LOUISIANA REALTORS® COMMENTARY TO LOUISIANA RESIDENTIAL AGREEMENT TO BUY OR SELL BY Patricia B. McMurray ADAMS AND REESE LLP Baton Rouge, Louisiana BATON ROUGE , LOUISIANA (225) 336-5200 ● NEW ORLEANS, LOUISIANA (504) 581-3234 JACKSON, MISSISSIPPI (601) 353-3234 ● HOUSTON, TEXAS (713) 652-5151 ● MOBILE, ALABAMA (215) 433-3234 NASHVILLE, TENNESSEE (615) 341-0068 ● MEMPHIS, TENNESSEE (901) 525-3234 BIRMINGHAM, ALABAMA (205) 250-5000 ● WASHINGTON, D C (202) 737-3234 Copyright © 2007 LOUISIANA REALTORS®. All Rights Reserved. Any reproduction, adaptation, or redistribution of this work in any form is prohibited, except upon the express written permission of LOUISIANA REALTORS®. Notwithstanding the foregoing, the Louisiana Purchase Agreement Form, as amended, promulgated by Act 333 of the 2006 Louisiana Legislative Session is dedicated to the public domain. 1 386279_1 PatriciaB.McMurray Practice Teams Partner, Transactions and Corporate Advisory Services Real Estate Practice Team Leader Baton Rouge (225) 336-5200 [email protected] Real Estate Commercial Restructuring Bankruptcy Banking and Finance Forestry Law Construction and Real Estate Economic Development Areas of Experience Real Estate Forestry Commercial Litigation Bankruptcy State Bar Admissions Louisiana Education J.D., Louisiana State University Paul M. Hebert Law Center, 1986 B.S., University of Alabama, 198 3 Honors and Awards: BRBA Friend of Pro Bono Award, 1998 LBA Pro Bono Publico Award, 199 4 LSU Law School: President's List and Moot Court Board University of Alabama, Phi Beta Kappa Publications: Contributor, The Louisiana Section of the Bankruptcy Exemption Manual, West's Bankruptcy Series Patricia B. McMurray's practice focuses on all types of commercial transactions, forestry and real estate. She is also an experienced litigator in the bankruptcy and general commercial areas. Ms. McMurray is an active member of the Baton Rouge Bar Association, and in 1993, she was awarded the "Baton Rouge Association President's Award." In 1994, she received the "Pro Bono Publico Award" from the Louisiana State Bar Association, and in 1998, she received the "Friend of Pro Bono Award" from the Baton Rouge Bar Association. In 2003, Ms. McMurray was selected as one of the nine most influential women in the Baton Rouge business community. Ms. McMurray also serves as a speaker for the Louisiana State University Law School, the National Business Institute and the Louisiana State Bar Association. She is a member of the Board of Directors of Boys Hope/Girls Hope of Baton Rouge, and the Childrens Charter School. She is also a former board member and president of the Baton Rouge Big Buddy Program. Ms. McMurray is listed in Louisiana Super Lawyers (Real Estate). 2 386279_1 DISCLAIMER These materials are to be used for informational purposes and should not be construed as specific legal advice, nor are they designed to cover every aspect of a legal situation or every factual circumstance that may arise regarding the subject matter included. This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice. The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission. 3 386279_1 I. STATEWIDE PURCHASE AGREEMENT FORM A. INTRODUCTION The Law requiring the Statewide Purchase Agreement Form In 2006, the Legislature passed Act 333 which provides that real estate licensees in the State of Louisiana shall use the Statewide Purchase Agreement Form (the “Statewide Purchase Agreement Form”) prescribed by the Louisiana Real Estate Commission (“LREC”) in making their offer to purchase or sell residential real property. The statute provides: A. A licensee representing either the buyer or seller of residential real property shall complete the Purchase Agreement Form prescribed by the Louisiana Real Estate Commission in making an offer to purchase or sell residential real property. No person shall alter the Purchase Agreement Form; however, addendums or amendments to the Purchase Agreement Form may be utilized. B. The promulgation of this form shall be conducted in accordance with the Administrative Procedure Act no later than July 1, 2007. C. (1) As used in this Section, the term "Purchase Agreement Form" shall mean a document in a form prescribed by the Louisiana Real Estate Commission as a written agreement for the sale or purchase of residential real property. (2) As used in this Section, the term "residential real property" means real property consisting of one or not more than four residential dwelling units, which are buildings or structures each of which are occupied or intended for occupancy as single family residences. The purpose of the law was to assist real estate licensees, many of whom now have clientele statewide, with a uniform starting contract to begin their negotiations. The Statewide Purchase Agreement Form is not intended to mandate the terms of sale but to assist licensees with a central beginning contract. 4 386279_1 B. EXPLANATION TO STATEWIDE PURCHASE AGREEMENT FORM The Statewide Purchase Agreement Form promulgated by the Louisiana Real Estate Commission is titled the “Louisiana Residential Agreement to Buy or Sell”. This form is reproduced in sections and shown in blue text. The comments shown in red are explanations of the information to be filled in for each blank. Further comments to the Statewide Purchase Agreement Form are shown in black. 1. Box at Top of First Page of Statewide Purchase Agreement Form ____(Listing Firm)________________ ______(Selling Firm)_______________ Listing Firm Selling Firm __(Name of Seller’s Designated Agent) Seller’s Designated Agent □ Office Buyer’s Designated Agent (Information on Buyer’s Designated Agent) (Information on Seller’s Designated Agent) Phone Number _(Name of Buyer’s Designated Agent)_ Dual Agent Fax Phone Number Office Fax (E-mail of Buyer’s Designated Agent) _(E-mail of Seller’s Designated Agent) Email Address Email Address _(Person or company to whom offer delivered)____ Delivered by Designated Agent to (Date and time of delivery)____ _____ Day Date Time AM/PM ______________________________________________________________________________ Comments _(Name of person receiving offer)_________________(Date and time of receipt) Received by Day Date Time AM/PM (Name of Designated Agent receiving offer)_________(Date and time of receipt) Received by Designated Listing Agent Day Date Time AM/PM Comments: The information box at the top of the Statewide Purchase Agreement Form provides blanks for information on the listing firm and selling firm. This information is intended to assist the agents in transmitting the offer and tracking delivery of the offer. If the designated agent for the Buyer and Seller is the same person, the dual agency box contained in the middle of this informational box should be selected. 2. 3 Date Date: _____(Date of Offer)____ Comments: Line 3 – This blank is for the date is the date the offer is made by the Buyer or Seller. 5 386279_1 3. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Property Description PROPERTY DESCRIPTION: We offer and agree to Buy/Sell the property at: (Municipal Address) __(Municipal address of property to be sold, example 142 Green Street) City (City name of property to be sold)___; Zip _(Zip) ___; Parish__(Parish)_____________; Louisiana, (Legal Description __(Legal description of property to be sold)________________________________ _________________________________________________________________________________ on lands and grounds measuring approximately __(Lot or land size of property to be sold if available)_ or as per record title; including all buildings, structures, component parts, and all installed, built-in, permanently attached improvements, together with all fences, security systems, all installed speakers or sound systems, all landscaping, all outside TV antennas, all satellite dishes, all installed and/or built-in appliances, all ceiling fans, all air conditioning or heating systems including window units, all bathroom mirrors, all window coverings, blinds and associated hardware, all shutters, all flooring, all carpeting, all cabinet tops, all cabinet knobs or handles, all doors, all door knobs or handles, all windows, all roofing, all electrical systems, and all installed lighting fixtures, chandeliers and associated hardware, other constructions permanently attached to the ground. If owned by the SELLER prior to date of this Agreement, standing timber, unharvested crops and ungathered fruits of trees on the property shall be conveyed to the BUYER. The following movable items here remain with the property, but are not to be considered as part of the Sales Price and have no value: __(Description of items remaining with the property but not included in the sales price)_____________________________________________________________________________ _________________________________________________________________________________. All items listed herein are included in the property sold no matter how they are attached or installed, provided that any or all of these items are in place at the time of signing of this Agreement to Buy or Sell (the “Agreement”), unless otherwise stated herein. (All of the above contained in lines 5 through 24 are collectively referred to herein as the “Property.”) The following items are excluded from the Property sold: __(Description of items being removed from the Property)_______________________ _________________________________________________________________________________ _________________________________________________________________________________. Comments: Line 5 – This line is the offer by the Buyer or Seller to buy or sell the Property described on the following lines of the Statewide Purchase Agreement Form. Line 6 – This blank should be completed with the municipal or street address of the Property to be sold if available. For example, the municipal address of the Property to be sold might be 142 Green Street. Line 7 – These blanks are for the city, the zip code and parish of the Property to be sold if available. Line 8 – This blank is provided to include the legal description of the Property to be sold if available. The legal description can also be attached as an addendum to the Statewide Purchase Agreement Form. 6 386279_1 Line 10 – The approximate measurement of the land and grounds of the Property to be sold should be included on this blank if available. If this information is not available terms such “as per survey” or “not available” may be included. Lines 11 – 18 – These lines describe the additional property being sold with the land. The necessity to further list the specifics of property being sold originally derived from the