New Forms Define Buyer/Seller Relationships
By Henry Lerner, Esq.
When a buyer needs to settle a property he owns before he is capable of purchasing a new one, his REALTOR® may need to use one of three new forms related to the Agreement of Sale: Settlement of Other Property (Form SOP), Sale and Settlement of Other Property (Form SSP) and Sale and Settlement of Other Property with the Right to Continue Marketing (Form SSP-CM).
Form SOP is used where the buyer has a bona fide Agreement of Sale on his current property but must wait until settlement in order to purchase the new property. This is the simplest of the forms and says that if the scheduled settlement for the current property doesn’t take place as expected, the seller has the authority to terminate the Agreement of Sale.
Form SSP is used when a buyer doesn’t yet have an identified buyer for his current property – and may not even have the property listed yet. By using this form, the seller agrees to take her property off the market for a defined period of time as long as the buyer makes a good faith effort to obtain an Agreement of Sale for his current property within that time period.
Because the seller is taking a risk by pulling the property off the market, the buyer must list the property within a certain time period at a price at or below an amount agreed upon by the parties. If the property is not under an agreement of sale by the stated deadline, the seller gets to terminate the contract. To avoid the possibility that a buyer might enter into a sham agreement just to lift the contingency, this form requires that the seller approve any agreement of sale for the buyer’s property. Generally, this means that the seller would review the primary aspects of the Agreement to be sure that it looks like a bona fide offer for a fair market price from a party who is qualified for the purchase. (PAR recommends using the Seller’s Reply to Proposed Agreement of Sale, Form SRA, for this purpose.)
Form SSP-CM is used in transactions where the parties agree that the seller can continue marketing the subject property during the time that the buyer is looking for someone to purchase his current property. This form provides that at any time after signing (until the buyer has accepted a bona fide offer for his current property), the seller is permitted to accept another offer from any other buyer and automatically terminate the original agreement. The seller doesn’t have to provide a notice to the original buyer before terminating, nor is there a “kick-out” or “wipe-out” clause that gives the buyer a certain period of time to remove the contingency before the seller can move forward with a second offer.
For more information on the use of these forms, get a copy of the guidelines from the Standard Forms section of the PAR web site at http://www.parealtor.org/content/StandardForms.asp.