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Changes to FAR/BAR Contract in April

Starting April 4, 2017 there are some needed changes that will be made to the Florida FAR/BAR contract. The contract will no longer mention "Loan Commitment," instead it is being replaced by the term "Loan Approval." The default time for "Loan Approval Period" will also change back to 30 days from 45 days. The biggest alteration is the removal from the current version of the contract - "this contract is contingent upon buyer obtaining a written loan commitment,"- has been changed, and the "written" component has been deleted.

The new financing clause within the contract mandates that a buyer must promptly notify a seller, in writing, when a Loan Approval is obtained. If a buyer does not obtain Loan Approval within the Loan Approval Period, then the buyer may notify the seller again, in writing, and elect to either terminate the contract or waive Loan Approval. However, the buyer no longer has a unilateral contractual right to terminate the contract for failure to obtain Loan Approval after the Loan Approval Period.

If there is no written communication obtain by seller from buyer during the Loan Approval Period, then it is assumed that the buyer obtained financing. This could result in the buyer's deposit being at risk if he fails to close.

If a seller has received no written notification at all during the loan approval period, the seller may exercise the right to cancel the contract by giving buyer written notice within a three-day period after the buyer's Loan Approval Period has expired. However, if the seller does nothing during the three-day period following the Loan Commitment Period, the seller has no further unilateral opportunity to terminate the contract based on the buyer's failure to obtain Loan Approval or failure to provide the seller a written notice. The bottom line, buyers must keep sellers informed during the new "30- day loan approval" period, otherwise the earnest deposit could potentially be forfeited, or the seller can terminate the contract.

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