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| Colorado Real Estate Contract and Date Management This information should further clarify the often complex language found in a Colorado "Contract To Buy and Sell Real Estate." Colorado is one of the few states where the Real Estate Commission has certified the documents that all licensed brokers utilize in a transaction (excepting development specific or specialty forms). This process is thoroughly analyzed and modified on an annual basis and all Colorado brokers are re-trained annually on changes to the commission approved forms. Colorado is also one of the very few states that requires all of its real estate practitioners to be licensed brokers, thereby requiring a higher level of education and a more rigorous licensing process. With its progressive and education oriented atmosphere, Colorado is a leader in the country in providing a thorough and secure transaction process that is fair to both buyer and seller. As you go through the process of buying or selling property in Colorado, the following should be taken into account as it pertains to the "Dates and Deadline" section of your agreement. This matrix is the foundation of the Colorado contract and provides a synopsis of the important and time sensitive elements of the agreement. Please read your individual contract carefully as the information that follows is general in nature to managing the buy/sell process, while each contract is different and individual contractual nuances are infinite. Your contract has important legal consequences and all parties should consult legal and tax or other counsel before signing. Item No. 1 - Alternative Earnest Money Deadline (reference 4.2.1) Typically an earnest money deposit is an essential element to the transaction process and the contract is not considered to be "executed" without the delivery and deposit of earnest monies. However, both parties can agree to an alternate date, other than the date both parties agree to the terms of the agreement, for earnest monies to be delivered. If both parties have agreed on an alternate date, it will appear here. Earnest monies must be delivered either by the date the contract is signed or this date to be considered "under contract." Item No. 2 - Loan Application Deadline (reference 5.1) If the subject property is going to be purchased with funds from a loan, the Buyer must make a verifiable application with a lender by this date and must have followed through in a timely fashion with all lender requirements. If a Buyer fails to follow through with this requirement in "Good Faith," the Buyer's ability to terminate the agreement based on the loan conditions can be in jeopardy and earnest monies deposited may be forfeited in the event of a termination. Item No. 9 - Appraisal Deadline (reference 6.2.2) This date will most often precede the Loan Conditions Deadline, because it is an essential element to obtaining a fully committed loan document from a lender. If you have an appraisal contingency in the contract, you must have the appraisal done and evaluated prior to this date in order to ensure that the home either "appraises" at or above the value you are paying, or you exercise your right to terminate the agreement based upon the home's failure to appraise. Lenders typically arrange for the appraisal, unless you're paying cash, and you'll want to make certain you are following-up with them and that they are well prepared to get the appraisal back in advance of this date. Item No. 3 - Loan Conditions Deadline (5.2) This is one to watch carefully. It is a major Buyer contingency date in the contract and once the date goes by your earnest money deposit is further at risk should you decide to terminate the agreement at a later date or fail to close . If you are to pay all or part of the purchase with a new loan, you have until this date to terminate the agreement if you are not able to qualify for, or find a loan with conditions acceptable to you within the parameters of the "Purchase Price and Terms" (reference 4). If you terminate with the Seller in writing prior to this date, you will typically receive a refund of your earnest money deposit. It is important to make sure the information under the "Purchase Price and Terms" as it pertains to the loan you'll attempt to qualify for is accurate and acceptable to you. If, for instance, you have indicated you would accept a loan up to a certain percentage interest rate, you cannot later claim you are terminating because the interest rates in the market are below or equal to that rate. By this date you must receive from your mortgage broker or lender an unequivocal and unconditional commitment to lend on the property without any contingencies, and that commitment must be in writing. If the lender isn't committed to the purchase, then you can possibly lose your earnest money if they fail to fund at the time of closing. This is particularly difficult to obtain from many out-of-state lenders, because they don't understand this particular section of the Colorado contract and often put their customers at risk by their ignorance. Item No. and 11, 12, 14, 17, 21- Title, Document Request, CIC Documents Deadline and Off-Records Matters Deadlines, as well as Seller's Property Disclosure Deadline We lump these together because essentially they function similarly. If you are a Seller, you're obligated to provide all documentation requested within the terms of the contract by these dates (usually occur on the