Willis-Knighton Medical Center vs. Caddo-Shreveport Sales & Use Tax Commission, 2005 WL 737 481 (La. 2005) decision whereby the Louisiana Supreme Court called into question what had long been considered in the industry to comprise the component parts of real property. This listing of specific items also provides an opportunity to discuss with Buyers and Sellers exactly what items will remain with the Property being sold and which items will be taken by the Sellers upon their departure from the Property. The items listed on Lines 11 through 18 are intended to be component parts of the Property being sold. Lines 18 – 20 – This sentence provides the Property being sold will include standing timber (timber that has not already been cut), unharvested crops and ungathered fruits of the trees on the Property unless this term is changed on an addendum to the Statewide Purchase Agreement Form or unless these crops or timber has previously been sold by the Seller. Lines 20 - 24 – This blank provides a place to list movable items which will remain with the Property but are not considered part of the Sales Price and therefore have no value per the sale. Movable items that might be left with the Property at no value regarding the Sales Price for example, include an item such as a refrigerator. Lines 25 - 28 – This definition provides that the Property being sold shall include all of the above referenced Property per Lines 5 through 24 collectively referred to as the “Property” elsewhere in the Statewide Purchase Agreement Form. Lines 28 - 31 – This blank is to include items excluded from the Property to be sold such that if a Seller is not selling window coverings for example, the Seller could say in this portion of the Statewide Purchase Agreement Form, “window coverings are excluded from the Property sold”. 4. 33 34 35 Mineral Rights MINERAL RIGHTS: □ □ If SELLER owns any mineral rights, they are to be conveyed without warranty. _*____% mineral rights owned by SELLER are to be reserved by SELLER, but SELLER shall waive any right to use the surface for any such reserved mineral activity or use. * - Percentage of mineral rights which Seller is retaining. Comments: Line 33 The first checkbox should be selected if the Seller may own any mineral rights and the Seller is conveying these rights to the Buyer without warranty of title to the minerals. This means the Seller is transferring the mineral rights he may have but is not warranting or guaranteeing to the Buyer that there are any mineral rights which he may be able to convey to the Buyer. 7 386279_1 Line 34 - The second checkbox should be selected if the mineral rights owned by the Seller are to be reserved by the Seller, or if the Seller is conveying a portion of mineral rights to the Buyer. For example, the Seller may wish to retain 50% of the mineral rights and convey 50% of the mineral rights to the Buyer. The Seller might also fill in 100% in Line 34 if the Seller is reserving all mineral rights. Lines 34 - 35 – This line provides, the Seller shall waive any right to use the surface of the Property being sold for any reserved mineral activity or use. This means the Seller is agreeing that any drilling or production of minerals shall not be on the surface of the Property being sold. For example, the mineral production could be by directional drilling off the Property. 5. 37 38 39 40 PRICE PRICE: The Property will be sold and purchased subject to title and zoning restrictions, servitudes of record, and law or ordinances affecting the Property for the sum of ____________________________ __(Written out amount of Sales Price, example One Hundred Thousand)___________Dollars ($100,000 ) (the “Sales Price”). Comments: Lines 37 - 40 – This paragraph provides a blank to fill in the offered Sales Price for the Property both alphabetically and numerically. The paragraph further provides the Property will be sold subject to title and zoning restrictions, servitudes of record, and law or ordinances affecting the Property. This amount in the blank on Lines 38 – 40 is called the “Sales Price” through the remainder of the Statewide Purchase Agreement Form. 6. 42 43 44 45 Contingency for Sale of Buyer’s Other Property CONTINGENCY FOR SALE OF BUYER’S OTHER PROPERTY: □ This sale is contingent on the sale of other property by the BUYER and the attached contingency clause addendum shall apply. □ This sale is not contingent upon the sale of other property by the BUYER nor is the loan needed by the BUYER to obtain the Sales Price contingent on the BUYER’S sale of any property. Comments: Line 42 - This checkbox should be selected if the sale of the Property is contingent or conditioned upon the sale of another piece of property by the Buyer. If this checkbox is selected, a contingency clause addendum which sets forth the specific terms upon which the Buyer’s current property will be sold should be attached. Lines 43 – 45 – On Line 43, a second checkbox is provided which should be selected if the sale of the Property is not contingent upon the Buyer’s sale of another piece of property. 7. 49 All Cash Sale □ ALL CASH SALE: BUYER warrants he has cash readily available to close the sale of this Property. 8 386279_1 Comments: Line 49 – This checkbox should be selected if the sale of the Property will be for all cash. This means the Buyer is not obtaining financing to fund the Sales Price with the Property being acquired used as collateral for the loan. The Buyer warrants that he has cash readily available to fund the Sales Price. 8. 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 □ Financed Sale FINANCED SALE: This sale is conditioned upon the ability of BUYER to borrow with this Property as security for the loan the sum of $__(Amount of loan to be obtained)________________ or _____% of the Sales Price by a mortgage loan or loans at an initial interest rate not to exceed _____% per annum, interest and principal, amortized over a period of not less than _____ years, payable in monthly installments or on any other terms as may be acceptable to BUYER provided that these terms do not increase the cost, fees or expenses to SELLER. The loan shall be secured by: □ Fixed Rate Mortgage; Mortgage; □ □ □ VA Guaranteed Mortgage; □ FHA Insured Financing; □ Other __________________________. Adjustable Rate Mortgage; Owner Financing; □ Bond SELLER mandated fees required by lender on VA or FHA loans, if any, shall not exceed $___________. BUYER agrees to pay discount points not to exceed _____% of the loan amount. Other financing conditions:_________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________. BUYER agrees to make good faith application, which includes ordering and paying for an appraisal and credit report if required for loan approval, within _*____ calendar days of acceptance of this offer or any counteroffer and written proof from the lender that the application has been made shall be supplied by BUYER to the SELLER. Written commitment by the lender to make loan(s), without contingencies except subject to approval of title, shall be obtained by BUYER and shall constitute final loan approval. Final loan approval shall be obtained on or prior to __*_________________. Any extension of this date shall be in writing and shall be signed by all parties. BUYER authorizes and instructs lender to release to SELLER or SELLER’S Broker or Designated Agent, written verification of the loan application and final loan approval. SELLER reserves the right to provide all or part of mortgage loan(s) set forth above. The BUYER acknowledges and warrants that he has available the funds which may be required to complete the sale of the Property including, but not limited to, the deposit, the down payment, closing costs, pre-paid items, and other expenses. * - Number of calendar days after acceptance of offer by which the Buyer will submit a loan application. This includes Saturdays, Sundays and legal holidays. * – Deadline for final loan approval. Comments: Lines 51 - 75 – This section provides the financial terms of the sale if the Sales Price is to be financed by the Buyer. Line 51 – This checkbox should be selected if the Sales Price is being financed by the Buyer. This means that the Buyer will be borrowing money to pay the Sales Price. 9 386279_1 Lines 52 – 55 – This line provides a blank for the amount of the loan which the Buyer intends to obtain or if the Buyer does not know the amount of the loan a blank is also provided in Line 53 for the amount of the loan to be expressed as a percentage of the Sales Price. For example, the Buyer might include a term that 80% of the Sales Price will be financed by a mortgage loan or loans. This paragraph also provides a blank for a maximum interest rate per annum if the Buyer wishes to include this as a term of sale. Further, a blank is provided for amortization of the loan. For example the Buyer may say that he must obtain a mortgage loan for 80% of the Sales Price at an initial interest not to exceed 9% per annum, interest and principal amortized over a period of not less than 30 years. Lines 55 – 56 - These lines provide that the Buyer may agree to other loan terms not stated in the financing terms in the lines above, so long as these different financial terms do not increase the costs, fees or expenses to the Seller. Lines 56 – 58 - The type of loan to be obtained by the Buyer is provided for in Lines 56 through 58 of the Statewide Purchase Agreement Form. These choices include a fixed rate mortgage which is a mortgage in which the amount of interest is at a set amount that does not change through the term of the mortgage. For example, an 8% mortgage that remains 8% from the beginning to the end of the term of the loan. The second type of loan is an adjustable rate mortgage. In an adjustable rate mortgage the interest rate is adjusted during the term of the mortgage. For example, the interest rate might start at 8% the first year and increase to 9% after 5 years. The third type of loan is a VA Guaranteed Mortgage or FHA Insured Mortgage. There is also a checkbox for Owner Financing, Bond Financing and an “Other” checkbox if the type of financing is not included in the previous checkbox selections. Line 59 – This line provides a blank for the mandated fees, if any, required by lender on VA or FHA loans. The maximum amount the Seller shall be required to pay of these mandated fees should be included in this blank. Line 60 – This line provides a space to list any discount points to be paid by the Buyer. Lines 61 – 63 – These lines provide a space for other financing conditions not already included in this preprinted paragraph. Lines 64 – 69 - These lines provide that the Buyer agrees to