Colorado Contracts and Regulations
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Chapter8.docxSales Contract Related Forms
Just when you thought you had completed the contract forms, you find that even writing a purchase offer sometimes requires more than the
Contract to Buy and Sell Real Estate. We will go over some of the addenda and forms related to the sales contract. While this will cover these forms in a more summary fashion than the line-by-line review of the Contract to Buy and Sell Real Estate, the knowledge of the forms is essential to both getting your license and the practice of real estate.
By the end of this unit, you will be able to:
· Recognize and explain the various Addenda to the Sales Contract
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Earnest Money Receipt
Click here to open a copy of the Earnest Money Receipt .
This form is used when delivering the earnest money deposit to a title company or closing entity for deposit in lieu of the broker holding the earnest money in his or her own trust account. The receipt for the buyer turning over the earnest money to the broker is contained within the bottom section of the Contract to Buy and Sell Real Estate.
Earnest Money Holder, acknowledges receipt of the Earnest Money in the amount of $_________ in the form of _________ , to be held by Earnest Money Holder in its trust account on behalf of both Seller and Buyer pursuant to the Contract to Buy and Sell Real Estate described below: Until Closing Instructions have been signed by Buyer, Seller and Earnest Money Holder, § 24 (Earnest Money Dispute) and § 25 (Termination) of the Contract will apply to the holding of the Earnest Money by Earnest Money Holder.
Seller
Buyer
Date of Contract
Date of Closing Instructions
This is for the sale and purchase of the Property described in the Contract and is known as (No. Address, City, State).
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Licensee Buy-Out Addendum To Contract To Buy And Sell Real Estate
Click here to open the Licensee Buy-Out Addendum . This form is used in three limited circumstances as noted in the footnotes to the Forms Index. They are when a broker enters into a contract to purchase property:
1. Concurrently with a listing.
2. As an inducement or to facilitate the owner’s purchase of another property, or
3. Under an existing listing and continues to market the property.
All of the above are known as “guaranteed buyouts.” In effect they tell an owner: “List with me, or Buy this new home, and if yours doesn’t sell, I’ll buy it from you for this amount.”
If you are intending to purchase a home as your own residence, you should do so before you list it or cancel your listing. Under designated brokerage, an Owner whose home is listed with another broker is protected by that broker. It is improper for you to buy your own listing for your own benefit without first severing the listing.
The Licensee Buyout Addendum is tilted totally in favor of the Seller:
1. The buyer’s free out if the property doesn’t appraise is deleted. This means you better know the value before making the buyout offer.
2. The offer is specific performance against the buyer/broker with liquidated damages being deleted AND there are no specific performance damages against the Seller, who may cancel at any time. (If the Seller cancels the buyout, he or she must reimburse the broker for any expenses made in expectation of closing, i.e. inspection, etc., up to an agreed upon limit.)
A final note on this form. There is a signature block for the offering broker and an optional second block for the employing/supervising broker. It is preceded by a (yup – you guessed it - a bold-faced all caps) warning that says:
NOTICE TO SELLER: THIS CONTRACT IS BINDING ONLY UPON THE BUYER (LICENSEE) WHO PERSONALLY SIGNS ABOVE, UNLESS THE SUPERVISING BROKER OF THE BROKERAGE FIRM WORKING WITH SELLER SIGNS HERE.
Note: This form was updated (effective January 1, 2011) with the current formatting modifications to be consistent with the other new Contract forms and updated to reflect the updated Section numbers of the Contract to Buy and Sell Real Estate.
Exchange Addendum to Contract to Buy and Sell Real Estate
Click here to open the Exchange Addendum . This rarely used form is essential when one or both of the parties will conduct a tax-deferred exchange of like-kind properties under Internal Revenue Code #1031. This may be a simultaneous exchange between the two, or it may be a sale with assignment made to a financial intermediary who will hold the proceeds until the original seller identifies a replacement property (45 days). Even more than usual, such an exchange requires tax counsel.
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Source of Water Addendum to Contract to Buy and Sell Real Estate
Click here to open the Source of Water Addendum . The purpose of this form is to enable the buyer to investigate the long-term prospects of water availability for the property. One more reason to use great care when gathering listing data on other than urban property.
The disclosure of the source of water is published as an addendum to the Contract to Buy and Sell Real Estate, and as a paragraph within the Contract to Buy and Sell Real Estate, as well as in the Seller’s Property Disclosure form. It should properly be prepared and placed in the property as part of the listing/showing materials and attached as an addendum to any future Contract to Buy and Sell Real Estate.
The form provides for the Seller to choose one of three disclosures:
1. There is a Well (with Well Permit # furnished or not furnished)
2. The contact information for the Water Provider is furnished.
3. There is neither a well nor a provider. Water comes from:_____
This form is needed in residential transactions. Using the data in your offer to purchase the 1234 Mains Street Property, and knowing that it is urban real estate deriving its water from the Colorado Springs Utility Division, prepare the form as the listing broker would.
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Counterproposal
Due to the rearrangement of the various Sections of the Contract to Buy and Sell Real Estate, the Dates and Deadlines Section was revised which required this Counter proposal form to be changed in order to coincide with the new Section numbers as well as changing a number of the Captions/Deadline names due to the large number of additions and changes to the forms. In addition, the Counterproposal and the Amend/Extend to Contract (which can be seen below) created 2 new columns. The first column is entitled “No Change” and the second column is “Deleted”. This was done in order to avoid an accidental “deletion” of the very important Section by inserting “N/A”(a common practice).Unfortunately, completion with N/A has the effect of deleting the corresponding provision in the Contract from. To avoid this problem each date line now requires a check mark or insertion of a revised date or deadline in the respective column.
Remember you learned that there are three possible responses to an offer to purchase. They are acceptance, rejection, or a counterproposal. People look at counterproposals in two ways. Some say it is a form of acceptance: “We accept most of your proposal, except (xxxx).” Others hold that any counter is actually a form of rejection: We will not accept your offer unless (xxxx) is changed.
