Q: Our office has been debating the meaning of the word “Agreement” in Paragraph 8B of the CAR Contingency for Sale of Buyer’s Property Addendum (“COP”) form. See screen shot below:
Some people believe that the word “Agreement” in the second check box must be referencing the COP Addendum itself, while others believe it is the actual Purchase Agreement. Who is right?
A: The correct answer is the actual Residential Purchase Agreement (“RPA”). CAR uses a convention in its forms that is widely used by attorneys and others who create contract documents: Terms that appear in the RPA that start with a capital letter — such as “Agreement” — are specifically-defined terms (see, e.g., paragraph 30.B of the RPA definition of “Agreement”). Although this convention is not actually explained in the RPA (or in the SFAR Purchase Agreement), the Definitions listed in Paragraph 30 of the RPA details the defined terms and all start with a capital letter.
The PRDS Real Estate Purchase Contract (REPC 11/18) explains this convention in Paragraph 29D Terminology: “Words that are used in this Contract that start with a capital letter are specifically-defined terms in this Contract.”
We receive multiple inquiries/complaints regarding the COP form and much of it is a result of disputes regarding the use/misuse of Paragraph 8, the Delayed Notification Right.
For more information on the CAR COP form and our recommended alternative form, see our prior Weekly Practice Tip: Contingent on Sale of Buyers’ Property
PRACTICE TIPS:
- When representing Sellers, if the Buyer’s Agent uses a COP form, be sure to read through it carefully before providing that Addendum to the Seller.
- Pay special attention to paragraph 8.B. Note that there are TWO CHECK BOXES in that Paragraph and the Buyer’s Agent can only choose one of the two boxes. If the last check box is checked, then the Seller is prohibited from giving the Buyer the Notice to remove the Contingency for the sale of their property for the entire term of the “Agreement,” meaning the term of the Purchase Agreement.
- Even if the Seller is willing to have the sale of their property subject to the Buyer selling their property, be sure that the Seller is not agreeing to any type of delayed notification without their informed consent.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.