make good faith financing application with the lender. This includes ordering and paying for an appraisal and credit report if required for loan approval by the lender. A blank is provided for the number of calendar days after acceptance of this offer or any counteroffer that written proof from the lender of the loan application should be supplied by the Buyer to the Seller. This means that the Buyer must make his application for financing within a certain number of calendar days from acceptance of the offer or counteroffer and then provide proof that the application has been made to the Seller. This loan application proof could be supplied to either the Seller or the Seller’s agent. The commitment by the lender to make loans without contingencies except subject to title approval is considered final loan approval for purposes of the Statewide Purchase Agreement Form. 10 386279_1 Line 70 - Final loan approval shall be obtained by the Buyer on or prior to the date listed in the blank provided on Line 70. This blank is intended to require the Buyer to obtain final loan approval prior to a date certain. The date provided in Line 70 may be the closing date or an earlier date prior to the closing date. Line 70 further provides that any extension of the loan approval date shall be in writing and shall be signed by the parties. Lines 71 - 72 – This sentence gives the lender the authority to release to the Seller or the Seller’s broker or designated agent, written verification that the loan application has been made and final loan approval has been obtained. Lines 72 – 73 – In this section, the Seller reserves the right to provide owner or Seller financing upon the terms set forth in Lines 51 through 63 if the Seller decides to do that in lieu of the traditional lender financing. Lines 73 – 75 - In this section, the Buyer acknowledges and warrants that he has available funds which may be required to complete the sale of the Property. This includes the deposit, the downpayment, the closing cost, prepaid items and other expenses. This section is also intended to give notice to the Buyer that there may be costs that the Buyer will need to pay above the amount of the mortgage loan. 9. 77 78 79 80 81 82 83 84 85 86 87 88 89 Deposit DEPOSIT: Upon acceptance of this offer, SELLER and BUYER shall be bound by all terms and conditions of this Agreement, and BUYER or BUYER’S agent will deliver immediately upon notice of acceptance of the offer a deposit (the “Deposit”) in the amount of $_(Deposit Amount)___________ or _____% of the Sales Price by □ □ Cash $__(Cash Deposit Amount)__________________________ Check $__(Check Deposit Amount)______________________ □ Promissory Note in the amount of $_(Promissory Note Deposit Amount)_________________ to be held by _____*_______________. Failure to deliver the Deposit shall be considered a breach of this Agreement. If the Deposit is held by a Broker, it must be held in accordance with the rules of the Louisiana Real Estate Commission in a federally insured banking or savings and loan institution without responsibility on the part of the Broker in the case of failure or suspension of such institution. In the event the parties fail to execute an Act of Sale by date specified herein, and/or a dispute arises as to ownership of, or entitlement to, the Deposit or funds held in escrow, the Broker shall abide by the Rules and Regulations set forth by the Louisiana Real Estate Commission governing such matters. * – Name of person or company holding the Deposit. Comments: Lines 77 - 89 – This section provides the Buyer shall make a Deposit. The Deposit shall be delivered immediately upon acceptance of the offer. The amount of the Deposit is the amount set forth in the blank provided on Line 79 or the percentage of the Sales Price provided for with the blank on Line 80. The Deposit may be by cash, if the checkbox on Line 80 is selected or check, if the checkbox on Line 81 is selected. A Promissory Note may be used for the Deposit if the checkbox on Line 81 is selected. The Deposit may also be a combination of cash, check and Promissory Note depending upon the terms agreed to by the parties. 11 386279_1 Line 82 – This line provides a blank for listing the amount of the Promissory Note used for the Deposit if applicable. Line 82 further provides a blank for the name of the person or company who shall hold the Deposit. Line 83 – This line provides that failure to deliver the Deposit shall be considered a breach of this contract. Lines 84 - 89 – These lines provide that the rules and regulations on Deposits set forth by the Louisiana Real Estate Commission governing Deposits shall apply to this Statewide Purchase Agreement Form. See Louisiana Real Estate Commission Rules and Regulations § 2901 et seq. 10. 91 92 93 Property and Flood Insurance PROPERTY AND FLOOD INSURANCE: It is recommended that the BUYER make good faith application for property and flood insurance, if applicable, on the Property as soon as possible after acceptance of this offer. Comments: Lines 91 - 93 - This paragraph is intended to provide a reminder to the Buyer that the Buyer should make a good faith application for property and flood insurance as soon as possible after acceptance of the offer to purchase. Currently Louisiana property owners are experiencing delays in obtaining property and flood insurance. Buyers are encouraged to make application as quickly as possible if they desire to obtain insurance prior to the closing. 11. 95 96 97 98 99 100 101 102 103 Appraisal APPRAISAL: □ This sale is NOT conditioned on appraisal. □ This sale IS conditioned on the appraisal of the Property being not less than the Sales Price. If the appraised value of the Property is equal to or greater than the Sales Price, the BUYER shall pay the Sales Price agreed upon prior to the appraisal. If the appraised value is less than the Sales Price, BUYER shall immediately provide written notification to SELLER of appraised value and BUYER’S request for SELLER to reduce the Sales Price. Within ______*___________________ (__*_____) calendar days after SELLER’S receipt of such written notification of the appraised value, BUYER shall have the option to pay the Sales Price agreed upon prior to the appraisal or to void this Agreement unless SELLER agrees in writing to reduce the Sales Price to the appraised value or all parties agree to a new Sales Price. * – Number of days given to Seller to respond to appraisal written out, for example “Seven”. * – Numerical amount of days to be given to Seller to respond to the appraisal. For example (7). Comments: Lines 95 – 99 – This section provides checkboxes to select if the sale is subject to an appraisal of the Property or if the Buyer will not require an appraisal of the Property prior to the closing. The first checkbox should be selected if the sale is not conditioned on appraisal of the Property as a condition of completing the sale. This 12 386279_1 means the Buyer does not desire to obtain appraisal of the Property. The second checkbox on Line 95 should be selected if the sale is conditioned on appraisal of the Property. Lines 96 – 99 - The Statewide Purchase Agreement Form provides that if the appraisal of the Property is for less than the Sales Price the Buyer may provide written notice to the Seller of the appraised value and the Buyer’s request for the Seller to reduce the Sales Price to the value shown on the appraisal. Line 100 – 103 – This section provides that after delivery of this written notice to the Seller, of the appraised value being lower than the Sales Price and the request by the Buyer to reduce the Sales Price, the Buyer shall have the option to pay either the Sales Price agreed upon in the Statewide Purchase Agreement Form or to void the Statewide Purchase Agreement Form unless the Seller agrees to reduce the Sales Price to the appraised value. 12. 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 Warranty or As Is Clause with Waiver of Right of Redhibition WARRANTY OR AS IS CLAUSE WITH WAIVER OF RIGHT OF REDHIBITION: (CHECK ONE ONLY) □ A. SALE WITH WARRANTIES: SELLER and BUYER acknowledge that this sale shall be with full SELLER warranties as to any claims or causes of action including but not limited to redhibition pursuant to Louisiana Civil Code Article 2520, et seq. and Article 2541, et seq. □ B. SALE “AS IS” WITHOUT WARRANTIES: SELLER and BUYER hereby acknowledge and recognize that the Property being sold and purchased is to be transferred in “as is” condition and further BUYER does hereby waive, relieve and release SELLER from any claims or causes of action for redhibition pursuant to Louisiana Civil Code Article 2520, et seq. and Article 2541, et seq. or for reduction of Sales Price pursuant to Louisiana Civil Code Article 2541, et seq. Additionally, BUYER acknowledges that this sale is made without warranty of fitness for ordinary or particular use pursuant to Louisiana Civil Code Article 2524. SELLER and BUYER agree that this clause shall be made a part of the Act of Sale. □ C. NEW HOME WARRANTIES. Notwithstanding lines 108 through 118 and irrespective of whether A or B above is checked, if the Property is a new construction, the parties agree that neither A or B will apply but instead the provisions of the New Home Warranty Act (LA R.S. 9:3141 et seq.) shall apply. The warranty of condition of this Property is governed by the New Home Warranty Act if a home on the Property is a “home” as defined in the New Home Warranty Act. Comments: Lines 107 – 123 - Only one checkbox should be selected in this section. Either the box on Line 108, 111 or 119 should be selected. Line 108 – 110 – The checkbox on Line 108 should be selected if the sale of the Property is made with warranty by the Seller to the Buyer. This means that the Seller and Buyer acknowledge that the sale is with full warranty as to any claim or cause of action, including redhibition. This clause should be reviewed in detail by the Buyer and Seller. Line 111 – The checkbox on Line 111 should be selected if the sale is “as is” and without warranty. In this event the Seller is not providing any warranty to the 13 386279_1 Buyer and is selling the Property in “as is” condition. An “as is” clause notifies the Buyer that the Property being sold may not be perfect condition and that generally the Seller does not intend to correct or fix any defects. Waiver of redhibition is a different term then selling property “as is”. See Wilston v. Noland, 888 So.2d 950 (La. Ct. App.1st Cir. 2004) Under Louisiana law, a Seller generally warrants that the property sold is free of hidden or non-apparent defects. The existence of a redhibitory defect gives the Buyer the right to void the sale on account of some vice or defect in the property sold, which renders the property either absolutely useless, or the property’s use is so inconvenient and imperfect that the Buyer would not have purchased the property had the Buyer known of the defect. See Louisiana Civil Code Article 2520 et seq. Generally, for a waiver of redhibitory defects or redhibition to be effective, the waiver of the warranty must satisfy three requirements. First, the waiver must be clear and unambiguous. Second, it must be contained in the contract being signed by the Buyer and Seller and third, it must be brought to the attention of the Buyer or explained to him. See Mitchell v. Popiwchak, 677 So.2d 1050 (La. Ct. App. 4th Cir. 1996). If the checkbox on Line 111 is selected, this means that the Buyer is also waiving and releasing the Seller from any causes of action for redhibition. This clause should be reviewed in detail with the Buyer and Seller. Lines 119 – 123 – The checkbox on Line 119 should be selected if property being sold is new construction and will be covered by the New Home Warranty Act. The New Home Warranty Act is provided for in LA R.S. 9:3142 et seq. This Act provides by statute certain home warranties on new home construction. 