From a contract law standpoint it is a form of rejection, and makes the offeree (seller) the presenter of a new offer called a counterproposal. Now the buyer has those same three options, acceptance, rejection or counterproposal, EXCEPT: One exchange of an offer and a counterproposal is the maximum proper. If it comes to this – and it may especially if the brokers have negotiated or communicated poorly - it is best to start over with a brand new Contract to Buy and Sell Real Estate and make a new offer. This eliminates any confusion over dates and deadlines and exactly what was countered when. Click here to open a Counterproposal form and we will discuss some of the points:
1. This Counterproposal shall supersede and replace any previous counterproposal. This Counterproposal amends the proposed contract dated ____________(Contract), between ________________(Seller), and _____________________(Buyer), relating to the sale and purchase of the following legally described real estate in the County of ______________, Colorado:
The Dates and Deadlines Grid, and the Purchase Price and Terms Grid are identical to the Contract to Buy and Sell Real Estate, but either grid may be omitted if not applicable.
6. ACCEPTANCE DEADLINE. This Counterproposal shall expire unless accepted in writing by Seller and Buyer as evidenced by their signatures below and the offering party to this document receives notice of such acceptance on or before ____ (Date and Time) ______.
While the Contract to Buy and Sell Real Estate should allow the Seller a reasonable time to thoughtfully consider a complex and detailed offer, the time allowed the buyer to accept a relatively simple and straightforward counterproposal can be somewhat more restrictive; for instance, one day.
If accepted, the Contract, as amended by this Counterproposal, shall become a contract between Seller and Buyer. All other terms and conditions of the Contract shall remain the same.
So now, instead of conversion from an offer to a contract at the time of seller’s acceptance, such a conversion occurs at buyer’s acceptance.
Note: When this Counterproposal form is used, the Contract is not to be signed by the party initiating this Counterproposal. Brokers must complete and sign the Broker's Acknowledgments and Compensation Disclosure portion of the Contract.
Following through with your ongoing transaction, the Sellers of the Main Street Property (Robert D. Graham and Margaret A. Graham) are excited to get Mr. and Mrs. Buyer’s offer. However, considering that it is for less than the list price, they would like to have an additional $10,000 in earnest money. They would also like to close on the property a week later (December 7th) to enable them to host their planned Thanksgiving gathering without the worry of packing and moving.
Prepare the Counterproposal as the listing broker would to send back to you and Mr. and Mrs. Buyer.
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Agreement to Amend/Extend Contract
All of the changes mentioned above in the 2015 Counterproposal are the same in the Amend/Extend to Contract 2015 form.
If you know the Counterproposal, you also know this agreement to amend/extend. It is your job to make sure both parties sign this agreement before any date in the Dates and Deadlines grid of the Contract to Buy and Sell Real Estate expires (unless, of course your party doesn’t want the contract to continue). There is no purchase Price and Terms grid in this form, and it specifically says that: “All other terms and conditions of the Contract shall remain the same.”
One final reminder. While the broker was a party to the listing contract and any Agreement to Amend/Extend with Broker, the broker is not a party to this contract and amendments/extensions must be intended only by the principals to the contract.
Click here to open the Agreement to Amend/Extend Contract .
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Inspection Notice
Click here to open the Inspection Objection NTC43-9-12 (Revised for 2017)
A. BUYER'S NOTIFICATION OF UNSATISFACTORY PHYSICAL CONDITION.
1.1. Buyer gives notice to Seller that the Property or Inclusions are unsatisfactory.
1.2. Description of what is unsatisfactory that Buyer requires Seller to correct:
If more space is required, attached is/are _____________additional pages.
NOTE: Resolution of inspection or other items agreed to by the parties may alter the terms of the Contract and require disclosure by Buyer to Buyer’s lender. Buyer is encouraged to consult Buyer’s lender prior to entering into a final resolution on inspection as well as other matters as the resolution may (1) have a detrimental impact on the Buyer’s ability to get the loan; (2) cause delays in the lender’s processing and funding of the loan by Closing; and (3) require further inspections and repairs. Communication with the lender should be in writing.
1.3. A copy of the inspection report ___ Is ___Is Not attached.
Pursuant to § 10.4 of the Contract, items set forth in § 1.1, or otherwise in this document, shall be paid by Seller.
If Buyer and Seller have not agreed in writing to a settlement of the above matters on or before the Inspection Resolution Deadline, the Contract will terminate unless Seller receives written notice from Buyer withdrawing this Inspection Objection on or before expiration of the Inspection Resolution Deadline.
Buyer: Date:_________________
2. BUYER'S WITHDRAWAL OF INSPECTION OBJECTION NOTICE.
Buyer withdraws this Inspection Objection and elects to proceed with the Contract.
Buyer________________________________Date:_____________________________
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NEW FORM: Inspection Resolution (NTC43R-6-16 Revised for 2017)
Click here to open the Inspection Resolution form.
INSPECTION RESOLUTION
(Amendment To Contract To Buy And Sell Real Estate)
Date:
This Inspection Resolution amends to the Contract dated _______________, between(Seller) and (Buyer) relating to the sale and purchase of the Property known as:
Terms used herein shall have the same meaning as in the Contract.
2. RESOLUTION OF UNSATISFACTORY PHYSICAL CONDITION. Pursuant to the Inspection Resolution provision in the Contract, Buyer and Seller agree that Seller, on or before, will do the following to resolve Buyer’s Inspection Objection Notice:
3. SELLER'S COST. Pursuant to the Damage, Liens and Indemnity provision in the Contract, correcting or resolving the unsatisfactory physical condition set forth in this document, will be paid by Seller.
4. SURVIVAL. If any agreed upon correction requires action after Closing, the obligations agreed upon survive Closing.
Note: This document amends the Contract. Buyer must provide a copy of this Inspection Resolution to Buyer's Lender.
Buyer Date Buyer Date
Seller Date Seller Date
This is not a mandatory form unless there have been complex negotiations back and forth between the parties in order to get to a final resolution. It is to be used when the parties have been negotiating back and forth on how to resolve the Inspection Objection, following a Buyer’s inspection of the property. If there is a counter and a counter to the counter, to avoid confusion of what the parties agreed the ultimate “resolution” to be, the Inspection Resolution form allows the parties to set forth their “resolution” in one place (avoiding the problem of making clear the back and forth and what the parties ultimately have finally agreed to accept.
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Notice to Terminate
There only one way to leave your lover (terminate a Contract to Buy and Sell Real Estate) -- a one-page Notice to Terminate which may be used by either party and provides a checklist of reasons for the termination.
