Top 7 Things You Should Know about the California Residential Purchase Agreement
Somewhere in the early 1980s I decided to create my own purchase contract to use for sellers and buyers of California real estate. Granted, I was then as I am now a real estate broker and not a lawyer, not licensed to practice law, which writing your own residential purchase contract most certainly falls into, but it was pretty much the Wild West back then as compared to today. Today, I wouldn’t dream of doing such a thing. OK, maybe I’d dream it, but I most certainly would not attempt it. Forty years of experience teaches us a few things, which includes looking back at the idiots we once were.
The thing about writing your own purchase contracts is when a term of the contract is in print, people tend not to challenge it. It seems too official. Unless, of course, we’re talking about the California Residential Purchase Agreement and Joint Escrow Instructions. In which case, nobody even reads it, especially not many Sacramento Realtors. Oh, sure, S.A.R. offers classes on the purchase contract, or the RPA as we call it, but how completely boring — where is the sparkle and pizazz, agents cry.
I’m not sure they realize this is the document that can keep you out of court, out of litigation, and it protects your clients, which are very good reasons in my mind to know the contents of that purchase contract forward and backward. But you know how some people are, la-tee-da guys. If they can figure out where their clients should initial and sign, they figure they’re ahead of the game. Even if it’s the clients that suffer.
So the following tips are for our Sacramento clients. I advise clients to read the purchase contract. Perhaps, ask your agent to give you a copy of the contract before you make an offer on property. Often, there is not enough time for a marathon reading session prior to writing an offer, especially in the midst of multiple offers, which can happen in this seller’s market. Read it in advance. Pay special attention to the following particulars:
- Closing date. It’s noted on page 1 in paragraph D. If you can’t meet your closing date, your contract could expire and the seller might not renegotiate with you.
- Paragraph 3-J-3: By contract default, the buyer has 21 days to remove a loan contingency and cancel a contract without penalty. That time period is negotiable.
- Paragraph 7: Some fees the seller may agree to pay are based on local custom and vary from county to county. Also, realize that although it’s “customary” for a seller and buyer to pay certain fees, “who pays what” is also negotiable.
- Paragraph8: Describes fixtures and notes personal property to stay with the home. Sacramento sellers, did you just give away your refrigerator without realizing it?
- Paragraph 9: Is the buyer an investor or a person who will live in the home? On what specific day and time do the sellers or tenants have to move out?
- Paragraph 14-B1: By contract default, the buyer has 17 days to complete home inspections and cancel the contract without penalty. That time period is negotiable.
- Paragraph 31: How long does the seller have to accept an offer and at which point is the contract considered accepted? Many agents forget to enter their own name in this spot, which means the contract is not legally delivered until the buyer receives it.
This list is by no means comprehensive, but it hits the highlights of the top negotiable items in the California Residential Purchase Agreement. The devil is in the details. It extends beyond the purchase price.