same date). Failure to provide this information puts the contract in jeopardy and could make it unenforceable. If you are a Buyer, make sure you receive this information to give you enough time to review in advance of your objection deadlines detailed in the following paragraphs. Item No. 15,16, and 18- Title Objection, Off-Records Matters Objection, and CIC Document Objection Deadlines Once again these are shown together because they are basically part of the same process. In short, if you have included any of these contingencies in your contract, then you must object to them if you're a Buyer by these dates, if you find anything objectionable (usually occur on the same date). Objecting to documentary elements of a community or pertaining to a purchase (Covenants, By-laws, financial reports etc...) requires a written termination of the contract and usually entitles a Buyer to a refund of their earnest money deposit if that termination is provided in advance of these dates. For Sellers it's just one more hurdle to getting a firm commitment to buy from the Buyer. It may be obvious by now, but Colorado is a Buyer-friendly state, and there are many protections in the Colorado contracts for Buyers. Item No. 13 - Survey Deadline This is a commonly misunderstood provision in the Colorado contract. It refers more to the issuance of the Title Commitment and the actual plat of the property than it does to a "physical" survey done on-site by a qualified surveyor. We modified your agreement in additional provisions to tie this section to a physcial on-site survey in order to give you an opportunity to view the property and it's relevant boundaries and corners. Item No. 14 - Survey Objection Deadline On or before this date you must review the "survey" as described in the additional provisions of this contract. If something therein is deemed uacceptable by you, we must provide written notice of the issue to the Seller and the matter will be deemed and unsatisfactory title condition. Item No. 22 - Inspection Objection Deadline (reference 10.2) This, as they say, is the killer-app of the Colorado Real Estate contract. For Buyers it's typically the last opportunity to terminate the agreement without penalty after either personally or professionally inspecting the property. It is strongly suggested that you hire a professional home inspector if you're purchasing an improved property (single family, condo, townhouse etc...), as they are trained to identify problems that may not be clearly visible to the layman's inpsection. One of two things happens before this date. One, the Buyer issues a notice to correct and the contract enters another area of negotiation where Buyer and Seller decide what will be fixed or credited for prior to closing. Or two, the Buyer terminates the contract and typically receives a refund of their earnest money. The Buyer can terminate subjectively in this stage of the process and does not have to give a reason, hence the killer-app. Sellers, once you get past this and the Resolution Deadline detailed below, you've usually got a fully committed Buyer on your hands, or at least a fully committed earnest money deposit. Item No. 23 - Resolution Deadline (reference 10.3) This is the date that the Seller must respond to any "notice to correct" issued at or before the Inspection Objection Deadline" above. Sellers can agree to fix all items in the notice, some of them, none of them, etc... Seller can also suggest a credit at closing in lieu of repairs. Until both parties sign the Inspection Notice document and agree to all of its amendments, the contract can be terminated by the Buyer. Once all parties have signed all components of the Inspection Notice and Resolution, the contract moves forward and typically enters the closing phase. Item No. 24 - Property Insurance Objection Deadline (reference 10.5) Though rarely used, this provision of the contract provides another contingency for the Buyer. It enables the Buyer to seek out insurance pertaining to their purchase and allows the Buyer to subjectively accept or reject the terms of said insurance. The Buyer may terminate the agreement based upon their findings if done in writing. It's a protection for the Buyer of a home that is either excessively expensive to insure (in a flood plane, on a cliff's edge, in the path of an avalanche etc..) or uninsurable. Item No. 25 - Closing Date (reference 12) The day we've all waited for. Colorado is a table funding state, so Buyers have to bring all funds, including loan proceeds, to the closing or they are in jeopardy of losing their earnest money deposit. If the Buyer has closely followed the terms of the rest of the dates in the contract, this last part is all about smiles and signatures. If any of the above has been neglected, well, it's can be a very different day. The Seller is not obligated to extend a closing if a Buyer fails to perform and can techinically keep earnest money funds and re-list the property. Don't forget to bring a driver's license to the closing and certified funds to the table for any remaining cash balance. For out-of-state or out-of-area Buyers, it is often advisable to do a remote closing. Most title companies will forward all documents several days in advance of closing with instructions on how to complete them. This actually tends to give you more time to review what you're signing and ask any pertinent questions. Sellers can close remotely as well. | |
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