Click here to open the Notice to Terminate .
BUYER’S NOTIFICATION OF UNSATISFACTORY CONDITION.
Buyer notifies Seller that the Contract is terminated (§ 25 Contract) because the following are unsatisfactory to Buyer:
Broker shall make the appropriate box(es) on behalf of the Buyer and have the Buyer sign and date in order to legally terminate the Contract.
SELLER’S NOTIFICATION OF UNSATISFACTORY CONDITION.
Seller notifies Buyer that the Contract is terminated (§ 25 Contract) because the following are unsatisfactory to Seller:
Broker will again mark the appropriate box(es) on behalf of the Seller and have the Seller sign and date in order to legally terminate the Contract.
It should be pretty obvious that this contract provides numerous opportunities for the buyer to terminate and get his or her earnest money back.
Click here to open the Seller Warning form . It doesn’t fit neatly in any other category as it is used only in a Foreclosure scenario to emphatically inform the seller that the buyer will NOT be paying off any of the seller’s debts.
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Closing Instructions
Click here to open the Closing Instructions form . These instructions should be done and delivered to the title company, along with a copy of the Contract to Buy and Sell Real Estate immediately after mutual execution of the contract. Title company is not to accept your Contract for processing and closing without full executed closing instructions.
1. PARTIES, PROPERTY. _______________, Seller, and ____________Buyer, engage _______________, Closing Company, who agrees to provide closing and settlement services in connection with the Closing of the transaction for the sale and purchase of the Property known as (No. Street Address City State Zip) and more fully described in the Contract to Buy and Sell Real Estate, dated, including any counterproposals and amendments (Contract). All terms of the Contract are incorporated herein by reference. In the event of any conflict between this Agreement and the Contract, this Agreement shall control, subject to subsequent amendments to the Contract or this Agreement.
The selection of the closing entity is a negotiable item in the Contract to Buy and Sell Real Estate. However, since the Seller will most likely purchase and furnish the owner’s title insurance to the buyer from the same company, by tradition the seller chooses the title company, per RESPA the Buyer has the right to choose their own title company to provide the Buyer’s title insurance. There is a difference in premium amounts among title companies. Also be aware that if the property is being transferred within 5 years, there may be a reduced title insurance premium rate available from the previous issuer.
2. TITLE COMMITMENT, EXCEPTIONS AND POLICY. Closing Company Agrees Does Not agree that: upon completion of a satisfactory title search and examination, it will furnish a Title Insurance Commitment; and it will issue a Title Insurance Policy provided that all requirements have been fulfilled. Closing Company Agrees Does Not agree to furnish copies of Exceptions
3. INFORMATION, PREPARATION, CLOSING, RECORDING. Closing Company is authorized to obtain any information necessary for the Closing. Closing Company agrees to prepare (excluding legal documents), deliver and record all documents (excluding legal documents), required or customarily recorded, and disburse all funds pursuant to the Contract that are necessary to carry out the terms and conditions of the Contract.
Remember that Conway-Bogue precludes the preparation of legal documents by title companies or closing service providers) that are necessary to carry out the terms and disburse all funds pursuant to the Contract that are necessary to carry out the terms and conditions of the Contract.
This Section 2 of the Closing Instructions has new language that clarifies that any disbursement made by the Closing Company must be made as call for in the Contract (which would include any amendments to the Contract).
4. CLOSING FEE. Closing Company will receive a fee of $_____ for providing these closing and settlement services (Closing Fee).
5. RELEASE, DISBURSEMENT. Closing Company is not authorized to release any signed documents or things of value prior to receipt and disbursement of Good Funds, except as provided in §§ 9, 10 and 11.
6. DISBURSER. Closing Company shall disburse all funds, including real estate commissions, except those funds as may be separately disclosed in writing to Buyer and Seller by Closing Company or Buyer's lender on or before Closing. All parties agree that no one other than the disburser can assure that payoff of loans and other disbursements will actually be made.
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Closing Instructions (continued)
7. SELLER'S NET PROCEEDS. Seller will receive the net proceeds of Closing as indicated:
___ Cashier's Check, at Seller's expense
___ Funds Electronically Transferred (wire transfer) to an account specified by Seller, at Seller's expense
___ Closing Company's trust account check.
8. CLOSING STATEMENT. Closing Company will prepare and deliver an accurate, complete and detailed closing statement to Buyer and Seller at time of Closing.
9. FAILURE OF CLOSING. If Closing or disbursement does not occur on or before Closing Date set forth in the Contract, Closing Company, except as provided herein, is authorized and agrees to return all documents, monies, and things of value to the depositing party, upon which Closing Company will be relieved from any further duty, responsibility or liability in connection with these Closing Instructions. In addition, any promissory note, deed of trust, or other evidence of indebtedness signed by Buyer shall be voided by Closing Company, with the originals returned to Buyer and a copy to Buyer's lender.
10. RETURN OF EARNEST MONEY. Except as otherwise provided in § 11, Earnest Money Dispute, if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder shall release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money shall be
made within five days of Earnest Money Holder’s receipt of the written mutual instructions signed by both Buyer and Seller, provided the Earnest Money check has cleared.
11. EARNEST MONEY DISPUTE. In the event of any controversy regarding the Earnest Money (notwithstanding any termination of the Contract), Earnest Money Holder shall not be required to take any action. Earnest Money Holder, at its option and sole subjective discretion, has several options (1) await any proceeding, (2) interplead all parties and deposit Earnest Money into a court of competent jurisdiction and shall recover court costs and reasonable attorney and legal fees, or (3) provide notice to Buyer and Seller that unless Earnest Money Holder receives a copy of the Summons and Complaint or Claim (between Buyer and Seller) containing the case number of the lawsuit (Lawsuit) within one hundred twenty days of Earnest Money Holder’s notice to the parties, Earnest Money Holder shall be authorized to return the Earnest Money to Buyer. In the event Earnest Money Holder does receive a copy of the Lawsuit, and has not interpled the monies at the time of any Order, Earnest Money Holder shall disburse the Earnest Money pursuant to the Order of the Court
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Closing Instructions (continued)
12. SUBSEQUENT AMENDMENTS. Any amendments to, or termination of, these Closing Instructions must be in writing and signed by Buyer, Seller, and Closing Company.
