Effective July 1, 2016

1. K1321 – Residential Sales Contract 
a. Deposit.
The new language clarifies that the deposit needs to be delivered to the escrow agent and not the real estate licensee in order to satisfy the terms of the Deposit paragraph. 
b. Virginia Condominium Act.
This paragraph has been updated to comport with the new laws. The Condo Act now allows a buyer to void a contract after receipt of the resale certificate OR receipt of a notice of non-availability of the resale certificate. 
c. Foreign Investment in Real Property Tax Act (FIRPTA).
This paragraph was added to the contract to address circumstances under which the seller is a foreign person for taxation purposes and thus subject to FIRPTA. If the Seller is a foreign person for taxation purposes, then in addition to checking the appropriate box in this paragraph, the seller will have to complete the FIRPTA Addendum – K1370.
d. Wood Destroying Insect Inspection.
This paragraph was updated to comport with the industry practice and the inspection report provided by the pest inspection companies. The validity of the report was extended from 30 days to 90 days. In addition, the seller will now have to provide written evidence of treatment and repairs, if applicable.

2. K1370 – FIRPTA Addendum
This is a new addition to the NVAR forms library, created by the committee at the request and with the input of the NVAR Attorney Roundtable. An increase in foreign buyers and sellers has created a need to address FIRPTA in the NVAR contract. FIRPTA is a complicated federal law that affects the obligations of the parties under the contract. These obligations are disclosed in this new addendum to allow the parties to get a head start on the process and ensure a smooth and timely settlement.

3. Financing Contingencies and Notices for their Removal
a. Conventional, VA and FHA Financing Contingencies – K1339, K1340 and   K1349. 
The changes to these contingencies represent a major shift in the mechanics of the financing contingencies in our contracts. A contract with a financing contingency will continue to be contingent on financing until the financing deadline. Once the financing deadline passes, the contingency will continue until the seller, at the seller’s option, sends a notice to the buyer alerting the buyer that he or she has three days to either void the contract or proceed with the contract without a financing contingency in place. So if the buyer, after receiving the seller’s notice, does nothing, then the contract is no longer contingent on financing and the buyer no longer has the protection of the financing contingency. The buyer must decide whether he or she will void the contract or take the risk of no longer having the protection of the financing contingency. However, the parties may agree to other terms and negotiate some other remedy. 
b. Seller’s Notice Requesting Removal of the Financing Contingency – K1371.
This new form will allow the seller to send a notice to the buyer stating that the buyer has three days to void the contract or the financing contingency will expire and the buyer will proceed to settlement without the protection of the financing contingency. 
c. Buyer’s Notice Removing the Financing Contingency – K1331.
This form has been updated to allow a buyer to remove any of the financing contingencies (VA, FHA, and Conventional) without having to show proof of funds or a written commitment letter. 

4. K1335 – Seller Financing Addendum
This form was updated to reflect current market practices. It covers four major areas. (1) The first paragraph requires the parties to agree as to whether seller financing will be a first, second or third deed of trust. The addendum then allocates the responsibility for drafting the required documents, indicates which version of the documents will be used, and who will pay for the drafting of these documents. (2) The second paragraph describes basic loan terms:  amount, payment of principal and interest, the term and any pre-payment terms. (3) The third paragraph addresses taxes and insurance escrows. (4) The fourth paragraph addresses the requirement for buyer’s submission of credit documentation and approval by the seller. The buyer has 10 days from the date of ratification to provide the seller with credit documentation (defined by agreement of the parties). The buyer also grants the seller the right to obtain the credit documentation from third parties. The paragraph then provides a remedy in the event the buyer fails to provide the required credit documentation, and a remedy in the event of material changes in the buyer’s financial condition prior to settlement. 

5. K1297 – Useful Information about a Transaction
This form was updated to reflect the addition of a FIRPTA paragraph and addendum to the Residential Sales Contract.

6. K1207- Disclosure of Brokerage Relationship to Unrepresented Parties
This form was updated to comply with the changes to the Agency statute in the Code of Virginia, which will become effective July 1, 2016. The updated statute does away with the requirement to use the disclosure form in commercial transactions. This form will now only be required in residential transactions. 

7. K1363 - Disclosure of Dual Agency or Dual Representation in a Commercial Transaction
This form was updated to comply with the changes to the Agency statute in the Code of Virginia, which became effective July 1, 2016. The updated statute eliminates the previous classifications of licensees for commercial transactions. Commercial agents will now act as agents or independent contractors. They will are no longer known as standard agents and no longer able to practice as a limited service agent.
  
8. K1346 – Understanding Your Rights under the Residential Property Disclosure Act
This form was updated to comply with the changes to the Residential Property Disclosure Act in the Code of Virginia, which will become effective July 1, 2016. The statute was amended to add to the list of disclosures, that the owner makes no representation about covenants and restrictions which may affect the property, or to zoning and permitted uses of adjacent parcels. It advises the buyer to exercise due diligence pertaining to covenants and restrictions that may be recorded in land records that affect the real property or any improvements located on the property. Similarly, the law advises buyers to exercise due diligence in regard to the costs associated with maintaining, repairing or inspecting any wastewater system, including any costs or requirements related to the pump-out of septic tanks. 

9. K1299 – Request for POA packet and  K1024 – Request for Condo documents
The form was updated to comply with recent changes in the Property Owner’s Association Act and the Condominium Act. The form now tracks the statute’s specification as to whom the owner of the property can have copies of the POA/Condo packet sent to. In addition, it has shortened the number of days that an owner has to pay for the packet, from 90 to 60 days. The association may charge the owner directly if settlement does not occur within 60 days of the packet delivery. 

Sarah Louppe Petcher is a general counsel for NVAR