What Buyers SHOULD know when signing an as-is real estate contract in Pompano Beach
Disclaimer: Oliver Hoffmann, Broker for Pompano Beach Realty Corporation specializing in Pompano Beach Real Estate is not an attorney nor is he providing legal advice in this article. The content of this article is of informational purpose only and his interpretation of the as-is contract. Please consult with your attorney when purchasing real estate.
In Pompano Beach the As-Is contract is the most commonly used contract used for the purchase of real estate.
In this article, I want to go over some of the most important dates in the as-is contract that a buyer should observe when purchasing property.
Dates on the As-Is Contract
The dates in the As-Is contract are counted in calendar days and NOT in business days, so it is important for the buyer not to miss any deadlines as this might result buyer being in default of the contract putting their earnest money deposit at risk and exposing themselves to a potential lawsuit from the seller.
It is the BUYERS responsibility to make sure all those deadlines are met!
The dates in the As-Is contract are based on the effective date.
The “Effective Date” is the date when the last party to the transaction has signed and or initiated the contract or counter-offer AND this offer was delivered to the other party. At this point the clock starts ticking.
What does As-Is mean?
AS-IS means that the property being bought is being sold exactly how it was seen at the time the buyer made the offer to purchase. This means that the seller(s) is/are obligated to maintain the property, until closing, in the exact same condition it was at the time of the offer.
Inspection Period
If a buyer is purchasing a property with a mortgage loan, most lenders will require buyer to obtain a homeowners insurance.
In order to obtain this homeowners insurance, most insurance carriers will ask for satisfactory 4 Point Inspection before binding the homeowners policy.
A 4 point inspection looks at these 4 items:
HVAC, Plumbing, Electrical and Roofing.
Should this 4 point inspection reveal any items that buyers insurance carrier needs to have fixed in order to bind an insurance policy, Buyer should ask the seller in writing to remedy those items while still within the inspection period. Buyer should understand that the seller is not obligated to do so.
Should the seller not be willing to fix those items, the buyer might want to strongly consider canceling the contract within their inspection period to get their earnest money back as buyer will most likely not be able to get insurance on the property, a requirement by most lenders.
Mortgage Approval
Probably the most important date in the contract if you are obtaining a mortgage loan is the “Loan Approval” date, usually 30 days from effective date or whatever time frame was negotiated between buyer and seller.
Please note it is the BUYERS responsibility to inform the Seller and Broker of the loan approval process as stated in line 99 of the as-is contract.
Should the buyer not obtain mortgage approval before the expiration of the loan approval period, the buyer may provide to the seller in writing either that
- Buyer waives the loan approval and continues with the contract as if the mortgage approval was obtained
- Buyer terminates the contract
The seller could also agree to extend the mortgage approval deadline.
If buyer opts to waive the loan approval and the transaction for whatever reason does not close, the buyer risks losing their earnest money deposit(s).
If mortgage approval was not provided to the seller by the mortgage approval deadline, seller can elect to cancel the contract by delivering written notice to the buyer within 3 days and buyer is at risk of losing their earnest money deposit(s).
Closing Date
The closing date is another important date that needs to be honored.
This date is at the bottom of page one of the as-is contract and was agreed to by buyer and seller when signing the contract. If the buyer does not close on the closing date, buyer might be at risk of losing their earnest money deposit.
Two exception to delay the closing date are
- funds from buyers lender are not available on the closing date due to the Consumer Financial Protection Bureau Closing Disclosure (CFPB) delivery requirements then the closing date can be extended for such period necessary to satisfy those CFPB requirements as long as it doesn’t exceed 10 days
- And event constituting Force Majeure causing services essential to closing not being available the closing date may be extended.
Please contact a Pompano Beach Realtor at 954-505-6000 or by filling out the form below when looking to buy or sell Real Estate in Pompano Beach.
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