13. CHANGE IN OWNERSHIP OF WATER WELL. Within sixty days after Closing, Closing Company shall submit any required Change in Ownership form or registration of existing well form to the Division of Water Resources in the Department of Natural Resources (Division), with as much information as is available, and the Division shall be responsible for obtaining the necessary well registration information directly from Buyer. Closing Company shall not be liable for delaying Closing to ensure Buyer completes any required form.
14. WITHHOLDING. The Internal Revenue Service and the Colorado Department of Revenue may require Closing Company to withhold a substantial portion of the proceeds of this sale when Seller either (a) is a foreign person or (b) will not be a Colorado resident after Closing. Seller should inquire of Seller's tax advisor to determine if withholding applies, or if an exemption exists.
15. ADDITIONAL PROVISIONS. (The following additional provisions have not been approved by the Colorado Real Estate Commission.)
16. COUNTERPARTS. This document may be executed by each party, separately, and when each party has executed a copy, such copies taken together shall be deemed to be a full and complete contract between the parties.
17. BROKER'S COPIES. Closing Company shall provide, to each broker in this transaction, copies of all signed documents that such brokers are required to maintain pursuant to the rules of the Colorado Real Estate Commission.
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Closing Instructions (continued)
18. NOTICE, DELIVERY AND CHOICE OF LAW.
18.1. Physical Delivery. Except as provided in § 18.2, all notices must be in writing. Any notice or document to Buyer is effective when physically received by Buyer, any individual buyer, any representative of Buyer, or Brokerage Firm of Broker working with Buyer.
Any notice or document to Seller shall be effective when physically received by Seller, any individual seller, any representative of Seller, or Brokerage Firm of Broker working with Seller.
Any notice or document to Closing Company shall be effective when physically received by Closing Company, any individual of Closing Company, or any representative of Closing Company.
18.2. Electronic Delivery. As an alternative to physical delivery, any signed documents and written notice may be delivered in electronic form by the following indicated methods only: ¨ Facsimile ¨ Email ¨ “ Internet” No Electronic Delivery. Documents with original signatures shall be provided upon request of any party.
18.3. Choice of Law. This contract and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Colorado that would be applicable to Colorado residents who sign a contract in this state for property located in Colorado.
(TO BE COMPLETED ONLY BY BROKER AND CLOSING COMPANY)
__________________________________________(Broker)
_____Working with Seller
_____Working with Buyer
engages Closing Company as Broker's scrivener to complete, for a fee not to exceed $_________ at the sole expense of Broker, the following legal documents:
___Deed
___Bill of Sale
___ Colorado Real Estate Commission approved Promissory Note
___Colorado Real Estate Commission approved Deed of Trust.
Closing Company agrees to prepare, on behalf of Broker, the indicated legal documents pursuant to the terms and conditions of the Contract.
The documents stated above shall be subject to Broker's review and approval and Broker acknowledges that Broker is responsible for the accuracy of the above documents. (Emphasis added)
Date:
Brokerage Firm's Name:
Broker's Name:
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Earnest Money Release
Click here to open the Earnest Money Release . Finally, in Chapter 8 we will look at two optional use forms with which you must be familiar, the Earnest Money Release and the Real Property Transfer Declaration.
1. Parties, Property, Contract, Earnest Money Deposit:
1. Seller
2. Buyer
3. Property
4. Date of Contract
5. Earnest Money $
2. Buyer and Seller agree that the Contract is terminated. Buyer and Seller agree that the Earnest Money will be distributed as follows:
1. $ payable to: ____________
2. $ payable to: ___________
3. Other:
If the Contract required the Earnest Money to be placed in an interest bearing account, the interest shall be disbursed as follows: ____________________
This Earnest Money Release may affect legal rights or claims of the parties. Buyer and Seller are advised of their right to obtain legal counsel.
This form is optional because there is no requirement to obtain signatures to return earnest money as a matter of contract termination. However, there may be circumstances when money is returned upon settlement of a dispute or any other time the broker might wish to document the parties’ concurrence in the return. See Commission Position Statement #6.
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Real Property Transfer Declaration (TD-1000)
Click here to open the Real Property Transfer Declaration . While this form is called optional and is not prepared by the broker, it is used at virtually every real estate closing for the benefit of the county assessor – and for every appraiser seeking truly comparable properties. The buyer (or seller if buyer is not present at closing) will be asked to complete the form at the closing table and the broker should be prepared to offer advice as to how it is done.
General Information
Purpose: The Real Property Transfer Declaration provides essential information to the county assessor to help ensure fair and uniform assessments for all property for property tax purposes. Refer to 39-14-102(4), Colorado Revised Statutes (C.R.S.).
Requirements: All conveyance documents (deeds) subject to the documentary fee submitted to the county clerk and recorder for recordation must be accompanied by a Real Property Transfer Declaration. This declaration must be completed and signed by the grantor (seller) or grantee (buyer). Refer to 39-14-102(1)(a), C.R.S.
Penalty for Noncompliance: Whenever a Real Property Transfer Declaration does not accompany the deed, the clerk and recorder notifies the county assessor who will send a notice to the buyer requesting that the declaration be returned within thirty days after the notice is mailed.
If the completed Real Property Transfer Declaration is not returned to the county assessor within the 30 days of notice, the assessor may impose a penalty of $25.00 or .025% (.00025) of the sale price, whichever is greater. This penalty may be imposed for any subsequent year that the buyer fails to submit the declaration until the property is sold. Refer to 39-14-102(1)(b), C.R.S.
Confidentiality: The assessor is required to make the Real Property Transfer Declaration available for inspection to the buyer. However, it is only available to the seller if the seller filed the declaration. Information derived from the Real Property Transfer Declaration is available to any taxpayer or any agent of such taxpayer subject to confidentiality requirements as provided by law. Refer to 39-5-121.5, C.R.S and 39-13-102(5)(c), C.R.S.
