Purchase Agreement and Property Disclosure Document Changes

1. A box has been added for the agent to check if he/she is acting in a dual capacity representing both the buyer and the seller. 

2. Note that if the agent is acting in a dual capacity, the agent will need to have all parties sign the mandatory Disclosure and Consent to Dual Agent Designated Agency form. 

1. Lines 18-20 are revised to clarify that the movable items listed are to remain on the property, transfer without warranty, are deemed to have no value, and are not considered part of the Sale Price. 

1. Lines 110 through 124 and lines 132 through 136 of the 2022 Agreement remain the same in the 2024 Agreement (lines 124 through 142).

2. However, there is no longer a place for buyers and sellers to sign within the 2024 Agreement when a deposit is held by a third party as the signature lines to the particular section were deemed superfluous. The parties signatures to the 2024 Agreement are deemed to include a signature to this section (and all other sections of the 2024 Agreement). 

3. The 2022 Agreement states “I have read the attached addendum and acknowledge” (2022 Agreement, line 124) that the Broker is not required to disburse the security deposit when held by a third party. The phrase “I have read the attached addendum” does not appear in the 2024 agreement.

4. Many brokers and title companies now have their own addendums that may have parties acknowledge more than the absence of the Broker’s responsibility to disburse a security deposit when it is held by a third party.

Most of the concepts in this section are the same in both the 2022 and 2024 Agreements, but there are some differences.  See below for a line-by-line explanation of these changes. 

1. Assessments, special assessments, flood insurance, etc. are all still prorated through the date of the Act of Sale (2022 Agreement, lines 94-95; 2024 Agreement, lines 97-99).

2. The 2024 Agreement still requires the Act of Sale costs, abstracting costs, title search, etc. to be paid by the Buyer (2022 Agreement, lines 95-96; 2024 Agreement lines 100-101), but change how the parties would agree to do otherwise.

          a. The 2022 Agreement provides the Buyer pays these costs “unless otherwise stated herein” (2022 Agreement, lines 96-97).

          b. The 2024 Agreement provides the Buyer pays these costs “unless otherwise expressly provided for by the parties pursuant to a written agreement” (2024 Agreement, line 101).  

          c. Therefore, any exceptions to the language requiring the Buyer to pay these costs may be in a separate document signed by both. If there is not a separate document signed by both Buyer and Seller, the Buyer cannot be cast with paying these specific costs. 

          It is recommended for the existence of any written agreement providing that someone other than the Buyer is paying these costs be noted under “Additional Terms and Conditions” (2024 Agreement, lines 359 through 368) or List of Addenda to be Attached and Made Part of this Agreement (2024 Agreement, lines 390-398).

3. Necessary tax, mortgage, conveyance, release certificates, etc. are still paid by the Seller (2022 Agreement, lines 97-98; 2024 Agreement, lines 103-104).

4. Lines 98-100 of the 2022 Agreement are combined in lines 104 through 106 of the 2024 Agreement, and the substance of the 2022 Agreement is carried forward into the 2024 Agreement.

          a. The 2022 Agreement requires the Seller to pay “previous years” taxes, assessments, dues, and makes no mention of the Buyer and Seller being able to agree otherwise (lines 98 and 99).

          b. The 2022 Agreement requires the Seller to pay special assessments bearing against the property prior to the Act of Sale but allows for the parties to agree otherwise (lines 99-100).

          c. The language in the 2024 Agreement clarifies the payment of taxes, assessments, HOA dues, etc. AND “special assessments” incurred prior to the Act of Sale or that bear against the property prior to the Act of Sale are to be paid by the Seller “unless otherwise expressly provided for by the parties pursuant to a written agreement” (lines 106-107). 

5. NEW Requirements for notices and responses about “special assessments” within the “Leases” section of the 2022 Agreement (lines 165-168) were removed from the 2024 Agreement (lines 171-175).

          a. The 2022 Agreement requires the Seller to notify the Buyer of any unpaid “special assessments” and for the Buyer to notify the Seller if “they are acceptable” (2022 Agreement lines 165-166) and defines “special assessments” (2022 Agreement, lines 166-167; 2024 Agreement, lines 109-111).

          b. “Special assessments” is defined when used in the 2022 Leases Section, but not in the Prorations Section of the 2022 Agreement. 

          c. However, the 2022 Agreement imposes the responsibility to pay outstanding special assessments incurred prior to the Act of Sale (lines 99-100) whether the unpaid incurred special assessments are acceptable to the Buyer or not.  

