Part 4 of our 10 part series on the recent changes to the FARBAR Residential Contract for Sale and Purchase of Real Estate focuses on changes to section 7 and the 1 of 8 changes to section 8. They are:
- Financing – There are numerous revisions to paragraph 8(a) and 8(b). In paragraph 8(a) language was simplified and deleted that lender requirements would have no impact on the contract. Because it is a cash transaction, reference to lender requirements is unnecessary.
There were Eight (8) Revisions to paragraph 8(b):
The first change specifies two tasks be completed within the loan approval period. The first task is not new; the buyer must obtain loan approval of financing as described in the contract (amount, for a term of ___, at a % rate not to exceed …). The second task is new: it is receipt of an appraisal (or alternative valuation) satisfactory to the buyer's lender, if required. Again, both tasks are to be achieved within the loan approval period. This change was made to expedite the lender's receipt of the appraisal report so that any possible problems related to an insufficient appraisal could be resolved before closing. This is a significant change. No previous version of this contract included this deadline. In addition, for the first time, the definition of appraisal has expanded to include alternative valuations if applicable to the buyer's lender. This was done because lender practices have changed; some lenders no longer require any valuation. Some lenders, on certain loans, accept valuation products other than appraisals.