13. 125 126 127 128 129 130 131 132 133 Prorations/Other Costs PRORATIONS/OTHER COSTS: Real estate taxes, rents, assessments, condominium dues, assessments and/or dues owed to homeowners associations and the like for the current year are to be prorated through the date of the Act of Sale. Act of Sale costs, title insurance and other costs required to obtain financing shall be paid by BUYER, unless otherwise stated herein. All necessary tax, mortgage, conveyance and release certificates or cancellations and SELLER closing fees, if any, shall be paid by SELLER. SELLER shall pay all previous years’ taxes, assessments, condominium dues, assessments and/or dues owed to homeowners associations and the like. All special assessments bearing against the Property, other than those to be assumed as of the date of sale are to be paid by SELLER. Comments: Lines 125 - 131 - This section addresses the payment of costs such as real estate or ad valorem taxes, rents (if property is leased), assessments made by homeowner’s associations and condominium dues for the year in which the sale of the Property occurs. This section provides that these costs listed will be prorated through the date of the closing. For example, the Seller will pay the prorated costs for the portion of the year in which the Seller owned the Property and the Buyer will pay the portion of the year in which the Buyer owns the Property. All other costs of the sale such as title insurance and financing costs shall be paid by the Buyer. Any required Mortgage and Conveyance certificates and the cost of the cancellations of mortgages shall be paid by the Seller. 14 386279_1 Lines 132 – 133 – Special assessments against the Property which were assessed prior to the date of the closing, unless assumed by the Buyer are to be paid by the Seller on or prior to closing. 14. 135 136 137 138 139 140 141 142 143 144 145 Merchantable Title/Curative Work MERCHANTABLE TITLE/CURATIVE WORK: SELLER shall deliver to BUYER a merchantable title at SELLER’s costs (see line 141). In the event curative work in connection with the title to the Property is required or is a requirement for obtaining the loan(s) upon which this Agreement is conditioned, the parties agree to and do extend the date for passing the Act of Sale to a date not more than _______________________________ (____) calendar days from the date of the Act of Sale stated herein. SELLER’s title shall be merchantable and free of all liens and encumbrances except those that can be satisfied at Act of Sale. All costs and fees required to make title merchantable shall be paid by SELLER. SELLER shall make good faith efforts to deliver merchantable title. SELLER’s inability to deliver merchantable title within the time stipulated herein shall render this Agreement null and void, reserving unto BUYER the right to demand the return of the Deposit and to recover from SELLER actual costs incurred in processing of sale as well as legal fees incurred by BUYER. Comments: Lines 135 – 136 – This section provides that the Seller shall deliver to Buyer a merchantable title at Seller’s cost. Merchantable title is generally defined as a title that is readily sold or mortgaged in the ordinary course of business by reasonable persons familiar with the facts and questions involved. The Buyer cannot generally be compelled to accept a title that exposes the Buyer to an unreasonable risk of serious litigation. See Young v. Stevens, 252 La. 69, 209 So.2d 25 (1967). Lines 136 – 140 – In the event the Seller needs to perform curative work in connection with making the title merchantable or if curative work is required for obtaining the loan by the Buyer, a blank is provided to insert a date for extending the time for passage of the Act of Sale for the curative work to be completed. Lines 140 – 141 – This line provides that the Seller’s title to the Property shall be free of all liens and encumbrances except those that are to be paid at the closing. For example, the Seller may have an existing mortgage on the Property. This mortgage presumably would be paid at the time of the closing with the sales proceeds. Lines 141 – 142 – These lines provide all costs and fees which includes attorney’s fees required to make a title merchantable shall be paid by the Seller. Lines 142 – 145 – The Seller shall make a good faith effort to deliver a merchantable title. The Seller’s inability to deliver the merchantable title within the time for closing or an extension as provided for in Line 139 renders the contract null and void. This reserves to the Buyer the right to demand return of the Deposit and to recover from the Seller any actual costs incurred by the Buyer as well as any legal fees incurred by the Buyer. 15 386279_1 15. 147 148 149 Leases LEASES: If there are written leases on the Property, the Property will be sold subject to those leases. The sale is conditioned upon BUYER'S written approval of copies of all such leases within five (5) calendar days of receipt of the Leases. Comments: Lines 147 - 149 - The Seller is required to provide the Buyer with copies of any written leases that affect the Property being sold. The sale of the Property is conditioned upon the Buyer’s written approval of these leases within five calendar days of receipt of the leases by the Buyer. 16. 151 152 153 154 155 Act of Sale ACT OF SALE: The Act of Sale is to be executed before a settlement agent or Notary Public to be chosen by BUYER, on _________________________, 20_____. At closing, BUYER must provide "good funds" if required by Louisiana statute LA R.S. 22:2092.2 et seq. Any change of the date for execution of the Act of Sale must be mutually agreed upon in writing and signed by SELLER and BUYER. Security deposits, keys and leases are to be transferred to BUYER at Act of Sale. Comments: Lines 151 - 152 – These lines provide that the Act of Sale will be signed before a settlement agent or notary public. This notary or settlement agent will be selected by the Buyer. A blank is provided in Line 152 for the date of the closing. Lines 152 – 153 - Provides that the Buyer must provide good funds as required by Louisiana law at the closing. Good funds include: (a) Cash. (b) Wire transfers unconditionally received by the title insurer or the title insurance agent or the depository of the insurer or agent. (c) A depository check, including a certified check, cashier's check, or teller's check as defined by the Expedited Funds Availability Act, 12 U.S.C. 4001 et seq. (d) A personal check or other item which has been presented for payment and for which funds have been unconditionally collected by the title insurer or the title insurance agent. (e) Credit transfers through the Automated Clearing House which have been deemed available by the depository institution receiving the credit. The credit shall conform to the operating rules established by the National Automated Clearing House Association. (f) Checks unconditionally issued by mortgage lenders which are subject to periodic audit by the Department of Housing and Urban 16 386279_1 Development or the secretary of Veterans Affairs, and which are drawn on financial institutions insured by the Federal Deposit Insurance Corporation. (g) A check or checks, drawn on the trust account or sales escrow account of the real estate broker licensed under R.S. 37:1430 et seq., in an amount up to the amount of the then current guarantee provided by the Real Estate Recovery Fund as established in R.S. 37:1463. Lines 153 - 155 – These lines provide any change in the date for the closing that is set forth on Line 152 must be mutually agreed upon in writing by the Buyer and the Seller. Line 155 – This line provides that any security deposits and the keys are to be transferred to the Buyer on the date of the Act of Sale. This line further provides if the Property is subject to a lease, the lease will be assigned to the Buyer at closing. 17. 157 Occupancy OCCUPANCY: Occupancy is to be granted at Act of Sale or on _____________ at _______ A.M. /P.M. Comments: Line 157 – This line provides a blank for inserting the date and time the Buyer is granted occupancy of the Property. Occupancy will be granted at Act of Sale unless a different date is provided in this blank. 18. Inspection and Due Diligence 159 160 161 162 163 164 INSPECTION AND DUE DILIGENCE: BUYER ACKNOWLEDGES THAT THE SALES PRICE OF THE PROPERTY WAS NEGOTIATED BASED UPON THE PROPERTY'S APPARENT CURRENT CONDITION; ACCORDINGLY, SELLER IS NOT OBLIGATED TO MAKE REPAIRS TO THE PROPERTY, INCLUDING REPAIRS REQUIRED BY THE LENDER UNLESS OTHERWISE STATED HEREIN. THE SELLER IS RESPONSIBLE FOR MAINTAINING THE PROPERTY IN SUBSTANTIALLY THE SAME OR BETTER CONDITION AS IT WAS WHEN THE AGREEMENT WAS FULLY EXECUTED. 