Every residential real estate purchase involves several steps from the initial purchase agreement to title searches, financing, and finally, the actual closing of the sale.
These steps are all governed by the terms of the initial purchase agreement. In Florida, we have the benefit of the FAR/BAR contract which is a standardized purchase agreement developed by both the Florida Association of Realtors and The Florida Bar.
The FAR/BAR “AS IS” and Standard contracts are comprehensive and simplified agreements that contain all the pertinent provisions typically agreed upon in residential real estate agreements in Florida.
These contracts may be used by anyone entering into a real estate purchase and, although it is highly recommended that one seeks the guidance of a real estate professional, are not necessarily limited to use by attorneys and realtors only.
In fact, the reason these agreements were developed was to ensure that anyone entering into a real estate purchase contract had access to the most important and commonly encountered provisions.
“AS IS” VERSUS STANDARD FLORIDA FAR/BAR CONTRACT
As noted above, there are two versions of this standardized contract: the FAR/BAR “AS IS” contract and the FAR/BAR Standard contract.
While neither version is particularly better than the other, either may be more appropriate depending on the subject transaction.
To determine which may be more appropriate for any given transaction, it is best to examine the key differences between the two versions.
The main differences are as follows:
- “AS IS” – Buyers who are unfamiliar with the FAR/BAR contract are usually quite suspect of the FAR/BAR “AS IS” version due to a mistaken understanding of the meaning of the words “As Is”. Despite being one of the most commonly used contracts, too often buyers believe this to mean that the property is somehow faulty and the sellers are trying to get rid of it quickly. However, the true meaning of the term “As Is” relates to the lack of obligation of the seller to make repairs as opposed to the Standard contract that mandates sellers make certain repairs up to a specified dollar amount.
- Inspection Duration – Another difference is the timing involved with the Inspection period and the responsibilities of both parties. The “AS IS” contract is more favorable to the buyers in that it allows them fifteen days to conduct an inspection, decide whether they would like to proceed with the purchase and notify the seller accordingly. While the Standard contract also affords the buyer fifteen after the effective date of the contract to complete an inspection and inform the seller of any defects, the seller then has ten days from receipt of the buyer’s notice to either conduct their own inspection or obtain an estimate for the repairs. If the two parties cannot agree as to the defect and needed repairs, then they must share the cost of a third inspection that will be binding on them both.
- Seller Disclosure – Both contracts contain a duty to disclose imposed on the seller to disclose any facts that “materially” affect the value of the property. The specific language reads as follows: “Seller knows of no facts materially affecting the value of the Real Property which are no readily observable and which have not been disclosed to Buyer.” However, the “AS IS” contract includes additional language which seemingly protects the seller. This additional language states that the seller “extends and intends no warranty and makes no representation of any type, either express or implied, as to the physical condition or history of the Property.”
- Permits – Yet another significant difference is the obligation of the seller to resolve any pending permit issues, whether that means closing out open or expired permits or obtaining permits for unpermitted work done on the property. The Standard contract requires that the seller resolve all permitting issues which includes obtaining needed permits for improvements up to a certain amount. The “AS IS” contract, on the other hand, only requires the seller to cooperate and assist the buyer with closing out the permit and is not required to put forth the money to do so.
- Waiver of Claims – Another provision that appears to benefit the Standard contract is that it does not contain a waiver of claims by the buyer. The “AS IS” contract, however, states that the buyer waives any claims against the seller and any realtor associated with the specific transaction relating to defects or damages that exist at closing but are discovered at a later date.
CONTENTS OF FAR/BAR CONTRACT
Since the details of these agreements govern the terms by which each party to a real estate purchase is held, it is important that it contains all the relevant provisions that may be encountered during the process. Even more importantly, it is imperative that those provisions accurately and clearly state the intentions upon which both parties agree to avoid conflict and disagreement as the transaction progresses.
A few common provisions that are typically included in the FAR/BAR contract are as follows:
- Properly stating the property address and legal description/parcel identification number being purchased and ensuring that it corresponds with the most recent deed.
- List of fixtures, appliances and other items being sold with the home.
- Payment amounts and due dates.
- Important deadlines and dates such as the closing or occupancy dates.
- Inspection, financing or title deadlines and contingencies.
- Standardized amendments such as disclosures regarding Associations or lead-based paint.
While the FAR/BAR contract contains the most frequently used terms and provisions, the parties may also negotiate and include terms that are unique to their specific transaction.
It is imperative that such terms are properly drafted to reflect the true intentions of the parties.
So, having a knowledgeable and experienced real estate attorney to assist with the drafting of your contract is invaluable and can mean the difference between a successful transaction versus one that ends up in litigation.
WHO IS ELIGIBLE TO USE THE FAR/BAR CONTRACT?
The main purpose of creating the FAR/BAR contract was to provide an easy-to-use document for use by both laypersons and professionals.
As it is not limited to use by only licensed professionals, many parties choosing to purchase or sell their property without the use of a realtor may access digital FAR/BAR forms online or may fill in hard copies when necessary.
USE OF PROFESSIONAL
At first glance, it may appear that using these forms is easy enough and can be filled in by anyone involved in a transaction. And while it’s not prohibited for a layperson to complete these contracts independently, it may not be advisable to proceed without the guidance and counsel of a professional.
Real estate professionals not only understand the implications that using either version may have on the specific transaction, but they are typically abreast of any updated forms released by The Florida Bar and the Florida Association of Realtors.
A real estate attorney can also ensure that all terms are drafted in a manner that best protects your interests and that all addendums and provisions are included to accurately reflect the negotiated terms.
As with any contract, it is always best to have a real estate attorney help draft or review your real estate Florida FAR/BAR contract, as well as, provide guidance related to which version best suits the needs of the particular transaction at issue.
To determine whether your interests are properly protected, contact our experienced real estate attorneys for assistance with reviewing, drafting and negotiating your real estate contract.
Additional Helpful Resources for Florida Real Estate & Closings
- Understanding the Florida Title Insurance & the Closing Process
- Frequently Asked Florida Title & Closing Questions
- Florida Title Insurance Resources
- ASR Real Estate Closing & Title Services
- Boca Raton Title Company
- Boca Raton Real Estate Attorney
- Real Estate Closing Costs in Florida
- Common Ways to Hold Title in Florida Real Estate
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