RESIDENTIAL
BUY-SELL
AGREEMENT
Bob Brooks School of Real Estate and Insurance, Inc.
Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
The contents of this publication, in its entirety, are subject to any revisions of local,
state and federal laws and regulations. This publication is not for the purpose of
rendering legal or other professional service.
The services of a competent
professional person should be sought if legal advice or other professional assistance
is required.
The text of this publication, or any part thereof, may not be reproduced in any
manner whatsoever without permission in writing from the publisher.
Published by Bob Brooks School of Real Estate and Insurance, Inc.
Bob Brooks, Director/CEO
Brent P. Lancaster, President
Certified by the Louisiana Real Estate Commission
LREC Vendor Code #0002
LCE #8025
Printed in the United States of America
First Printing 2007
Bob Brooks School of Real Estate and Insurance, Inc.
6721 Pecue Lane
Baton Rouge, Louisiana 70817
(225) 752-2920
Toll Free (800) 448-5693 Fax (225) 752-6815
www.BobBrooksSchool.com
i
Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
Lesson One
Learning Objectives
♦ To provide the scope and use of the new statewide residential
purchase agreement form
♦ Understand the details within the property description section of
the residential purchase agreement form.
♦ Recognize the differences that exist in the finance section of the
new residential purchase agreement and the form licensees
currently use.
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
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
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 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
□
(Information on Seller’s Designated Agent)
Phone Number
Office
_(Name of Buyer’s Designated Agent)_
Dual Agent
Fax
_(E-mail of Seller’s Designated Agent)
Email Address
_(Person or company to whom offer delivered)____
Delivered by Designated Agent to
Buyer’s Designated Agent
(Information on Buyer’s Designated Agent)
Phone Number
Office
Fax
(E-mail of Buyer’s Designated Agent)
Email Address
(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
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
Date
Date: _____(Date of Offer)____
3
Comments:
Line 3 – This blank is for the date is the date the offer is made by the Buyer or
Seller.
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)_______________________
_________________________________________________________________________________
_________________________________________________________________________________.
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
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
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
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.
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
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
□
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
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
67
68
69
70
71
72
73
74
75
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.
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
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.
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.
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.
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Residential Agreement to Buy and Sell
Lesson Two
©Bob Brooks School of Real Estate and Insurance Inc.