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 BUYER shall have an inspection period of ( ) calendar days, commencing the first day after acceptance of this Agreement wherein, BUYER may, at BUYER’S expense, have any inspections made by experts or others of his choosing. Such inspections may include, but are not limited to, inspections for termites and other wood destroying insects, and/or damage from same, molds, and fungi hazards, and analysis of synthetic stucco, appliances, structures, foundations, roof, heating, cooling, electrical, plumbing systems, utility and sewer availability and condition, out-buildings, square footage, school district, flood zone classifications, current zoning and/or subdivision restrictive covenants and any items addressed in the SELLER’S Property Disclosure Document. All testing shall be nondestructive testing. SELLER agrees to provide the utilities for inspections and immediate access. If BUYER is not satisfied with the current condition of the Property as reflected in the inspection reports: Option 1: BUYER may elect, in writing, to terminate the Agreement and declare the Agreement null and void; or Option 2: BUYER may indicate in writing the deficiencies and desired remedies and SELLER will have seventy-two (72) hours to respond in writing as to SELLER’s willingness to remedy those deficiencies (“SELLER’s Response”). 17 386279_1 186 187 188 189 190 191 192 193 194 195 196 197 Should SELLER in the SELLER’S Response refuse to remedy any or all of the deficiencies listed by the BUYER, then BUYER shall have twenty-four (24) hours from the date of SELLER's Response or twentyfour (24) hours from the date that SELLER's Response was due, whichever is earlier, to: (a) accept SELLER'S Response to BUYER’S written requests or (b) accept the Property in its current condition, or (c) to elect to terminate this Agreement. BUYER’S response shall be in writing. Upon BUYER'S failure to respond to the SELLER’s Response by the time specified or BUYER’S electing, in writing, to terminate this Agreement, the Agreement shall be automatically, with no further action required by either party, ipso facto null and void except for return of Deposit to the BUYER. FAILURE TO MAKE INSPECTIONS OR TO GIVE WRITTEN NOTICE OF DEFICIENCIES AND DESIRED REMEDIES TO SELLER (OR SELLER’S DESIGNATED AGENT) AS SET FORTH IN LINES 180 THROUGH 184 WITHIN THE INSPECTION PERIOD SHALL BE DEEMED AS ACCEPTANCE BY BUYER OF THE PROPERTY'S CURRENT CONDITION. Comments: Lines 159 – 164 – This section addresses the Buyer’s ability to inspect the Property and conduct whatever due diligence the Buyer deems necessary regarding the Property. In this first paragraph of the inspection section, the Buyer acknowledges that the Sales Price of the Property was negotiated based on the Property’s current and apparent condition. Further, this section states that the Seller is not obligated to make repairs to the Property including any repairs which are suggested or required by the lender unless repairs are otherwise provided for in the agreement. The Seller is responsible though for maintaining the Property in substantially the same or better condition as it was when the offer was accepted. Lines 169 – 171 – This section provides a blank for a number of calendar days the Buyer shall have to inspect or conduct due diligence regarding the Property. The inspection period begins to run the first day after acceptance of the offer. Any inspections of the Property shall be at the Buyer’s expense and conducted by experts or individuals of the Buyer’s choosing. Lines 171 – 176 – These lines provide that the Buyer’s inspections can include many different types of inspections. This is an illustrative and not exclusive list of inspections that the Buyer may choose to employ. Lines 176 – 177 – The testing conducted by the Buyer shall be nondestructive unless other agreement is reached with the Seller. This means the Buyer may not destroy any portion of the Property during the testing period in order to gain data needed for testing without the written approval of the Seller. Line 177 – This line provides that the Seller shall supply the utilities for inspections and access to the Property for the Buyer. Lines 177- 178 – This begins the section which addresses the result if the Buyer is not satisfied with the current condition of the Property after his due diligence investigation or inspection. 18 386279_1 Lines 180 – The first option the Buyer may have if the Buyer is not satisfied with the condition of the Property after inspection is that the Buyer may elect in writing to terminate the contract and declare the contract null and void. Lines 182 – 184 – If the Buyer is not satisfied with the current condition of the Property after inspection, the second option the Buyer may have is to indicate in writing the deficiencies and desired remedies to the Seller. The Seller will then have 72 hours to respond in writing to the Buyer as to the Seller’s willingness to correct these defects alleged by the Buyer. Lines 186 – 193 – These lines address the result if the Buyer selects the second option after being dissatisfied with the Property inspection and the Seller refuses to remedy the deficiencies. Should the Seller in the Seller’s response to the Buyer’s request, refuse to remedy any and all of the deficiencies listed by the Buyer, then the Buyer has 24 hours from the date of Seller’s response or 24 hours from the date the Seller’s response was due, whichever is earlier, to either first accept the Seller’s response to the Buyer’s written request or second, accept the Property in its current condition or third, elect to terminate the contract. The Buyer’s decision after the Seller’s response shall be in writing. If the Buyer fails to respond in writing to the Seller’s response to the Buyer’s dissatisfaction with the Property condition in the time specified, then the contract is automatically void except for return of the Deposit to the Buyer. Lines 193 – 197 – If the Buyer chooses not to make inspections or not to give any notice of any deficiencies in the Property or remedies desired from the Seller, the inspection period shall be deemed an acceptance by the Buyer of the Property’s current condition. 19. 199 200 201 202 203 204 205 Private Water/Sewerage PRIVATE WATER/SEWERAGE: In the event there is a private water system or private sewerage system on the Property, this Agreement □ is; □ is not; contingent upon an approval by the appropriate governmental entity of the private water or sewerage system. An approved sewerage and/or water inspection report, if requested by the lender, BUYER or other governmental entity will be issued within thirty (30) days prior to the Act of Sale by the appropriate governmental agency. The inspection and test on the water and/or sewerage system are to be furnished and paid for by the SELLER. Comments: Lines 199 - 201 – These lines provide checkboxes to determine whether the sale is contingent upon the approval of the private water or sewerage system. If this sale is conditioned upon approval by appropriate governmental entity of the private water sewerage system, the checkbox “is” should be selected. If the Property is not being sold subject to approval of a private water system or private sewerage system, then the checkbox “is not” should be selected. 19 386279_1 Lines 201 - 203 – These lines provide that the approval of the sewerage system and/or water inspection report must be issued within thirty days prior to the Act of Sale by the appropriate governmental agency. Lines 203 - 205 – These lines provide that the inspection or test of the water and sewerage system is to be paid for by the Seller. 20. 207 208 209 210 211 212 213 214 215 Home Warranty Program HOME WARRANTY PROGRAM: A home warranty plan will be purchased at the closing of sale at a cost not to exceed $___*________________________ to be paid by □ BUYER, □ SELLER, □ Neither, and ordered by ___*__________________________. It is understood that Agent/Broker may receive compensation from the home warranty company. The home service warranty plan does not warrant pre-existing defects and options, and does not supersede or replace any other inspection clause or responsibilities. If neither BUYER nor SELLER accepts the home service warranty plan, they declare that they have been made aware of the existence of such a plan and its advantages by the Broker, and further declare they hold the Broker and Agents harmless from any responsibility or liability due to their rejection of such a plan. * - Maximum amount of cost of home warranty plan which either party agrees to pay. * - Name of party who will order the home warranty plan. Comments: Lines 207 - 215 – These lines provides for the purchase of a home service warranty program should the Buyer or Seller desire to purchase one. Line 208 – This line provides a blank for the maximum amount of the cost of the home warranty plan which either party agrees to pay for a home service warranty program. A checkbox is provided for either the Buyer, Seller or neither to agree to purchase a home service warranty program. At least one of these three checkboxes should be checked either “Buyer”, “Seller” if a home service warranty program is being purchased or “neither” if a home warranty program is not being purchased. Line 209 - A blank is provided for the name of the party who will order the home warranty plan. Lines 210 – 212 – These lines provide disclosure that the agent or broker may receive compensation from the home warranty company and that the home warranty plan does not warrant certain defects, and further does not replace any other inspection by the Buyer. Lines 212 - 215 - This is an acknowledgment of the Buyer and Seller that they have been advised of the existence of a home warranty plan and its advantages by the 20 386279_1 broker. The Buyer and Seller declare they further hold the broker and agents harmless for any responsibility or liability due to their rejection of their plan should they decide to reject the purchase of a home service warranty program. 21. 217 218 219 220 221 Final Walk Through FINAL WALK THROUGH: BUYER shall have the right to re-inspect the Property within five (5) days prior to the Act of Sale, or occupancy, whichever will occur first in order to determine if the Property is in the same or better condition as it was at the initial inspection(s) and to insure all agreed upon repairs have been completed. SELLER agrees to provide utilities for the final walk through and immediate access to the Property. Comments: Lines 217 - 221 – These lines provide for the final walkthrough of the Buyer to inspect the Property prior to the closing. The Buyer has the right to re-inspect the Property within five days prior to the Act of Sale or occupancy of the Property, whichever occurs first. The purpose of this final walkthrough is to determine if the Property is in the same or better condition as it was when it was initially inspected by the Buyer. The Seller agrees to provide utilities for the final walkthrough and access to the Buyer to the Property for the inspection. 