New State Contract

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Differences between the New Castle County contract and the new State-wide contract

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Financing Contingency

New

The new state wide contract adds obligations and provides direction when obtaining mortgage commitments how they will be handled in Kent County which were not previously in the Kent County Contract. Here are the additions to the financing contingencies:

  1. The contingency will be based on the terms agreed to in the contract. Any commitment given to the buyer that differs from that specified in the contract, the buyer may void the contract if the buyer acted in good faith.
  2. Seller may void the contract if (1) the commitment imposes financial obligations on the Seller that were not agreed to, and Seller does not then agree to, and/or (2) is contingent upon the sale of real estate owned by the Buyer. Seller may cancel the contract, in writing, within 5 days after receipt of a copy of the commitment.
  3. if a commitment is not obtained by the Buyer within the time specified in the contract, Seller from that time forward may void the contract in writing. However, should the Buyer receive the commitment after the time specified in the contract and the Seller has not yet voided the contract, the Seller’s right to void the contract will have been waived.

Old

The old Kent County contract is silent in regard to the above obligations. All contingencies in the old contract are still in effect with the new contract, however the Buyer and Seller can agree to the amount of days the Buyer has to apply for a commitment. The 10 day requirement in the old contract has been removed.

Disbursement of Deposits

This paragraph was not in the previous contract. The new contract explains how the disbursements of buyers deposit money will be handled at settlement or otherwise. Practically speaking, this is how it was always handled, however it was never explained in the actually contract.

Deed Preparation

This is an option that was not included in the previous contract. The seller was required to pay for the deed preparation; however the new contract allows the parties to decide who will pay for the deed preparation.

Notice

New

The new contract explains further that a verbal communication to the party or their agent is sufficient for notice. Additionally, a facsimile, electronic record with electronic signature or photocopy of a signed original shall constitute an original.

Old

Notice was only mentioned in the miscellaneous section, which stated that if there was more than one Buyer or Seller, then notice to one was notice to all.

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Time is of the Essence

New

Time is now of the essence in Kent County for all dates in the contract, HOWEVER, final settlement is not of the essence and may be extended for a reasonable time to “secure a survey or prepare the necessary legal and financial documents.”

Old

Previously, time was not of the essence in Kent County. A reasonable time after the settlement date is allowed if it did not go to settlement per the date on the contract.

On Site Inspections

New

The new contract specifically includes the septic, well water, radon, and swimming pool inspection contingencies. They will become a part of the contract, but only if they are marked off or checked on the original contract. The definition for a major defect has not changed with the new contract.

Seller shall notify Buyer within 5 days of receipt of a major defect of the above contingencies whither Seller will (1) correct the issues at Seller’s expense; (2) refuse to correct; or (3) offer to negotiate with Buyer but all negotiations must be complete within 5 additional days. If no agreement has been made then Seller has refused to correct.

Buyer must then notify the Seller within 5 days of receiving Seller’s notice whether Buyer will (1) accept property with the defect; or (2) declare the contract null and void. Buyer’s failure to provide written notice will result in Buyer accepting the property as is with no abatement of price.

Old

The “walk through” clause has not changed from the old contract to the new. The buyer is still responsible for scheduling the walk through. The old contract does not discuss the following contingencies; septic, well water, radon, and swimming pool.

Property Inspections Contingency

New

Now the Buyer and Seller will negotiate the time period for inspections and subsequent negotiations should problems arise during the inspection.

If there are issues that arise, the Buyer must provide in writing a request for the repairs and provide the relevant parts of the inspection report. Seller may then, (1) agree to correct defects by a licensed contractor, which should be completed at least 2 days prior to settlement with written proof provided by the Seller to the Buyer; or (2) refuse to correct; or (3) enter into a mutually agreeable written agreement with Buyer providing for particular repairs and/or credit to Buyer at Settlement.

If the Seller refuses to correct, fails to respond to the Buyer’s request in writing, or doesn’t enter into an agreement with the Buyer, Buyer may one day after the date for subsequent inspections and negotiations accept the property as is in writing or the contract will be void.

The new contract further explains that general statements such as “electrical system shall be in working order at the time of settlement,” will not obligate the Seller to repair items noted in the inspection report unless Seller agrees to make repairs according to the terms of the specific paragraph in the inspections report.

Seller will not have to repair anything that is fully disclosed in the seller’s disclosure.

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Old

Buyer had ten days from execution of the contract to complete the home owner’s inspection. Buyer then had 5 days to give the report to the Seller/Listing agent. Seller then had 10 days to notify the Buyer in writing that Seller will correct the problems at Seller’s expense or not. Buyer then had 5 days to accept the property as is if Seller chose not to correct the problems or void the contract.

Wood Destroying Insect Report

New

Buyer is now responsible for the cost of the report. Buyer will then deliver the report at least 15 days prior to settlement. If there is infestation, Buyer may then inspect the structural integrity of the property and proved estimates for repairs at the Buyer’s expense.

If the cost to repair exceeds 10% of the purchase price, Buyer may then void the contract.

If the costs do not exceed 10% then Seller shall have the option of treating the infestation and having the repairs corrected by a licensed contractor at Seller’s expense prior to settlement. Seller has 5 days to notify Buyer in writing whether Seller will correct the issues. After the treatment and repairs the Seller will provide a written statement from the contract that all repairs are completed and the structure is no longer impaired. Buyer, at Buyer’s expense, may hire a contractor to accompany the Seller’s contractor while the work is being completed.

If the Seller elects not to correct the issues, or doesn’t respond to the report, Buyer may proceed with settlement without reduction of the price or declare the contract null and void. Buyer must deliver this notice in writing within 5 days after Seller’s written notice or failure to respond.

If Buyer doesn’t declare this null and void, there shall be no liability of the Seller for the infestation or damage.

Old

Seller was responsible for the cost. The report was to be delivered at least 15 days prior to settlement. Within 5 days of receiving the report, the Seller, if there was infestation, could correct the issue at their expense or refuse to correct. At this point the Buyer had 5 days to let the Seller know that they would accept the property as is or to void the contract.


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