Real Estate LEADER Magazine (Summer 2004) - Mississippi ...

FOR THE COURSE OF
YOUR CAREER
BY JO USRY
New and improved: 2004 MAR Standard forms revisions
Important updates on homeowners’ insurance, wood infestation, pre-closing inspections and more
The number of REALTORS ® using the Mississippi Association of REAL-
TORS ® library of standard forms and the ZipForm interactive software
continues to grow. In local boards around the state where many brokers
require the use of MAR forms exclusively, REALTORS ® have expressed
relief about not having to interpret a multitude of different contracts.
In March, revisions were made to several of MAR’s standard forms based
on recommendations from members who use them, from our legal counsel
and the Standard Forms Working Group.
Two new forms were added to the forms library for 2004: A Lead Based
Paint Disclosure for Lessors and an Independent Contractor Agreement. In
order to be in compliance with IRS regulations, it is suggested that brokers
have an Independent Contractor Agreement on file with each agent that is
signed and current.
The following substantive changes were made to existing forms:
Contract for the Sale and Purchase of Real Estate (F-1)
Paragraph 1: includes a clause requiring the purchaser to make an
application for homeowners insurance in addition to making a loan application.
Paragraph 8: Proration - Includes a statement indicating that homestead
exemption has or has not been applied for as stated on the Property
Condition Disclosure Statement.
Paragraph 9: Commission - Since commission is not an item on the
Purchase Agreement to be negotiated by the parties, the blanks for insertion
of commission have been deleted and replaced by a clause referring back to
the agreements that established the commission – the listing agreement and
the compensation offered through MLS: Seller / Buyer of property sold
under this contract agrees to pay as per the listing agreement and prior
offer of cooperation and compensation.
Paragraph 14: Pre-Closing Inspection - Since the words "home inspection"
are indicative of an inspection performed by a home inspector, a clause
has been added to clarify that a "home inspection" performed in Mississippi
must be performed by a licensed home inspector: Any home inspection
where the approval is made a contingency for purchase must be performed
by a Mississippi licensed home inspector.
Paragraph 15: Wood Infestation Report – Clarification has been added
to include a remedy if wood infestation is found and the requirement that a
material change, if found, must be disclosed.
A. If such infestation constitutes material damage, the purchaser can
declare the contract null and void and have his earnest money refunded.
Additionally, when any infestation is found on the subject property, the seller
can either furnish a warranty of approved treatment and correct any structural
damage caused by such infestation or deem said repairs as cost prohibitive
and declare the contract null and void refunding the purchaser’s
earnest money.
B. Any material change to the subject property shall be disclosed in
accordance with the Mississippi Real Estate Brokers License Act of l954 as
Amended 90-501-523 allowing for termination of the offer as prescribed by
law.
Counter Offer: A new section has been added within the Purchase
Agreement for two counters. The Forms Library still includes a separate
Counter Offer (F-14) for further counters, if needed.
Buyer Representation Agreement (F-8)
Several changes have been made to the Buyer Representation Agreement
to clarify the roles and responsibilities of the buyer and the Buyer Agent. The
most substantive change, however, is in the addition of language to assist the
broker in attempting to keep a client that might be in conflict with the Buyer
Agent and who plans to exercise the 15-day termination clause required to
be in the agreement. Under the section titled Client Agrees, the following language
has been added: Broker reserves the right to reassign you to another
agent within the firm for representation should you and the Broker
mutually agree that reassignment is best.
Property Issues Addendum (Form 27)
The Property Issues Addendum is one of the most utilized forms in the
MAR forms library. A paragraph has been added to address the current
issues surrounding the availability and affordability of property insurance as
follows:
The availability and cost of homeowners or property insurance depends
on a number of factors, including your personal insurance, financial and
credit history, materials and conditions present in or on the property, and the
claims history on the property. Some insurance companies base part of their
underwriting decision on Loss History Reports that show the history of insurance
claims or property losses concerning the property or made by you concerning
other properties. At the time you close on the purchase of your real
property, most insurance companies will only issue a binder to you. A binder
is NOT an insurance policy; it is only a temporary commitment to provide
insurance coverage. From the effective date of the binder, the insurance company
has 90 days to review the insurance application and other information
and determine whether it will issue an insurance policy on the terms set forth
in the binder. You are advised to consult directly with insurance companies
of your choice regarding the availability and costs of insurance coverage for
the property. Further, if the property is located in a flood zone, the mortgage
lender may require that you obtain and pay for flood insurance on the property
and its improvements. n
Jo Usry is MAR’s Vice President of Professional Development and the staff
liaison to the Standard Forms Working Group. E-mail her at
jusry@msrealtors.org.
8 / MISSISSIPPI REAL ESTATE LEADER / Summer 2004