22. Return of Deposit 223 224 RETURN OF DEPOSIT: The Deposit shall be returned to the BUYER and this Agreement declared null and void without demand in consequence of the following events: 229 230 231 232 233 234 235 236 237 238 239 240 1) If this Agreement is declared null and void by BUYER during the inspection period as set forth in lines 180 through 197 of this Agreement; 2) If this Agreement is subject to BUYER’S ability to obtain a loan and the loan is not obtained by the date set forth in lines 64 through 70 of this Agreement but only if the BUYER has made timely application for the loan and made good faith efforts to obtain the loan; 3) If the BUYER conditions the Sales Price on an appraisal and the appraisal is less than the Sales Price and the SELLER will not reduce the Sales Price as set forth in lines 95 through 103 of this Agreement; 4) If the Property being sold subject to the existing leases and BUYER does not accept the leases as set forth in lines 147 through 149 of this Agreement; 5) If the BUYER is unable to obtain property insurance on the Property prior to the date for passing the Act of Sale, but only if BUYER has in good faith applied for property insurance. Comments: Lines 223 – 224 – This section deals with the return of the Deposit to the Buyer in the event the agreement is declared null and void. This section outlines in what events the Buyer receive return of his Deposit without demand made to the Seller. 21 386279_1 Lines 229 – 230 – These lines provide that the Buyer shall receive return of his Deposit in the event that the Buyer is not satisfied with the inspection of the Property and the Seller and Buyer are unable to reach an agreement for repair of the Property as set forth in Lines 180 – 197 of the agreement. Lines 231 – 233 – The Buyer shall receive return of his Deposit if the sale is contingent upon the Buyer’s ability to obtain a loan and the loan is not obtained by the Buyer. This is only in the event that the Buyer has timely made application for the loan and used good faith efforts to obtain the loan. The loan application process is set forth in Lines 64 – 70 of the Statewide Purchase Agreement Form. Lines 234 – 236 – If the Buyer has conditioned the Sales Price on an appraisal, and the appraisal received is for less than the amount of the Sales Price and further the Seller does not agree to reduce the Sales Price, then the Buyer shall receive return of his Deposit. The appraisal process is set forth in Lines 95 – 103 of the Statewide Purchase Agreement Form. Lines 237 – 238 – If the Buyer is buying the Property subject to existing leases on the Property and after receipt of the existing leases, the Buyer is not satisfied with the leases, the Buyer is entitled to return of his Deposit. The lease review process is set forth in Lines 147 – 149 of the Statewide Purchase Agreement Form. Lines 239 – 240 – If the Buyer is unable to obtain property insurance on the Property prior to the date set forth for passing the Act of Sale, then the Buyer may obtain return of his Deposit and declare the Statewide Purchase Agreement Form null and void. This return of Deposit is only in the event that the Buyer has in good faith applied for the property insurance. 23. 242 243 244 245 246 247 248 249 250 251 252 Default of Agreement by Seller DEFAULT OF AGREEMENT BY SELLER: In the event of any other default of this Agreement by SELLER except as set forth in lines 142 through 145 or lines 223 through 240, BUYER shall at BUYER’S option have the right to declare this Agreement null and void with no further demand, or to demand and/or sue for any of the following: 1) Termination of this Agreement; 2) Specific performance; 3) Termination of this Agreement and an amount equal to 10% of the Sales Price as stipulated damages. Further, BUYER shall be entitled to the return of the Deposit. The prevailing party to any litigation brought to enforce any provision of this Agreement shall be awarded their attorney fees and costs. The SELLER may also be liable for Broker fees. Comments: Lines 242 – 252 – This section provides the remedy in the event of a default by the Seller. This is exclusive of any return of Deposit rights contained in Lines 142 – 145 or Lines 223 – 240. In the event of a default by the Seller, the Buyer has the 22 386279_1 option of (1) terminating the agreement, (2) suing for specific performance, or (3) terminating the agreement and suing for amount equal to 10% of the Sales Price as stipulated damages. Lines 250 – 252 – This provides that in the event of default by the Seller, the Buyer is also entitled to the return of the Deposit. This further provides that the prevailing party to any litigation if a suit is filed to enforce or terminate this agreement shall be awarded their attorney’s fees and costs. This section also provides on Line 252 that the Seller may be liable for broker’s fees. 24. 254 255 256 257 258 259 260 261 262 263 Default of Agreement by Buyer DEFAULT OF AGREEMENT BY BUYER: In the event of any other default of this Agreement by BUYER except as set forth in lines 223 through 240, SELLER shall have at SELLER’s option the right to declare this Agreement null and void with no further demand, or to demand and sue for any of the following: 1) Termination of this Agreement; 2) Specific performance; 3) Termination of this Agreement and an amount equal to 10% of the Sales Price as stipulated damages. Further, SELLER shall be entitled to retain the Deposit. The prevailing party to any litigation brought to enforce any provision of this Agreement shall be awarded their attorney fees and costs. The BUYER may also be liable for Broker fees. Comments: Lines 254 – 260 – This section provides the remedy in the event of a default by the Buyer. This is exclusive of any required return of Deposit rights contained in Lines 223 – 240. In the event of a default by the Buyer, the Seller has the option of (1) terminating the agreement, (2) suing for specific performance, or (3) terminating the agreement and suing for amount equal to 10% of the Sales Price as stipulated damages. Lines 261 – 263 - Further the Seller will also be entitled to retain the Deposit if it is Buyer’s default. Again the provision that the prevailing party to any litigation brought to enforce any provision of this agreement shall be awarded their attorney’s fees and costs. 25. 265 266 267 268 269 Mold Related Hazards Notice MOLD RELATED HAZARDS NOTICE: An informational pamphlet regarding common mold related hazards that can affect real property is available at the EPA website http://www.epa.gov/iaq/molds/index.html. By initialing this page of the Agreement, BUYER acknowledges that the real estate agent has provided BUYER with the EPA website enabling BUYER to obtain information regarding common mold related hazards. 23 386279_1 Comments: Lines 265 - 269 – This section provides the mold related hazards disclosure. An informational pamphlet on mold related hazards is available at the Environmental Protection Agency website in this paragraph. The Buyer can access this website to learn more about mold related hazards. When the Buyer initials this page of the Statewide Purchase Agreement Form, the Buyer is acknowledging that they have been made aware of the website and the ability to access same to learn more about common mold hazards. This section is intended to be in compliance with LA R.S. 37§1470 which requires a real estate licensee to deliver a mold educational pamphlet or website to the Buyer before a contract is entered into by the parties. 26. 271 272 273 274 275 276 277 Offender Notification OFFENDER NOTIFICATION: The Louisiana State Police maintains the State Sex Offender and Child Predator Registry through the Louisiana Bureau of Criminal Identification and Information. It is a public access database of the locations of individuals who are required to register pursuant to LA R.S. 15:540 et seq. The website for the database is http://www.lasocpr.lsp.org/socpr/. Sheriff and police departments serving jurisdictions of 450,000 also maintain such information. Inquiries can be made by phone at 1-800-858-0551 or 1-225-925-6100. Send written inquiries to Post Office Box 66614, Box A-6, Baton Rouge, Louisiana 70896. Comments: Lines 271 - 277 – These lines contain the notification to the Buyer in compliance with the federal law known as Megan’s law that the website is available for determining if a registered state sex offender or child predator is residing within the neighborhood where the Property is being purchased. The telephone numbers for contacting the appropriate agency and the address is also contained in this paragraph. This paragraph is in compliance with the Louisiana License Law LA R.S. 37§1469 which provides: A. Every written lease or rental agreement executed by any licensee for residential immovable property and every written contract for sale of residential immovable property shall contain a notice of the availability to the public of access to a statewide database disclosing the locations of individuals required to register pursuant to R.S. 15:540 et seq. The notice shall include the telephone number and Internet site for the statewide database. B. Upon delivery of the notice to the lessee or transferee of the residential immovable property, the lessor, seller, broker, or licensee is not required to provide any information in addition to that contained in the notice regarding the proximity of registered sex offenders. The 24 386279_1 information in the notice shall be deemed to be adequate to inform the lessee or transferee about the existence of a statewide database of the locations of registered sex offenders and information from the database regarding those locations. The information in the notice shall not give rise to any cause of action against the disclosing party by a registered sex offender or other parties to the transaction. 27. 279 280 Choice of Law CHOICE OF LAW: This Agreement shall be governed by and shall be interpreted in accordance with the laws of the State of Louisiana. Comments: Lines 279 - 280 – This section provides that the Statewide Purchase Agreement Form shall be governed by Louisiana law. 28. 282 283 284 Deadlines DEADLINES: TIME IS OF THE ESSENCE, and all deadlines are final, except where modifications, changes, or extensions are made in writing and signed by all parties to this Agreement. All “calendar days” as used in this Agreement shall end at 12:00 midnight in Louisiana. Comments: Lines 282 - 284 – This section provides that all deadlines are essential to parties in the purchase of the Property. Calendar days are used throughout the Statewide Purchase Agreement Form. This means every day of every year counts towards any deadline. This includes weekends and holidays. A calendar day ends at 12:00 midnight in Louisiana. 29. 