Park City Real Estate Trends

By Rob Harris and Todd Anderson

I originally wrote this back in May anticipating implementation August 1, 2015. When the start date was delayed I shelved this thinking this would be addressed by the state or our forms committees. I haven’t seen any resolution to what I think puts our buyers at risk.

As we know the new RESPA rule will require, for contracts written starting October 3, 2015, that the “closing disclosure” be in the hands of the consumer no less than 3 days prior to closing.  As is often the case with new regulations, the implementation of them can have unforeseen and possibly negative results.

In May I attended a class on the new regulation and asked the presenter how an agent should deal with it when the contractual settlement and closing deadlines are delayed as a result of this regulation. The response was that the agent should just ask for extensions. As we all know extensions are not always granted. If the extension is not granted and the settlement and or closing do not occur according by the contract deadline could the seller view this as a breach of contract? Could the seller decide decide to keep the earnest money and accept an offer (better) from another buyer?

I am not an attorney and I don’t know but I am certainly concerned. I have been trained that if something is not part of the contract it doesn’t have standing in court.

Should there be an addendum to the REPC that defines how delays in settlement and or closing as a result of complying with Dodd Frank TRID regulations will be dealt with?. I am sure our brokers and the State will come up with a form that addresses this but until they do should our clients have attorneys draft an addendum to cover this?

An example might be:

1. The buyer and the seller agree that any delays in the Settlement and Closing Deadlines that are a result of complying with the RESPA regulations implemented as of October 3, 2015 will be accepted by both parties. The settlement and closing deadlines will be extended to allow for compliance with the regulation.

Some agents are of the opinion that the chances of there being a delay and the seller opting to cancel the contract are small. I agree but I am unwilling to roll the dice with my client’s money. I have no interest in asking a seller for an extension with earnest money at risk. On the flip side I wouldn’t want this to be something my seller has to think about at the last minute. We should address this when we are writing and negotiating contracts. October 3^rd will be here soon. Please talk to your Brokers if you are an agent and your agent if you are buying or selling a home.