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Real Property Transfer Declaration (TD-1000) (continued)
1. Address and/or legal description of the real property sold: Please do not use P.O. Box numbers.
2. Type of property purchased:
· Single Family Residential
· Townhome
· Condominium
· Multi-Unit Res
· Commercial
· Industrial
· Agricultural
· Mixed Use
· Vacant Land
· Other __________________
3. Date of closing: Month Day Year Date of contract if different than date of closing: Month Day Year
4. Total sale price: Including all real and personal property. $_____________
5. Was any personal property included in the transaction? Personal property would include, but is not limited to, carpeting, draperies, free standing appliances, equipment, inventory, furniture. If the personal property is not listed, the entire purchase price will be assumed to be for the real property as per 39-13-102, C.R.S. ___ Yes ___ No If yes, approximate value $___________ Describe____________
6. Did the total sale price include a trade or exchange of additional real or personal property? If yes, give the approximate value of the goods or services as of the date of closing.___ Yes ___ No If yes, value $_______________ If yes, does this transaction involve a trade under IRS Code Section 1031? Yes No
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Real Property Transfer Declaration (TD-1000) (continued)
7. Was 100% interest in the real property purchased? Mark "no" if only a partial interest is being purchased. ___ Yes ___ No If no, interest purchased __________%
8. Is this a transaction among related parties? Indicate whether the buyer or seller is related. Related parties include persons within the same family, business affiliates, or affiliated corporations. ___ Yes ___ No
9. Check any of the following that apply to the condition of the improvements at the time of purchase. ___ New ___ Excellent ___ Good ___ Average ___ Fair ___ Poor ___ Salvage. If the property is financed, please complete the following.
10. Total amount financed. $______________
11. Type of financing: (Check all that apply)
· New
· Assumed
· Seller
· Third Party
· Combination; Explain
12. Terms: ___ Variable; Starting interest rate _____% ___ Fixed; Interest rate _____% ___ Length of time _________years ___ Balloon payment Yes No. If yes, amount $_________ Due date__________
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Real Property Transfer Declaration (TD-1000) (continued)
For properties other than residential (Residential is defined as: single family detached, townhomes, apartments and condominiums) please complete questions 14-16 if applicable. Otherwise, skip to #17 to complete.
14. Did the purchase price include a franchise or license fee? ___ Yes ___ No If yes, franchise or license fee value $___________
15. Did the purchase price involve an installment land contract? ___ Yes ___ No If yes, date of contract: _____________
16. If this was a vacant land sale, was an on-site inspection of the property conducted by the buyer prior to the closing? ___ Yes ___ No Remarks: Please include any additional information concerning the sale you may feel is important.
17. Signed this day of _______, 20___. Enter the day, month, and year, have at least one of the parties to the transaction sign the document, and include an address and a daytime phone number. Please designate buyer or seller. Signature of Grantee (Buyer) ___ or Grantor (Seller) ___
18. All future correspondence (tax bills, property valuations, etc.) regarding this property should be mailed to: (normally the property or, if applicable, the investor’s address)
It is essential that appraisers have realistic amounts available upon which to base future appraisals of this property and from which to draw comparables for future appraisals on other properties. This cannot happen if a fully furnished property is compared to one sold without any personal property included. Similarly, a property sold by a parent to an adult child may be seen as a more favorable price than that same transaction conducted “at arm’s length.” It is ultimately to the brokerage community benefit to reflect accurate data on this form.
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Earnest Money Receipt
The revision to this form now clarifies that the Earnest Money shall be held in a “trust” account. With the advent of third party closing companies, it is necessary to assure that the provider be able to confirm that the money will be placed in a “trust” account.
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
EARNEST MONEY RECEIPT
Date:
Earnest Money Holder, on the date set forth above, acknowledges receipt of the Earnest Money in the amount of $______________________, in the form of __________________ , to be held by Earnest Money Holder in its trust account, on behalf of both Seller and Buyer pursuant to the Contract to Buy and Sell Real Estate described below: Until Closing Instructions have been signed by Buyer, Seller and Earnest Money Holder, § 24 (Earnest Money Dispute) and § 25 (Termination) of the Contract will apply to the holding of the Earnest Money by Earnest Money Holder.
Seller:
Buyer:
Date of Contract:
Date of Closing Instructions:
This is for the sale and purchase of the Property described in the Contract and is
known as No. _________________________________________________________________.
Street Address City State Zip
Earnest Money Holder:__________________________________________________________
By:_________________________________________________________________________
Signature Title Date
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Additional Colorado Real Estate Commission Forms
POST-CLOSING OCCUPANCY AGREEMENT (Seller Rent-Back Agreement) PCO70-6-16)
This document creates Commission approved terms and condition for a “Seller rent back” when the Seller is not conveying possession on day of closing. Since this common practice has led to a number of legal concerns this form was created to give Brokers the appropriate form to follow in these circumstances. Whenever the Seller is allowed to remain in the property following closing this form must be used to cover the “Seller rent back” in addition to the other required contract documents.
Note: This form is to be used only for short-term residential occupancy for a term not to exceed 30 days. A residential lease shall be used for a term longer than 30 days.
Covered in this form are the following topics:
1. Names of all parties.
2. Legal Description.
3. Property Address.
4. Length of short-term rent back.
5. Seller requirement to maintain property condition.
6. Buyer requirement to cover major mechanical and structural items of the property.
7. Buyer’s ability to access the property for inspection of condition.
8. Rental Rate.
9. Who is responsible for water and sewer, electric and gas service.
10. Insurance coverage on behalf of both the Seller and the Buyer.
11. Amount of security deposit, if any.
Additional Colorado Real Estate Commission Forms (continued)
SHORT SALE ADDENDUM (Contract to Buy and Sell Real Estate) (SSA38-10-11)
SHORT SALE ADDENDUM (Seller Listing Contract) (SSA39-10-11)
There are two (2) forms. The information is similar, but the SHORT SALE ADDENDUM (Contract to Buy and Sell) contains a much more in depth discussion of the entire process with sections addressed to both Buyer and Seller. Now we have a Commission approved forms that must be attached to the Seller Listing Contract at the time of listing, when the Broker and the Seller first discuss the possibility of pursuing a Short Sale Transaction. The second document is a form that the Broker working for/on behalf of the Buyer must explain and attach at the time an “Offer to Purchase” is being written at the direction of the Buyer on a potential Short Sale Transaction. There will not be both Buyer and Seller signatures on the form attached to the Listing Contract, but the goal should be to get signatures of both Buyer and Seller on the Short Sale Addendum attached to the Contract to Buy and Sell. It is essential that all parties to the transaction have full knowledge of the potential legal ramifications of completing a Short Sale Transaction.