          Therefore, with both the 2022 and 2024 Agreements, the Seller must notify the Buyer of unpaid incurred special assessments if the Seller does not intend to satisfy them prior to the Act of Sale so the parties can expressly provide otherwise pursuant to a written agreement.

1. This section does not appear in the 2024 Agreement because it is unnecessary as the contents of the section are addressed by the New Home Construction Addendum. 

1. The list of DDI period activities 2024 Agreement and 2022 Agreement are illustrative, but for clarification purposes, the permittance of conducting a survey was expressly added to the 2024 Agreement. 

2. The 2024 Agreement requires the buyers’ signatures to be on the notice of deficiencies and desired remedies when it is submitted to the Seller – the 2022 Agreement did not require the buyers’ signatures on the notice.  The 2024 Agreement additionally clarifies this submission is to be one single and complete written list (line 220). 

1. The FHA Amendatory Clause was removed because it is not a condition to the purchase agreement, but rather merely relates to the loan. 

1. One - Claim an exemption and attest that he/she has no knowledge of known defects; 

2. Two - Does not claim an exemption and agrees to fill out the disclosure; or

3. NEW Three – Claims an exemption but because the Seller is aware of known defects, agrees to fill out the disclosure. 

4. This is a material addition to the form.

          a. On and after January 1, 2024, even if the transaction would have otherwise been exempt from the disclosure requirements and the Seller has knowledge of a defect, the disclosure form or a form that contains at least the language in the disclosure form must now be filled out. 

          b. For example, if the property is being sold following death of the owner, and the succession executor knows of a material plumbing defect, the succession executor must now disclose the plumbing defect. 

          c. Likewise, when co-owners transfer a property between themselves, an exemption is usually claimed, and disclosures are typically not made.  But on and after January 1, 2024, if the home has, for example, a termite problem, and one co-owner is transferring the property to another, and is aware of the termite problem, the termite problem must be made known.

          d. If a Seller checks the new box #3, claiming an exemption, but declaring the Seller has knowledge of a defect, the Seller needs to identify which exemption he/she claims on Property Disclosure Exemption Form. Checking Box 3 does not dispense with the requirement to identify which exemption(s) Seller claims. 

1. Question 4 – The 2024 Disclosure requires Seller to make known if they are aware of rights vested in others because of leased land. This box would be checked if the property being sold has a lease on it whether it is a commercial, residential, hunting, mineral, or other type of lease. 

1. Questions 16, 17, and 18 –  Questions 16, 17, and 18 are revised to delete a reference to “known defects.” This change does not practically expand the scope of the response since a party is only required to disclose defects that are known, and since “known defects” and “defects” are defined the exact same way in the PDD. 

1. Questions 18, 20, 21, and 23 –  Each of these are revised to ask “Are you aware of any defects” in lieu of the 2022 language “Are there any known defects.”  This change does not practically expand the scope of the response since a party is only required to disclose defects that are known, and since “known defects” and “defects” are defined the exact same way in the PDD.

2. Question 24 is revised and, instead of only inquiring about different types of security systems (security alarms, fire, and audio/video surveillance) asks if any of the structures contain a security alarm, fire alarm, solar panels, audio/video surveillance, generator, smoke detectors or carbon monoxide (CO) detector. The question also asks if any of the devices are leased, and if so, the Seller must list the service provider. The 2024 revision adds solar panels, generators, smoke detectors and CO detectors 

          a. Because solar panels was added to the list in Question 24, Question 53 inquiring about solar panels is removed. 

1. NEW The 2024 Disclosure expressly states that the Seller must provide immediate written notice if any information in the disclosure becomes inaccurate, incorrect, or otherwise materially changes. This is a material change and requires continuing disclosures to be made until the property is transferred.