288 289 290 291 292 293 294 295 296 297 Additional Terms and Conditions ADDITIONAL TERMS AND CONDITIONS: _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 25 386279_1 Comments: Lines 289 - 297 – This section provides blank lines for either the Buyer or Seller making the offer to write in any additional terms which may be needed. 30. 299 300 301 Contract CONTRACT: This is a legally binding contract when signed by both SELLER and BUYER. READ IT CAREFULLY. If you do not understand the effect of any part of this Agreement seek legal advice before signing this contract or attempting to enforce any obligation or remedy provided herein. Comments: Lines 299 - 301 – These lines provide a disclosure to the Seller and the Buyer that they should carefully read the contract. If this Seller or Buyer does not understand the effect of any part of this contract, they should seek legal advice before signing the contract or attempting to enforce any obligation or remedy provided in the contract. 31. 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 Roles of Brokers and Designated Agents ROLES OF BROKERS AND DESIGNATED AGENTS: Broker(s) and Designated Agent(s) have acted only as real estate brokers to bring the parties together and make no warranty to either party for performance or non-performance of any part of this Agreement or for any warranty of any nature unless specifically set forth in writing. Broker(s) and Designated Agent(s) make no warranty or other assurances whatsoever concerning Property measurements, square footage, room dimensions, lot size, Property lines or boundaries. Broker(s) and Designated Agent(s) make no representations as to suitability or to a particular use of the Property, and BUYER has or will independently investigate all conditions and characteristics of the Property which are important to BUYER. BUYER is not relying on the Broker(s) nor the Designated Agent(s) to choose a representative to inspect or re-inspect the Property; BUYER understands any representative desired by BUYER may perform this function. In the event Broker/Agent(s) provides names or sources for such advice or assistance, Broker/Agent(s) does not warrant the services of such experts or their products and cannot warrant the condition of Property or interest to be acquired, or guarantee that all defects are disclosed by SELLER(s). Broker/Agent(s) do not investigate the status of permits, zoning, code compliance or restrictive covenants. The Broker(s) and Designated Agent(s) specifically make no warranty whatsoever as to whether or not the Property is situated in or out of the Government’s hundred year flood plan or is or would be classified as wetlands by the U.S. Army Corp. of Engineers, or as to the presence of wood destroying insects or damage therefrom. BUYER(s) are to satisfy themselves concerning these issues. Designated Agent shall be an independent contractor for Broker if the conditions as set forth in LA R.S. 37:1446(h) are met. Comments: Lines 303 - 322 – This section discloses the role of the broker and the designated agents in providing service to the Seller or Buyer. 26 386279_1 Lines 303 – 306 – These lines state that the broker and designated agent make no warranty to either party regarding the performance or compliance by the Buyer or the Seller of the contract. Lines 306 – 311 – These lines further describe the warranties that the broker and designated agents do not make to Buyers and Sellers. This includes any warranty relating to measurements of rooms, boundary lines or representations of the suitability of the Property for a particular use. This section of the Statewide Purchase Agreement Form advises the Buyer to make an independent investigation of all conditions and characteristics of the Property which the Buyer believes are important. Lines 310 – 312 – These lines provide that the Buyer should not rely on the broker or the designated agent to choose an expert to inspect or reinspect the Property. The Buyer is free to choose whatever representative or expert they desire to perform inspection or appraisals. Lines 312 – 315 – These lines disclose that if the broker or designated agent provides a name of an expert for inspection or other expert, then the broker or designated agent does not warrant the services of this expert. Lines 316 – 317 – These lines advise the Buyer that the broker and designated agent did not investigate the status of any zoning or permitting on the Property. This includes any restrictive covenants such as homeowner association or building restrictions on the Property. Lines 317 – 320 – These lines provide that the broker and designated agent did not investigate whether the Property is in a flood zone. Lines 320 – 321 – These lines provide that the designated agent may be an independent contractor of the broker. 32. 324 325 326 Singular – Plural Use SINGULAR – PLURAL USE: Wherever the word BUYER or the word SELLER occurs in this Agreement or is referred to, the same shall be construed as singular or plural, masculine or feminine or neuter, as the case may be. Comments: Lines 324 – 326 – This section provides that whenever the term “Buyer” or “Seller” is used this includes both the male or female as well as the singular or plural of the words. Therefore, the word “Seller”, would include both “Sellers” should there be a two Sellers, for example, a husband and wife. 27 386279_1 33. 328 329 330 331 332 Acceptance ACCEPTANCE: Acceptance of this Agreement must be in writing. Notice of this acceptance may be communicated by facsimile transmission. The original of this document shall be delivered to the listing Broker’s firm. This Agreement and any supplement addendum or modification relating hereto, including any photocopy, facsimile or electronic transmission thereof, may be executed in two or more counterparts, all of which shall constitute one and the same Agreement. Comments: Line 328 – This line provides that the acceptance of an offer to purchase made on this Statewide Purchase Agreement Form must be in writing. The Buyer’s offer to purchase may only be accepted by the Seller in writing. Lines 328 – 329 – These lines further provide that notice of the acceptance of the offer may be communicated by facsimile transmission or fax. This means that a fax of the signature of the Seller will have the same force and effect as the original signature. Lines 329 – 330 – These lines provide the original executed version of the Statewide Purchase Agreement Form shall be delivered to the listing broker’s firm. The listing broker shall retain the original signed contract. Lines 330 – 332 – These lines provide that the Statewide Purchase Agreement Form may be executed in counterparts. This means that a copy of the Statewide Purchase Agreement Form could be signed by the Buyer. A separate copy of the Statewide Purchase Agreement Form can be signed by the Seller. These two contracts will be treated as a single agreement for all legal purposes. 34. 334 335 336 337 338 339 340 341 List Addenda to Be Attached and Made a Part of this Agreement LIST ADDENDA TO BE ATTACHED AND MADE A PART OF THIS AGREEMENT: If any of the preprinted portions of this Agreement vary or are in conflict with any handwritten terms or Addendum attached to this Agreement, the handwritten or Addendum provisions control. [ ] Contingency for Sale of Buyer’s Other Property Addendum [ ] Condominium Addendum [ ] ______________________________________________ [ ] ______________________________________________ [ ] ______________________________________________ Comments: Lines 334 – 336 – These lines provide that if there are any addenda attached to this Statewide Purchase Agreement Form, the terms on the addendum shall control should they conflict with the printed portions of the Statewide Purchase Agreement Form. 28 386279_1 Lines 337 – 341 – These lines provide checkboxes and blanks to check off or list addenda that may be attached and therefore, incorporated into the Statewide Purchase Agreement Form. 35. 343 344 Expiration of Offer EXPIRATION OF OFFER: This offer remains binding and irrevocable until ___________________ AM/PM/MIDNIGHT/NOON. Comments: Lines 343 – 344 – These lines provide a blank to fill in the deadline to accept the offer. Line 344 – Provides a space to put a date through which the offer to purchase or sell remain binding on the Buyer or Seller and irrevocable by the offering party. This generally means that the Buyer or Seller cannot withdraw the offer to buy or sell prior to that date. 36. 348 349 Entire Agreement ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement between the parties, and any other agreements not incorporated herein in writing are void and of no force and effect. Comments: Line 348 – 349 – These lines provide that this Statewide Purchase Agreement Form is the entire agreement between the parties and there is no other previous writings that supersedes or alters and amends this contract signed by the parties. 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 X__(Signature of Buyer)_______________ Signature of Buyer Date/Time __(Print Buyer’s Name)____________ X__________________________________ Signature of Buyer __________________________________ Print Buyer’s Full Name (First, Middle, Last) Print Buyer’s Full Name (First, Middle, Last) _(Print Street Address)___________ __________________________________ Street Address _(City, State, Zip)_______________ Street Address __________________________________ City, State, Zip City, State, Zip [_*___]___________________________ Last 4-digits of SSN [______]__________________________ Telephone #.Cell Last 4-digits of SSN _(Telephone numbers of Buyer)_____ Telephone #.Home Telephone #.Cell _________________________________ Telephone #.Work Telephone #.Home __(E-mail of Buyer)_______________ Telephone #.Work ________________________________ E-Mail Address E-Mail Address * - The last four digits of the Buyer’s social security number. 29 386279_1 Date/Time Comments: Line 351 – This is the line for the signature of the Buyer and the date and time the Buyer signs. Two lines are provided for the Buyers to sign the offer. Line 354 – This line is for printing the Buyer’s name. Line 357 – This line is for printing the current street address of the Buyer. Line 360 – This line is for printing the city, state and zip code of the Buyer. Line 363 – This line provides a space for the last four digits of the Buyer’s social security number. This information is provided to assist the title attorney or title company in searching the title. 372 373 _________________________________________________________________________ This offer was presented to the Seller by Day Date Time AM / PM MIDNIGHT/NOON Comments: Line 372 – This line provides a blank space for the broker or designated agent to insert the name of the party who presented the offer to the Seller and the date and time of the presentation. 