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Additional Colorado Real Estate Commission Forms (continued)
SHORT SALE ADDENDUM (Contract to Buy and Sell Real Estate) (SSA38-10-11)
1, ADDENDUM TO CONTRACT. This Short Sale Addendum (Addendum) is made a part of the Contract to Buy and Sell Real Estate between Seller and Buyer (Contract) dated _______________________ relating to the sale of the Property known as (Property).
_________________________________________________________________________________
Street Address City State Zip
This Addendum shall control in the event of any conflict with the Contract. Except as modified, all other terms and provisions of the Contract shall remain the same.
2. PURPOSE AND DEFINITIONS.
2.1. Purpose of Addendum. Seller has debts secured by one or more liens on the Property. The Purchase Price may not be enough to cover payment for all the liens and costs of sale. If so, for the Closing to occur, the affected Lien Holders (§ 2.2 below) must agree to a Short Sale (§ 2.3 below).
2.2. Lien; Lien Holder. A Lien is a recorded claim or lien against the Property, including, but not limited to, a mortgage, deed of trust, mechanic’s lien, judgment or tax lien (Lien). A title insurance commitment may be used to show the Liens against the Property. A Lien Holder is a creditor who has a Lien and agrees to release its Lien in a Short Sale (§ 2.3 below).
2.3. Short Sale. A Short Sale (Short Sale) is a transaction in which any Lien Holder releases its Lien against the Property and (1) accepts an amount less than the full amount Lien Holder claims is owed or (2) treats the debt secured by the Lien differently than as originally provided for in the evidence of debt (such as promissory note). Before a Short Sale can occur, Buyer, Seller, and each Lien Holder (except those creditors that are to be paid the full amount claimed) must consent to the terms of the sale. Sometimes, a Lien is released but the Lien Holder does not agree to release Seller from liability or reduce the unpaid portion of the debt, and the Seller and any guarantors will remain liable after Closing for that unpaid portion, despite the release of the Lien against the Property at Closing.
2.4. Short Sale Acceptance. Short Sale Acceptance (Short Sale Acceptance or SSA) is when Seller receives one or more written statements, signed or approved by each Lien Holder, that specify the terms and conditions of the Short Sale.
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Additional Colorado Real Estate Commission Forms (continued)
3. MANDATORY DISCLOSURES TO SELLER AND BUYER.
3.1. Lien Holder is not required to agree to a Short Sale. Even if a Lien Holder agrees to a Short Sale, a Lien Holder is not required to forgive repayment of the debt secured by the Lien or release Seller and any guarantors from liability unless Lien Holder’s claim is paid in full. Seller acknowledges that Lien Holder may or may not agree to release Seller or any guarantors from liability to Lien Holder. If not released, Seller and any guarantors will remain liable to Lien Holder for any amount that remains unpaid after the Short Sale. To be binding, any release of liability by Lien Holder must be in writing, must be executed by Lien
Holder, and must provide that Seller and all guarantors are released from liability.
3.2. Lien Holder may condition its agreement on Seller doing any or all of the following to obtain a Short Sale Acceptance: (1) make a cash payment, (2) sign a new promissory note, (3) continue to owe the Lien Holder the unpaid portion of the debt and (4) agree to other requirements made by Lien Holder.
3.3. If the Lien Holder accepts less than full payment, Seller understands that Seller may incur federal and state tax liability due to a Short Sale and understands that Lien Holder is required to file all required 1099 Forms with the Internal Revenue Service with respect to this transaction. Seller is strongly advised to seek tax advice regarding the potential adverse tax consequences to Seller of a Short Sale.
3.4. Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not necessarily repair or rehabilitate Seller’s credit rating and Lien Holder has no obligation other than to fairly report this transaction to any credit rating agency.
3.5. Release of the Lien against the Property does not by itself release Seller or any guarantors from liability for the debt.
3.6. Buyer acknowledges that the Short Sale Conditions (§ 4 below) may lead to termination of the Contract. The Short Sale process may result in delays in the Closing. Buyer is advised to consult with legal counsel about this Addendum and its legal effect.
3.7. Buyer and Seller acknowledge and agree that any Short Sale Acceptance by Lien Holder is made on the condition that none of the terms of the sale shall differ in any material respect from the terms submitted to the Lien Holder on which the Short Sale Acceptance was based. For purposes of the Contract, any change in the date of Closing, Purchase Price, real estate brokerage commissions, concessions or net proceeds to be paid to, or other remuneration to be received by Seller in connection with the proposed Short Sale shall be deemed a material change. Any material change will require that the Short Sale proposal be re-submitted to the Lien Holder for approval, which could result in delays for approval or even denial of the Short Sale.
3.8. This Addendum should be signed by both Buyer and Seller at time of contracting, as most Lien Holders will not consider a Short Sale until a signed contract is received for their review.
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Additional Colorado Real Estate Commission Forms (continued)
4. SHORT SALE CONDITIONS. Notwithstanding anything to the contrary in this Addendum, the Contract between Seller and Buyer, for the benefit of both Seller and Buyer, is conditional upon all of the following occurring:
4.1. Seller has received from each Lien Holder a Short Sale Acceptance that is acceptable to Seller.
4.2. Agreement to Amend/Extend Contract signed by Buyer and Seller, so long as both parties agree, in their sole subjective discretion, to the changes to the Contract required by the Short Sale Acceptance.
5. SELLER DEADLINE FOR SUBMISSION TO LIEN HOLDER. Seller agrees to submit to each Lien Holder a request for a Short Sale and all documents and information requested by Lien Holder, including a copy of the Contract, any Counterproposal, this Addendum and amendments. The initial submission by Seller to each Lien Holder shall be on or before Initial Submission Deadline (§ 5.1 below). Any additional information or documentation requested of Seller by such Lien Holder shall be submitted within five days such request or Buyer may terminate the Contract pursuant to § 8.2 below.
5.1. Seller Submission Deadline. The Seller Submission Deadline shall be as set forth below.
Event _______________________ Deadline ____________________ From ______________
I initial Submission days from MEC (§ 3 of Contract)
______________________________________________________________
5.2. Seller Consents to Lien Holder’s Release of Information. Seller consents that Lien Holder and its representatives may supply and communicate any loan, financial information, or other information of Seller, confidential or otherwise, with any of the following involved in the transaction and their representatives: Seller’s attorney, Broker or Brokerage Firm working with Seller, transaction coordinator, title insurance company, Closing Company, and the following as checked: ____ Other Lien Creditors _____Broker or Brokerage Firm working with Buyer _____Buyer Buyer’s attorney and their representatives.
