder must disburse the Earnest Money pursuant to the Order of the Court. The parties reaffirm the obligation of Mediation. This Section will survive cancellation or termination of this Contract.
Section 25. TERMINATION.
25.1. Right to Terminate. If a party has a right to terminate, as provided in this Contract (Right to Terminate), the termination is effective upon the other party’s receipt of a written notice to terminate (Notice to Terminate), provided such written notice was received on or before the applicable deadline specified in this Contract. If the Notice to Terminate is not received on or before the specified deadline, the party with the Right to Terminate accepts the specified matter, document or condition as satisfactory and waives the Right to Terminate under such provision.
25.2. Effect of Termination. In the event this Contract is terminated, all Earnest Money received hereunder will be returned and the parties are relieved of all obligations hereunder, subject to §§ 10.4, 22, 23 and 24.
Section 26. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL; SUCCESSORS.
26. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL; SUCCESSORS. This Contract, its exhibits and specified addenda, constitute the entire agreement between the parties relating to the subject hereof, and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Contract. No subsequent modification of any of the terms of this Contract is valid, binding upon the parties, or enforceable unless made in writing and signed by the parties. Any right or obligation in this Contract that, by its terms, exists or is intended to be performed after termination or Closing survives the same. Any successor to a Party receives the predecessor’s benefits and obligations of this Contract.
Section 27. NOTICE, DELIVERY, AND CHOICE OF LAW.
27. NOTICE, DELIVERY, AND CHOICE OF LAW.
27.1. Physical Delivery and Notice. Any document, or notice to Buyer or Seller must be in writing, except as provided in § 27.2, and is effective when physically received by such party, any individual named in this Contract to receive documents or notices for such party, the Broker, or Brokerage Firm of Broker working with such party (except any notice or delivery after Closing must be received by the party, not Broker or Brokerage Firm).
27.2. Electronic Notice. As an alternative to physical delivery, any notice, may be delivered in electronic form to Buyer or Seller, any individual named in this Contract to receive documents or notices for such party, the Broker or Brokerage Firm of Broker working with such party (except any notice or delivery after Closing must be received by the party, not Broker or Brokerage Firm) at the electronic address of the recipient by facsimile, email or __________.
27.3. Electronic Delivery. Electronic Delivery of documents and notice may be delivered by: (1) email at the email address of the recipient, (2) a link or access to a website or server provided the recipient receives the information necessary to access the documents, or (3) facsimile at the Fax No. of the recipient.
27.4. Choice of Law. This Contract and all disputes arising hereunder are governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in Colorado for real property located in Colorado.
Section 28. NOTICE OF ACCEPTANCE, COUNTERPARTS.
28. NOTICE OF ACCEPTANCE, COUNTERPARTS. This proposal will expire unless accepted in writing, by Buyer and Seller, as evidenced by their signatures below, and the offering party receives notice of such acceptance pursuant to § 27 on or before Acceptance Deadline Date and Acceptance Deadline Time. If accepted, this document will become a contract between Seller and Buyer. A copy of this Contract may be executed by each party, separately, and when each party has executed a copy thereof, such copies taken together are deemed to be a full and complete contract between the parties.
Section 29. GOOD FAITH.
29. GOOD FAITH. Buyer and Seller acknowledge that each party has an obligation to act in good faith including, but not limited to, exercising the rights and obligations set forth in the provisions of Financing Conditions and Obligations, Title Insurance, Record Title and Off-Record Title, New ILC, New Survey and Property Disclosure, Inspection, Indemnity, Insurability, Due Diligence, Buyer Disclosure and Source of Water.
Additional Provisions and Attachments
Section 30. ADDITIONAL PROVISIONS.
30. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.) __________
Section 31. ATTACHMENTS.
31.1. The following attachments are a part of this Contract: __________
3.1.1. Post-closing Occupancy Agreement. If the Post-Closing Occupancy Agreement box is checked in § 17 the Post-Closing Occupancy Agreement is attached.
31.2. The following disclosure forms are attached but are not a part of this Contract: __________
[NOTE: If this offer is being countered or rejected, do not sign this document. Refer to § 32]
Section 32. COUNTER; REJECTION.
32. COUNTER; REJECTION. This offer is Countered Rejected. Initials only of party (Buyer or Seller) who countered or rejected offer __________
End of Contract to Buy and Sell Real Estate
Section 33. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
33. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
(To be completed by Broker working with Buyer)
Broker ☐ Does ☐ Does Not acknowledge receipt of Earnest Money deposit and, while not a party to the Contract, agrees to cooperate upon request with any mediation concluded under § 23. Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder’s receipt of the executed written mutual instructions, provided the Earnest Money check has cleared.
Broker is working with Buyer as a ☐ Buyer’s Agent ☐ Seller’s Agent ☐ Transaction-Broker in this transaction.
☐ This is a Change of Status.
Brokerage Firm’s compensation or commission is to be paid by ☐ Listing Brokerage Firm ☐ Buyer ☐ Other __________.
Section 34. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
34. BROKER’S ACKNOWLEDGMENTS AND COMPENSATION DISCLOSURE.
(To be completed by Broker working with Seller)
Broker ☐ Does ☐ Does Not acknowledge receipt of Earnest Money deposit and, while not a party to the Contract, agrees to cooperate upon request with any mediation concluded under § 23. Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § 24, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder’s receipt of the executed written mutual instructions, provided the Earnest Money check has cleared.
Broker is working with Seller as a ☐ Seller’s Agent ☐ Buyer’s Agent ☐ Transaction-Broker in this transaction. ☐ This is a Change of Status.
Brokerage Firm’s compensation or commission is to be paid by ☐ Seller ☐ Buyer ☐ Other __________.
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