More often than not, I handle one of two types of contracts during a real estate transaction - the Florida Association of Realtors Sale and Purchase Contract (FAR) and the Florida Association of Realtors and Florida Bar Sale and Purchase Contract (FAR/Bar). Though there are some differences between the two contracts, they both have one thing in common - they both have a provision for repairs to be made before closing.
There are two repair types specified: one for the mechanical systems of the house, and the other for wood-destroying organisms. Both contracts limit repairs of each type to 1.5% of the sales price of the house, though these limits are often negotiated to a lower amount by both the buyer and the seller.
The provision can seem a little confusing at first but it's actually fairly simple. Let's say, for example, that a buyer and seller negotiates a contract and they set the repair limit at a total of $1,000. After a home inspection is complete, the buyer will make a list of repairs that they want the seller to make. Let's assume for a moment that the repair estimate is $800.00. At that point, the seller would pay for $800.00 worth of repairs and the remaining $200.00 would stay in his pocket. If the repair estimate exceeds $1,000, then either party may cancel the contract, or either party may pay the excess. In some cases, the contract is re-negotiated.
Also included in these contracts is a list of warranted items essential to the operation of the home, including the heating and cooling system, major appliances, the electrical system, the plumbing system, the roof and more. Under contract, these items must be kept in working condition by the seller until closing, whether this maintenance (or repair) exceeds the repair limit or not. Additionally, the contracts also provide a very specific list of cosmetic repairs such as nail holes, discoloration of the floors and wall cracks, that the seller is not contractually obligated to repair at all.
The provision included the FAR and FAR/Bar contracts is designed to protect home buyers from having to take on unexpected and costly repairs once the purchase process is complete. It also encourages home sellers to invest a little extra in their property in order to get the most out of the selling experience. Whether buying or selling a home, be sure to inquire about a final home inspection before signing any sales contract. If you have any questions regarding these contracts, home inspections, repairs, or anything else regarding Central Florida real estate, please feel free to contact me or email me directly. You can also call or text me at (407) 421-1052!
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