Contract & Forms Committee Update

The group, Chaired by Steve Ray and members Lora Kozlowski, Wendy Smith, Franz Forster, Nate Girard, Pam Roberts, Eric Steurnagle, Charley Sawyer and Sandy Carroll met on April 14, April 29, May 19, 2014 and made the following changes, all that were approved by the MLS Board of Directors on May 21st, 2014.

YAY!!!!!!  The Exclusive Right to Sell Agreement DATES have been changed based on considerable feedback.  The ____ month time period was originally changed because there needed to be a finite term.  When including a start date, there was confusion between the longstanding MLS requirement to submit the contract within 2 days of SELLER’s signature, and the new start date that was sometimes in the future.  The solution?  New language will appear as follows:

  • LISTING TERMS:  SELLER hereby gives and grants to BROKER, a member of Multiple Listing Service (MLS) of the Berkshire County Board of REALTORS®, Inc., the exclusive right to list and sell the above mentioned Property for the period to begin on the date of the SELLER signature and end on ___ /___ /___ , unless extended in writing by all parties involved.  The list price for the Property shall be of  $ ________ or at such other price, terms and considerations to which SELLER may agree.

We also are in the process of adding the following MAR forms to our FlexMLS system.

  • Seller’s Statement of Property Condition.  Finally!!
  • Exclusive Right to Sell COMMERCIAL
  • Purchase and Sale COMMERCIAL
  • And some consumer disclosures.

Request to add rented property (hot water heater, alarm system, etc…) disclosures on the MLS Input so that the information can be available for the completion of the updated Purchase and Sale Agreement.

  • TF Recommendation:  Consensus is to make this on the MLS Input form and see about making it on the Exclusive Right to Sell.  Space is an issue, but we will work on layout to see if it is possible. The change has already been made in Flex.

Requests that we update fields FlexMLS.  All were approved and modifications were made in Flex.

  • Switch “rubber” to “membrane” under roofing.
  • Add Storage Tank to Hot water
  • Add the Flood Disclosure yes/no field to all reports and displays
  • Add new house styles of Post and Beam and Arts and Crafts
  • Change middle and high schools for Otis
  • Add fixer-upper category to all property types, not just residential

Request that we update the Facilitation form, to mirror the agency forms currently in use and updated.

  • TF Recommendation:  Consensus:  Upon further review, the Committee has determined that the organization is best served by allowing full use of the Facilitation Agreement drafted by the Massachusetts Association of REALTORS and agreed our FlexMLS contract system should include this form.  They further advise the MLS Board that they do not recommend approving any modification to our copyrighted agent forms for non-agency relationships.

The following changes have been considered for modifications to the Purchase and Sale Agreement.  The committee has one final review of the form before we publish a new form incorporating the changes approved.

Request that the Purchase and Sale Agreement storage tank clause includes, as it did before, a definitive confirmation that the seller knows of no underground oil tanks.

  • TF Recommendation:  Consensus to obtain an interpretation from Board legal Counsel about the difference in liability to affirmatively disclose what exists from a list (what type of tanks exist), versus stating to the best of one’s knowledge something does NOT exist (underground tanks specifically).

Request that we add flood insurance clause and remove the radon and asbestos as separate clauses since they are both defined in the home inspection contingency clause (like mold, pests, wetlands) that do not have written disclosure forms, as lead paint does.

  • TF Recommendation:  Consensus to add a flood insurance clause to mirror disclosure statements in MAR form.  Consensus to eliminate asbestos clause since it is in the home inspection paragraph, but to retain radon unless space is an issue.  Rational is that radon is still an unseen hazard that the buyer should know about. Asbestos is disclosed by inspector.

Request that we add a disclosure that the Buyer has received the Home Inspectors Facts for Consumers as required by state law.

  • TF Recommendation:  Consensus to educate the members that the last revision changed paragraph 35 included this.

35. DISCLOSURES:  BUYER and SELLER acknowledge that they have been provided with a completed copy of the ‘Mandatory Licensee-Consumer Relationship’ form, as mandated by the Massachusetts Board of Registration of Real Estate Brokers and Salespersons. BUYER acknowledges receipt of lead paint disclosure form (for residences built before 1978) and a Home Inspectors Facts for Consumers brochure, prepared by the Office of Consumer Affairs.  The BUYER acknowledges that there are no warranties or representations on which BUYER relies in making this Offer, except those previously made in writing.

