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GAR Form of the Month
F401 No Financing Contingency
The No Financing Contingency Exhibit F401 (formerly All Cash) provides options for all-cash purchase or financed purchase without a financing contingency. It also details the process for verifying the Buyer's funds, the Seller's right to terminate if the buyer fails to provide required information, and optional appraisal contingency terms, including the Buyer's rights if the property does not appraise for at least the purchase price.
One of the most common errors I see with this Exhibit is agents not properly fulfilling the obligations regarding Verification (or Proof) of Funds. Here's the language from the Exhibit:
Verification of Funds. Within ______ days from the Binding Agreement Date, Buyer shall be obligated to provide or cause to be provided to Seller information describing in specific detail the source of all Buyer’s funds necessary to purchase the Property (“Required Information”). The Required Information shall consist of one or more of the following:
A. A letter or letters from a trust, stock brokerage firm and/or financial institution holding funds, stocks, bonds and/or other assets (hereinafter collectively referred to as “Assets”) of or on behalf of Buyer and dated subsequent to the Binding Agreement Date stating that Buyer has funds in US Dollars of at least an amount specified in the letter and/or Assets on deposit with the institution of a value
specified in the letter, that are sufficient to allow Buyer to complete the purchase of the Property;
B. An account statement or statements from the trust, stock brokerage firm and/or financial institution(s) holding funds and/or Assets confirming a specific amount of funds in US Dollars on deposit with the institution. Such account statement must be for the regular time period that such statements are issued immediately preceding the Binding Agreement Date.
C. If Option 1(B) is selected above, a loan commitment letter from a mortgage lender.
Seller’s Right to Terminate. In the event Buyer fails to provide Seller with the Required Information within the timeframe set forth above, Seller shall notify Buyer of the default and give Buyer three (3) days from the date of the delivery of the notice to cure the same. If Buyer
does not timely cure the default, Seller may terminate this Agreement within seven (7) days thereafter due to Buyer’s default upon notice to Buyer. In the event Seller does not terminate this Agreement within that timeframe, the right to terminate on this basis shall be waived.
I see many agents assume that the funds Buyers are receiving from the sale of their current home satisfies the Verification of Funds wording. Check with your broker and closing attorney if this applies to you! You may want to use a special stipulation to protect your Buyer as technically the Seller has the right to terminate as explained above. If you are the Seller's agent, your Seller should notify the Buyer of the default if they don't provide A,B or C above by the negotiated deadline.
Note: The information provided in this newsletter is for general informational purposes only and should not be construed as legal or brokerage advice.
SS 619 BUYER REQUESTS SELLER PAY BUYER’S BROKER’S COMMISSION (VA LOAN)
Since under the VA Loan program Buyer cannot pay Buyer's Broker a commission, Buyer hereby requests and Seller hereby agrees to pay Buyer’s Broker _________________________________ as the total real estate commission due to Buyer's Broker at Closing. Nothing herein shall be interpreted as a request to alter, modify or change the commission to be received by Seller’s
Broker, if any, that Seller may have agreed to pay Seller’s Broker in any separate written agreement.
SS 620 BUYER REQUESTS SELLER PAY BUYER’S BROKER’S COMMISSION
Buyer hereby requests and Seller hereby agrees to pay Buyer’s Broker _________________________________ as the total real estate commission due to Buyer's Broker at Closing. Nothing herein shall be interpreted as a request to alter, modify or change the
commission to be received by Seller’s Broker, if any, that Seller may have agreed to pay Seller’s Broker in any separate written agreement.
Note: I kept these two Stips as they're very important!!!
Monday, May 27, 2024
Memorial Day
Wednesday, June 19, 2024
Juneteenth
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