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Additional Colorado Real Estate Commission Forms (continued)
6. DATES AND DEADLINES.
6.1. Revised Dates and Deadlines and Other Terms. Buyer and Seller acknowledge that an Agreement to Amend/Extend Contract (Amend/Extend) is required to revise the Dates and Deadlines (§ 3 Contract) or other terms based on changes required by the Short Sale Acceptance. If both Buyer and Seller, in their sole subjective discretion, agree to the terms of the Amend/Extend, as evidenced by their signatures on the Amend/Extend then the Contract shall be so amended.
7. UNCERTAINTY OF SHORT SALE. Buyer and Seller acknowledge:
7.1. There are no promises or representations regarding: (1) whether Lien Holder will agree to a Short Sale, (2) the terms of any Short Sale Acceptance, or (3) when the Lien Holder will advise of its decision to agree to a Short Sale or provide the written terms and conditions of the Short Sale Acceptance.
7.2. Until Closing of the Short Sale, Short Sale Acceptance by the Lien Holder will not prevent, hinder or delay the Lien Holder from initiating or proceeding with any enforcement action, including but not limited to a foreclosure. In the event Seller loses ownership of the Property through foreclosure, the Contract shall terminate.
7.3. A significant period of time may be required to determine if a Short Sale Acceptance will be granted. Therefore, Buyer should inform Buyer’s lender of this fact for structuring Buyer’s loan, duration of “loan lock”, etc. Additionally, Closing is normally required to be held shortly following the Short Sale Acceptance.
7.4. After a Short Sale Acceptance is given, Lien Holder will normally not agree to any additional changes to the terms of the Contract that differ from the Short Sale Acceptance, to have repairs performed or to reduce the amount it is willing to accept due to the condition of the Property or results of an inspection. Buyer may want to conduct an inspection of the Property before Seller submits its request for a Short Sale to Lien Holder. The Purchase Price should reflect the condition of the Property and results of such inspection. Buyer recognizes the risk that Lien Holder may not agree to the offer submitted by Buyer.
Additional Colorado Real Estate Commission Forms (continued)
8. DEADLINE FOR ACCEPTANCE OF SHORT SALE; TERMINATION. Buyer and Seller must receive written notice of the Short Sale Acceptance on or before Short Sale Acceptance Deadline (§ 8.1 below) or the Contract shall terminate. Seller shall cause Buyer to receive a copy of the Short Sale Acceptance within one day of Seller’s receipt of a Short Sale Acceptance from any Lien Holder or Buyer may terminate the Contract pursuant to §§ 8.2 and 8.3.2 below.
8.1. Short Sale 104 Acceptance Deadline.
___________________________________________________________________________________
Event Deadline
___________________________________________________________________________________
Short Sale Acceptance Deadline
8.2. Termination. If any party has a right to terminate the Contract, such termination shall be governed by § 25 of the Contract upon written notice to the other party as described in § 27 of the Contract.
8.3. Additional Rights of Termination.
8.3.1. Seller may Terminate. Seller may terminate the Contract if the terms and conditions from Lien Holder to obtain a release of the Lien are not acceptable to Seller, in Seller’s sole subjective discretion, by Seller’s written notice received by Buyer on or before three days after the Short Sale Acceptance.
8.3.2. Buyer may Terminate. Buyer may terminate the Contract: (1) as provided in § 5 (Seller Deadline for Submission to Lien Holder) by Buyer’s written notice received by Seller on or before Short Sale Acceptance Deadline (§ 8.1) or (2) if the terms and conditions of any Agreement to Amend/Extend Contract are not acceptable to Buyer, in Buyer’s sole subjective discretion, by Buyer’s written notice received by Seller on or before three days after Buyer’s receipt of Short Sale Acceptance.
8.4. Early Termination
____ 8.4.1. Not Applicable. This § 8.4 shall not apply.
____ 8.4.2. Applicable. Both Buyer and Seller have the right to terminate the Contract by written notice to the other party so long as it is received on or before Short Sale Acceptance. Additionally, Seller has the right to accept subsequent offers from other buyers prior to Short Sale Acceptance without liability to Buyer.
Note: If no box in this § 8.4 is checked, the provisions of § 8.4.2 shall apply.
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Additional Colorado Real Estate Commission Forms (continued)
SHORT SALE ADDENDUM (Seller Listing Contract) (SSA39-10-11)
Since Sections 1 and 2 of this form are identical to the Short Sale Addendum (Contract to Buy and Sell), we will show only Section 3 through the end of this form
3. MANDATORY DISCLOSURES TO SELLER.
3.1. SELLER IS ADVISED TO CONTACT THE COLORADO FORECLOSURE PREVENTION HOTLINE OPERATED IN COOPERATION WITH THE COLORADO DIVISION OF HOUSING AT 1-877-601-4673 OR THE HUD HOUSING COUNSELING AND REFERRAL LINE AT 1-800-569-4287.
3.2. Seller acknowledges that there are alternatives to a Short Sale that may be better for Seller. Seller acknowledges that a Short Sale transaction may result in continued liability of Seller or other persons liable for the debt that could be extinguished through foreclosure, bankruptcy or other loss mitigation options, including but not limited to a negotiated loan modification with Lien Holder. Seller acknowledges that it is the responsibility of Seller to investigate these alternative methods of resolution with Seller’s legal, accounting or financial advisors and with Lien Holder and it is not the responsibility of any real estate broker to undertake any investigation of other options that may be available to Seller.
3.3. Short Sales may have serious adverse legal, tax and economic consequences for Seller and any guarantors. Seller is advised to seek legal and tax counsel to advise Seller of the legal effect and meaning of any Short Sale Acceptance from Lien Holder.
