When it comes to residential real estate transactions in Florida, two primary contracts are typically used: the FR/BAR (Florida Realtors/Florida Bar) and CRSP (Contract for Residential Sale and Purchase) contracts. Each has unique strengths, with FR/BAR offering a more comprehensive approach and CRSP providing a streamlined alternative. Below, we’ll explore the first sections of the FR/BAR contract and compare them to the CRSP contract to help you determine which might best suit your transaction.
Section 1: Parties and Property Description
The FR/BAR contract begins by identifying all parties involved in the transaction, including buyers and sellers. This section requires their full legal names to ensure clarity and enforceability. It’s advisable to look up the current vesting deed to verify ownership, which can be done by visiting the property appraiser’s website for the respective county.
Next, the contract includes a detailed property description, covering essential details like the full legal address, parcel identification number, and any other identifiers that help distinguish the property. An important aspect of this section is distinguishing between real property—the land and any permanent fixtures, such as built-in appliances, cabinetry, or landscaping—and personal property, which includes movable items like furniture or décor. The FR/BAR contract allows the buyer and seller to specify which personal property (if any) is included in the sale to avoid misunderstandings.
The CRSP contract includes similar elements, but be aware that there are differences in the list of personal property items that are included in the purchase of the property. For example, the CRSP contract includes the washer(s) and dryer(s), while the FR/BAR does not, but the FR/BAR includes the thermostat, doorbell, television mounting hardware, and storm shutters, while the CRSP does not. It is important to read through the personal property section of both contracts when drafting or reviewing an offer for your clients.
Sections 2-6: Purchase Price, Time, and Occupancy
The FR/BAR contract specifies the purchase price, which is crucial for both parties. This section breaks down the total price into components, including the initial deposit, additional deposits, financing amount, and the balance due at closing. This detailed breakdown fosters transparency and clarity, helping both parties understand how the payment will be structured throughout the transaction.
Additionally, the contract outlines the time for acceptance, establishing a clear timeframe in which the offer must be accepted before it expires. Once both parties sign and the executed contract is delivered to all parties, the effective date is set, triggering other important deadlines, such as financing and inspection periods. The closing date is also specified, with provisions allowing for extensions under certain circumstances, such as financing delays or other contingencies. This flexibility makes the FR/BAR contract adaptable, ensuring parties can accommodate changes without needing major amendments.
The FR/BAR contract also specifies that the Seller shall deliver occupancy and possession of the Property to the Buyer free of all tenants, occupants, and future tenancies, and the property shall be free of all personal items and trash. If the Property is subject to a lease post-closing, box 6B must be checked. If the Property is subject to vacation rentals post-closing, Rider DD must be attached to the Contract. The CRSP contract covers similar terms regarding the purchase price, acceptance, effective date, and closing date but is generally less detailed. These terms are found in Sections 2 and 4 of the CRSP contract. The simplified structure may work well for straightforward transactions; however, if the closing needs to be rescheduled or there are specific financing considerations, the CRSP contract may require amendments that could complicate the process. For those expecting possible adjustments, the FR/BAR contract’s detailed provisions provide a more comprehensive safety net.
Section 8: Financing Terms
The financing terms in the FR/BAR contract provide comprehensive options, allowing buyers to specify the type of loan they intend to use, such as conventional, FHA, or VA loans, the term, and the maximum interest rate. The contract includes a loan approval period during which the buyer is responsible for securing financing. This section also details protections for both parties if financing cannot be obtained, including conditions under which the buyer may be refunded their deposit or when the seller has the right to terminate the agreement. FR/BAR’s detailed financing terms make it a solid choice when financing is a key element of the transaction.
In contrast, the CRSP contract provides more basic financing terms, typically offering less extensive contingencies. The CRSP financing section (Section 3 of the CRSP contract) is simplified as are the conditions required for loan approval, which is called Loan Commitment throughout the financing section of the CRSP contract. For more complex financing scenarios, the FR/BAR contract’s additional detail is advantageous; however, CRSP may be preferred by buyers or sellers seeking a straightforward contract without extensive financing stipulations.
Section 9: Closing Costs
This section specifies who pays for what at closing. The FR/BAR contract provides default assignments for costs but allows customization. Key points include:
- Seller vs. Buyer Responsibilities: Defaults clarify the division of expenses, but parties can negotiate who covers items such as title insurance, transfer taxes, recording fees, and HOA transfer costs. See the bullet point lists in Section 9 to see the defaulted expenses.
- Repair Limits: The contract includes thresholds for repair costs the seller is obligated to cover.
- Home Warranty: Buyers may negotiate for a home warranty to cover potential post-closing issues.
- Special Assessments: The special assessments in this section of the contract refer to assessments imposed by a public body (a municipality), not an HOA or COA.
Conclusion
The first six sections of the FR/BAR contract and the first four sections of the CRSP contract set the stage for successful real estate transactions in Florida by defining essential elements clearly and concisely. Listen to our latest podcast episode for more insights from Ashley and Dion about these sections of the Florida Residential Contracts!