Lesson 3: LA Residential Agreement to Buy or Sell Part 1

Lesson 3: LA Residential Agreement to Buy or Sell (Part 1)

Flashcards Lines 44 - 45 - Occupancy.The change of occupancy from Seller to Buyer normally occurs at the act of sale or, as the Purchase Agreement states "unless mutually agreed upon in writing.Lines 85 - 88This sentence reserves the rights of the Seller to provide financing to the Buyer on the same terms as expressed in lines 54-65, if the Buyer is unable to secure financing.Lines 109 - 115 - DepositFirst it is to be noted that a deposit is not required under Louisiana law to have a valid Purchase Agreement. It is a practice and seems to be expected by Sellers and Buyers alike. However, to repeat, it is not necessary to have a deposit to have a valid Purchase Agreement. Therefore, this clause could be deleted by addendum. However, if not deleted, there is a requirement for immediate delivery of the deposit in the amount set forth in the blank. Please note that the deposit can be a particular dollar amount or a percentage of the sales price. The deposit can be made under the form either in cash, check, or a promissory note.LREC §2717 titled "Deposits" states that funds received in a real estate sales, lease or management transaction shall be deposited in the appropriate sales escrow checking account, rental trust checking account or security deposit trust checking account of the listing or managing broker unless all parties having an interest in the funds have agreed otherwise in writing.hyothetv for referenceMeantime, Buyer has ordered an inspection. Three

recommendations are made by the inspector: (1) repair

roof area over the garage; (2) replace damaged outside window sill in the office; and (3) repair chipped tile in kitchen. Within 72 hours as required, Seller agrees to items (1) and (2), but not item (3). Within 72 hours, Buyer decides to accept the Seller response. (Line 158-183) Promissory notes as depositsneed to be carefully thought through. You should try to put the due date of the promissory note as close to the closing date as possible, unless special circumstances exist. For example, assume there is a sixty (60) day gap between the Purchase Agreement and the date of closing, and Buyer expects funds from some source within thirty (30) days, he plans to redeem the promissory note with cash. In that case, the date can be adjusted. When a Seller gets a promissory note, it is nothing more than that, a promise to

pay. Therefore, if the Seller tries to collect on the deposit for some reason, for example, in the event of a breach, the Seller must go to court to obtain a judgment on the promissory note and then collect it using legal means. This is an added expense and should be considered when a promissory note is taken or given. Most promissory notes provide that in the case of legal collection process, that the maker of the note, in our case, the Buyer, will be liable for all fees, expenses and attorney fees.These lines serve two purposes:1) to state the four minimum criteria that the buyer must comply with to satisfy the "Verification of Loan Application", and 2) to state the timeframe agreed to for compliance. 1) to state the four minimum criteria that the buyer must comply with to satisfy the "Verification of Loan Application", and 2) to state the timeframe agreed to for compliance.Within 90 days of the scheduled closing date or knowledge that a dispute exists, whichever occurs first, the broker

shall do one of the following:

disburse the funds upon the written and mutual consent of all of the parties involved;2. disburse the funds upon a

reasonable interpretation of the contract that authorizes the broker to hold the funds. Disbursement may not occur until 10 days after the broker has sent written notice to all parties and licensees;3. place the funds into the registry of any court of competent jurisdiction and proper venue through a concursus proceeding;4. disburse the funds upon the order of a court of competent jurisdiction. LREC §2901.

Lines 83 - 88:The third time period is the number of additional calendar

days a buyer may have to obtain any missing criteria as described in lines 78 through 81. The additional calendar days are inserted in the blank space on line 84 and act as an extension, should the buyer not provide written verification of the loan application within the deadline set on line 82.If the buyer has not complied with the four criteria on lines 78 through 81 because the timeframe on Line 82 has elapsed without meeting the four criteria, the buyer has another opportunity to fulfill the contract. Line 84 provides the buyer with an extension period for compliance. If the buyer cannot provide a written verification of loan within the additional timeframe stipulated on Line 84, the seller may declare the contract null and void. A suggested "reasonable" timeframe for Line 84 is 10 calendar days; however, this is just a suggestion and the period of time may vary, depending on the circumstances in each transaction.If the buyer fails to provide the seller with the required "Verification of Loan Application" within the time specified on Line 82 of the contract, the seller must send the buyer a written notification of the intent to terminate the contract. That written termination notice must specify that the seller intends to terminate the contract if the "Verification of Loan Application" is not provided to the seller within the additional number of days specified on Line 84 of the contract. No other notice is required after that date, and the contract is then declared null and void.The conditions for return of the deposit are . If the Buyer declares the agreement null and void during the inspection period.2. If the Buyer had conditioned the agreement on getting a loan and cannot get the loan AND(a) The Seller has not offered to finance the property; AND(b) The Buyer has complied with the conditions of making timely application and making a good faith effort to obtain the loan; Lines 73 - 76The first time frame period to be identified is the number of calendar days for the buyer to make written loan application. That time period must be inserted in the blank space on Line 74. A reasonable timeframe for a buyer to