3.4. Lien Holder is not required to agree to a Short Sale. Even if a Lien Holder agrees to a Short Sale, a Lien Holder is not required to forgive repayment of the debt secured by the Lien or release Seller and any guarantors from liability unless Lien Holder’s claim is paid in full. Seller acknowledges that Lien Holder may or may not agree to release Seller or any guarantors from liability to Lien Holder. If not released, Seller and any guarantors will remain liable to Lien Holder for any amount that remains unpaid after the Short Sale. To be binding, any release of liability by Lien Holder must be in writing, must be 54 executed by Lien Holder, and must provide that Seller and all guarantors are released from liability.
3.5. Lien Holder may condition its agreement on Seller doing any or all of the following to obtain a Short Sale Acceptance: (1) make a cash payment, (2) sign a new promissory note, (3) continue to owe the Lien Holder the unpaid portion of the debt and (4) agree to other requirements made by Lien Holder.
3.6. If the Lien Holder accepts less than full payment, Seller understands that Seller may incur federal and state tax liability due to a Short Sale and understands that Lien Holder is required to file all required 1099 Forms with the Internal Revenue Service with respect to this transaction. Seller is strongly advised to seek tax advice regarding the potential adverse tax consequences to Seller of a Short Sale.
3.7. Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not necessarily repair or rehabilitate Seller’s credit rating and Lien Holder has no obligation other than to fairly report this transaction to any credit rating agency.
3.8. Release of the Lien against the Property does not by itself release Seller or any guarantors from liability for the debt.
3.9 Seller acknowledges there are no promises or representations regarding: (1) whether Lien Holder will agree to a Short Sale, (2) the terms of any Short Sale Acceptance, or (3) when the Lien Holder will advise of its decision to agree to a Short Sale or provide the written terms and conditions of the Short Sale Acceptance.
4. MORTGAGE ASSISTANCE RELIEF SERVICES (FTC – DISCLOSURES).
IMPORTANT NOTICE
4.1. You (Seller) may stop doing business with us (the Brokerage Firm and Broker) at any time. You (Seller) may accept or reject the offer of mortgage assistance we (Brokerage Firm or Broker) obtain from your (Seller’s) lender [or servicer]. If you (Seller) reject the offer, you (Seller) do not have to pay us (Brokerage Firm). If you (Seller) accept the offer, you (Seller) will have to pay us (Brokerage Firm) as set forth in Seller Listing Contract for our (Brokerage Firm’s and Broker’s) services.
4.2. Brokerage Firm is not associated with the government, and our (Brokerage Firm’s) services are not approved by the government or your (Seller’s) lender.
4.3. Even if you (Seller) accept this offer and use our (the Brokerage Firm’s and Broker’s) service, your (Seller’s) lender may not agree to change your (Seller’s) loan.
4.4. If you (Seller) stop paying your (Seller’s) mortgage, You (Seller) could lose your (Seller’s) home and damage your (Seller’s) credit rating.
Currently at the Colorado Real Estate Commission, there are a number of complaints that have been filed by consumers against Brokers due to their lack of knowledge regarding Short Sales, their failure to use the required forms, etc. It is imperative that the Broker fully understand this process. In light of the new CP-41 Competency, if a Broker DOES NOT understand this type of transaction they SHOULD NOT take the listing.
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Additional Colorado Real Estate Commission Forms (continued)
This concludes Chapter 8. Below is a brief summary which you can review before taking your quiz.
Earnest Money Receipt
· For deposits in lieu of the broker holding the earnest money in his own trust account.
· With the advent of third party closing companies, it is necessary to assure that the provider be able to confirm that the money will be placed in a “trust” account.
Licensee Buyout Addendum is used:
· Concurrently with a listing.
· As an inducement or to facilitate the owner’s purchase of another property,
· Under an existing listing and continues to market the property.
The buyer’s free out if the property doesn’t appraise is deleted.
The offer is specific performance against the buyer/broker with liquidated damages being deleted and there are no specific performance damages against the Seller, who may cancel at any time.
This form is binding only upon the buyer who personally sign above, unless the supervising broker of the brokerage firm with seller signs here.
Exchange Addendum is essential when parties conduct a tax-deferred exchange of like-kind properties.
The Source of Water Addendum enables the buyer to investigate the long-term prospects of water availability for the property. Needed in residential transactions.
When the Counterproposal form is used, the Contract is not to be signed by the party initiating this Counterproposal. Brokers must complete and sign the Broker's Acknowledgments and Compensation Disclosure portion of the Contract.
Agreement to Amend/Extend must be signed before any date in the Dates and Deadlines grid of the Contract to Buy and Sell Real Estate expires.
The Inspection Notice Form was revised to provide that the Inspection Resolution must occur prior to the Resolution Deadline requiring a written agreement to resolve the Notice to Correct.
Closing Instructions Form
Closing Company is authorized to obtain any information necessary for the Closing.
Closing Company is not authorized to release any signed documents or things of value prior to receipt and disbursement of Good Funds.
If Closing does not occur, Closing Company is authorized and agrees to return all things of value to the depositing party.
Earnest Money Holder shall release the Earnest Money as directed by the written mutual instructions.
The IRS may request withholding of a substantial portion of the proceeds.
The Earnest Money Release may affect legal rights or claims of the parties.
Real Property Transfer Declaration provides essential information to the county assessor to help ensure fair and uniform assessments for all property for property tax purposes.
· If the completed Real Property Transfer Declaration is not returned to the county assessor within the 30 days of notice, the assessor may impose a penalty.
· Information is available to any taxpayer subject to confidentiality requirements as provided by law.
Post-Closing Occupancy Agreement is to be used only for short-term residential occupancy for a term not to exceed 30 days.
Short Sale Addendum (Contract to Buy and Sell Real Estate)
If Seller has debts secured by liens on the Property.
A title insurance commitment may be used to show the Liens against the Property.
Short Sale is a transaction in which any Lien Holder releases its Lien against the Property and:
· Accepts an amount less than the full amount Lien Holder claims is owed;
· Treats the debt secured by the Lien differently than as originally provided for in the evidence of debt.
Lien Holder is not required to agree to a Short Sale.
Seller acknowledges that a Short Sale Acceptance by the Lien Holder will not necessarily repair or rehabilitate Seller’s credit rating.
Release of the Lien against the Property does not by itself release Seller or any guarantors from liability for the debt.
Seller agrees to submit to each Lien Holder a request for a Short Sale and all documents and information requested by Lien Holder.
Click here if you would like to open this summary as a pdf, which you can then print or save to your device: Chapter 8 Summary
