GLVAR has published a new Residential Purchase Agreement (RPA) effective February 1, 2012. The previous version (dated 2009) is no longer available.

Several changes and refinements have been made to the RPA:

• Clarification that the buyer must have "Good Funds" at closing (Section 1.F). "Good Funds" is defined in Section 23 (Definitions) as an acceptable form of payment determined by the escrow holder in accordance with NRS 645A.171. Forms of payment could be cash; interbank wire transfer; or a cashier's check from a Nevada financial institution. Check with the title company before closing to determine what form(s) it will accept.

• To help with FIRPTA compliance, the seller is now asked to indicate, as part of the Seller's Response, whether he or she is a foreign person such that the buyer will need to submit the appropriate paperwork for withholding.

• The list of potential inspections (Section 7.C) now includes a column to mark items "not applicable." In addition, an option of an energy audit has been added to the list of inspections the buyer may choose. (This is part of the reason that the Seller's Energy Consumption Evaluation was repealed as the industry agreed to add the option to purchase forms.)

• In an effort to make a licensee's disclosure of interest on the seller's side easier, a separate "Licensee disclosure of interest" paragraph has been added on page 11, under the Seller's Confirmation of Representation. This way, the disclosure of interest in the body of the buyer's offer (Section 11.A) is exclusively for the buyer's side.

• Digital signatures are expressly allowed. As a reminder, both sides must agree to digital signatures for them to be valid under NRS 720. Some asset managers require manual signatures, so even though it's part of the offer, using digital signatures may not be accepted by the seller.

Other minor changes include moving the Earnest Money Deposit Receipt to the bottom of page 10, and bringing back the buyer's agent public ID in the buyer's side Confirmation of Representation.

Buyer Broker Fees

One change that may send agents' hearts racing is the removal of the "Other fees" language in Section 7.H. The change was made to assist with RESPA compliance in the wake of the Busby decision regarding administrative fees. (Click here to learn more.) However, since licensees are required to disclose all sources of compensation, a selection has been added to Section 21 (Broker Fees). When completing the RPA, be sure to check the appropriate box, whether the buyer will or will not pay the buyer's broker additional compensation. An example could be a broker who charges a flat fee component to their compensation, in addition to any percentage commission.

The amount does not need to be disclosed to the other party, simply the source of additional compensation. The amount is always negotiable between the broker and client, and can be put in writing either using a Buyer's Brokerage Agreement or the Notice of Broker Compensation and Invoice.

Click here for a redline version of the form showing all the changes. Additional resources, including the "Understanding the RPA" booklet, a training video and frequently asked questions, are available on the Forms Update page. A live training class for brokers and managers will be held immediately after the Broker Forum on February 10, 2012.

 

This article is of a general nature and is not intended to address any specific legal or ethical situation. Suggestions for revisions to GLVAR forms should be forwarded to the Forms Committee at forms@glvar.org. Legal questions may be directed to NVAR's Legal Answerline at 1-800-748-6999.