Request that we change the Certificate of Occupancy language to only apply to a new home and not “for any dwelling that requires it”

  • TF Recommendation:  Consensus is to leave the language as it stands.  This is an important component for multifamily transactions (where each unit requires a CO) as well as any dwelling that has substantial renovations.  It was noted that we could add an educational element to clarify that the city department approving a substantial building remodel will leave a permit open if it REQUIRES a  Certificate of Occupancy.  The owner should know if one is required, and should an agent realize that if a home has been extensively remodeled, they should ask the seller about it.  If there are any open permits that have not had all required paperwork completed, it is flagged by the city/town.  It should also be noted that various departments in a city/town can issue a CO, depending on instance that required it.  Multifamily dwellings are inspected and issued a CO typically by the Health Department.  Renovation COs are issued by the Building Inspector.

Request to allow for the description of monthly, quarterly or weekly in the condo fee field.

  • TF Recommendation:  Consensus to change the condo fee to say MONTHLY.  REALTORS can then make a comment in the remarks if the monthly breakdown is to be paid quarterly or annually or otherwise agreed.  This would allow for the most consistency and not require a change by FlexMLS.

Request to change the Condo input to more clearly identify the unit #.  It was noted that to pull up a tax card you have to use the main complex address, but most are not specifying the unit or building information for REALTORS to find.

  • TF Recommendation:  Consensus is to ask FlexMLS to move Unit/Building # and Floor Level of Unit to the address tab to the input form, and to add it to the reports by the address.  Also, consensus to make both fields mandatory and to replicate that on the Multifamily forms

Request to review #33 Agreement to Mediate Dispute or Claims on the P&S to create a time limit to protect the seller.  This was the message:  “I was notified from my seller that they received a letter to mediate an issue that took place in September, closing was in August, buyer had it fixed, then notified seller 7 months later that she was going after them for $15,000. Seller had no knowledge of this issue, never had a problem like that under their ownership, owned for 10 years. Buyer had a very thorough inspection, and buyer had a signed Sellers Disclosure. Had to do with a leak from an upstairs bathroom, came through ceiling downstairs. Seller had to hire their Attorney to dispute this. Seller was not notified to view the problem or to have his own contractor look at it to see the cause of the problem. Buyer hired a non-licensed contractor to do the work. My concern is, there is NO time frame in this clause that protects the seller from something like this happening, I.e. 90 days, 120 days, etc. Shouldn’t there be a time frame to protect a seller?”

  • TF Recommendation:  Consensus to leave the Mediation agreement clause as written.  Modifying the mediation clause does not have any affect in protecting the seller, because it is the statute of limitations that exists for this purpose.  If we limited the period to mediate, the buyers would then have the ability to bring the seller directly to court for the alleged damages.  This clause only requires they try mediation to resolve a dispute first, which is considered a far cheaper and easier process (court fees and attorney costs especially) than a full blown court case.  It is our understanding that we cannot limit a buyer’s right to sue – but they can mutually agree to mediate first.  Therefore, the committee decided to leave the clause the way it is written.

Request to expand office remarks to include more information.  “In our office, we use it to enter private information such as the sellers names, addresses if not living at the property, unlisted phone numbers, email addresses, lock box codes etc. It is especially important if the listing agent is seriously ill, is away and somehow out of touch, and an offer might need to be presented etc We feel at least double or triple the space is necessary.”

  • TF Recommendation:  Consensus to ask FlexMLS to make this change, provided we have the fields and ability to do so at no cost.  Flex reported back that thefield is limited in characters and cannot be expanded without adding a programming cost.

Request that we remove the seller’s signature from the Termination Notice.  The request stated that “the P&S Inspection Contingency gives the Buyer the unilateral right to withdraw but, yet, when the Termination Notice is submitted it provides for the Seller’s signature/s which invites debate and seems to nullify the Buyer’s unilateral right to withdraw, subject to the provisions of the Inspection Contingency.”

  • TF Recommendation:  Consensus:  This termination form is to be used to protect the escrow agent in releasing the funds held.  If the buyer has a contractual right to terminate the agreement, the form is just an optional notice with mutual instructions to release the funds from escrow.  If the seller balks at signing the release for a legitimate termination, the seller should be advised that they will NOT get any money until they prove buyer did not have any right to terminate the agreement.  In fact, if the seller refuses to allow the buyer to terminate as promised (in the Purchase and Sale agreement due to the inspection, financing or other contingency), the buyer would likely bring suit against the seller to collect funds and the seller would incur additional legal costs associated with collections.  The escrow agent can only release when mutually agreed by both parties.  If there is no dispute, it should be simple to get the form signed.  If there is a dispute, the seller should know they may face a breach of contract lawsuit.   Either way, the escrow agent is protected and must hold the funds until the parties agree or the courts decide.

 In progress:  Stock Legal Clauses

Consensus to ask Legal Counsel about the inclusion of the following standard clauses in a new clause library.

  • Home Sale Contingency
  • 48 Hour attorney Review period
  • If Title V doesn’t pass or is non-conforming
  • Water Flow / Well testing