375 This offer is: □ Accepted □ Rejected (w/out counter) □ Countered (See Attached Counter) by: Comments: Line 375 – This line provides checkboxes to select whether the offer was Accepted, Rejected (without Counteroffer) or Countered. If the offer is Countered, a Counteroffer should be attached. 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 X__(Signature of Seller)___________ Signature of Seller X__________________________________ Date/Time __(Print Seller’s Name)___________ Print Seller’s Full Name (First, Middle, Last) ___(Print Street Address)_____________ Street Address Signature of Seller Date/Time __________________________________ Print Seller’s Full Name (First, Middle, Last) __________________________________ Street Address __(City, State, Zip)___________________ __________________________________ [_*___]___________________________ [______]__________________________ City, State, Zip Last 4-digits of SSN City, State, Zip Telephone #.Cell Last 4-digits of SSN _(Telephone numbers of Seller)_____ Telephone #.Home __________________________________ Telephone #.Work Telephone #.Home __(E-mail of Seller)_______________ Telephone #.Work __________________________________ E-Mail Address E-Mail Address * - The last four digits of the Seller’s social security number. 30 386279_1 Telephone #.Cell Comments: Line 377 – This is the line for the signature of the Seller and the date and time the Seller signs. Two lines are provided for the Sellers to sign the offer. Line 380 – This line is for printing the Seller’s name. Line 384 – This line is for printing the current street address of the Seller. Line 386 – This line is for printing the city, state and zip code of the Seller. Line 389 – This line provides a space for the last four digits of the Seller’s social security number. This information is provided to assist the title attorney or company in searching the title. 398 399 _________________________________________________________________________ The Seller’s response was presented to the Buyer by Day Date Time AM / PM MIDNIGHT/NOON Comments: Line 398 – This line provides a blank space for the broker or designated agent to insert the name of the party who presented the Seller’s response to the Buyer and the date and time of the presentation. 37. 401 402 403 404 405 406 407 408 409 410 411 Property Disclosure Document PROPERTY DISCLOSURE DOCUMENT: □ Attached to this offer is the SELLER’S completed property disclosure document dated ___________. The property disclosure agreement is issued pursuant to LA R.S. 9:3196 et seq. and was completed in good faith to the best of the SELLER’S knowledge. This document sets forth the minimum disclosure requirements for sellers of residential real estate as to the condition of the Property. THIS DOCUMENT IS NOT TO BE CONSIDERED A WARRANTY BY THE SELLER, AND IT IS NOT TO BE USED AS A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THAT THE BUYER MAY OBTAIN. Nothing in the document precludes the rights or duties of the BUYER to inspect the physical condition of the Property. The property disclosure document is not a part of this Agreement. □ The SELLER’S completed property disclosure document is not attached. Comments: Line 402 – This line provides a checkbox to select if the Seller’s completed property disclosure document will be attached to the purchase offer. A blank is also provided on this line for the date of the Seller’s property disclosure document. Line 403 – This lines states that the property disclosure document was completed by the Seller in compliance with Louisiana State law. The document sets forth the 31 386279_1 minimum disclosure required for a Seller of residential real property as to the condition of the Property. Lines 405 – 407 – These lines further advise the Buyer that the property disclosure document is not to be considered a warranty by the Seller of the condition of the Property. The property disclosure document is not to be used in lieu of any inspections that the Buyer may wish to conduct. Lines 407 – 408 – These lines provide that receipt of the property disclosure document does not prohibit the Buyer from a physical inspection of the Property. Line 409 – This line provides that the property disclosure document itself is not incorporated into the Statewide Purchase Agreement Form. This is a separate document. Line 411 – This line provides a checkbox to select if the Seller’s property disclosure document is not attached to the Statewide Purchase Agreement Form. 32 386279_1 II. FREQUENTLY ASKED QUESTIONS 1. Who is required to use the Statewide Purchase Agreement Form? All licensees representing either the Buyer or Seller of residential real property shall complete the Statewide Purchase Agreement Form prescribed by the LREC in making an offer to purchase or sell residential real property. 2. When do real estate licensees need to start using the Statewide Purchase Agreement Form? The Statewide Purchase Agreement Form shall be used by licensees on all sales of residential real property on or after January 1, 2008. 3. What is the definition of “residential real property”? “Residential real property” for purposes of this law means real property consisting of one or not more than four residential dwelling units which are buildings or structures each of which are occupied or intended for occupancy as single family residences. 4. Do all Buyers and Sellers have to use the new Statewide Purchase Agreement Form? Buyers and Sellers who do not use the licensed real estate agents or brokers are not required to use the Statewide Purchase Agreement Form. 5. Where can I obtain Agreement Form? a copy of the Statewide Purchase The form is available on the LREC website at http://www.lrec.state.la.us/ Further, the Louisiana REALTORS® has copies of the form available on its website http://www.larealtors.org/. 6. Do I need to use this Statewide Purchase Agreement Form for undeveloped land? No. This Statewide Purchase Agreement Form only needs to be used for residential real property and not undeveloped nonresidential land. 7. Do I need to use this Statewide Purchase Agreement Form for commercial property? No. This Statewide Purchase Agreement Form only needs to be used for residential real property. 33 386279_1 8. Do I need to use this Statewide Purchase Agreement Form for condominiums? Yes. Condominiums are generally included in the definition of residential real property. 9. Do I need to use this Statewide Purchase Agreement Form for new construction of homes? Yes. Residential real property generally includes new homes. 10. What type of addendum can I attach to the Statewide Purchase Agreement Form? Any addendum desired by the Buyer or Seller making their offer or counteroffer can be attached to the Statewide Purchase Agreement Form. The LREC has plans to have certain addendums as samples available on its website. These addendums shall not be mandated, but are just forms for use if desired by licensees. 11. Is there a limit on what I can include on an addendum to the Statewide Purchase Agreement Form? No. The legislation mandating the form did not include a limit on addendums. Any term of an offer or counteroffer may be included on an addendum. 12. Can the Statewide Purchase Agreement Form be altered? No. The pre-printed portions of the Statewide Purchase Agreement Form itself cannot be altered. No strike-through of the pre-existing portions of the Statewide Purchase Agreement Form is allowed and no handwritten or typed additions to the pre-printed form itself such as in margins is allowed. There are blank lines in the Statewide Purchase Agreement Form for handwritten or typed additional terms. Lines 288 through 297 of the Statewide Purchase Agreement Form also provide blank lines for adding additional terms. All other revisions to the Statewide Purchase Agreement Form shall be made in the form of addendums or amendments to the Statewide Purchase Agreement Form. 13. Is there a possible sanction if a licensee fails to use the Statewide Purchase Agreement Form? Yes, as with any other provision of the license law, potentially the failure of a licensee to comply with the statute can result in a licensee being sanctioned or other penalty. 34 386279_1 14. Does the Statewide Purchase Agreement Form count deadlines by calendar or business days? The Statewide Purchase Agreement Form uses calendar days throughout the agreement. This means all days count. There are no days that are not counted such as holidays or weekends. A calendar day ends at 12:00 midnight in Louisiana. 15. Is the Statewide Purchase Agreement Form on letter or legal size paper? The Statewide Purchase Agreement Form will print on letter size paper from the LREC website. There is no LREC rule requiring a specific page size. 16. What about font size for the Statewide Purchase Agreement Form? The font size should be at least 12 type per LREC rule. 17. The Statewide Purchase Agreement Form provides circumstances when the deposit will be returned to the Buyer, by the Seller. Does this mean licensees can return the deposit without complying with the LREC rules? No, the LREC rules on deposit still apply. See LREC Rules Chapter 29. 18. Do I need to wait until after January 1, 2008 to begin using the Statewide Purchase Agreement Form? No. You can start using the form now if you want to use it. 19. What happens if the Statewide Purchase Agreement Form is electronically transmitted (faxed) and through the transmission process the font is reduced below 12pt type as required by the Louisiana Real Estate Commission? Is this still a valid purchase agreement? The Louisiana Real Estate rule is that the Louisiana Statewide Purchase Agreement form shall be in 12 pt font or greater. The intent of the rule from the discussion of the LREC on the date the rule was enacted was to address the initial font size of the contract. We do not believe that the LREC commission addressed the reducing type size through the transmission process. Further, the mandate of a statewide contract does not change the general obligations laws of the Louisiana Civil Code and therefore it is very unlikely a Court would rule that a contract was unenforceable merely because upon the transmission of the document the font size was reduced from 12 pt font. 35 386279_1 20. Does the Statewide Purchase Agreement Form use Central Standard Time or Daylight Savings Time? The form uses “Louisiana time.” The time it is in Louisiana, whether Central Standard Time or Daylight Savings Time, prevails. 36 386279_1
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