Article amended as of 4/23/2020
Q. Form updates are usually released in January and July. Why did NVAR release updates in December?
A. The Dec. 1, 2019 release is in direct response to new Bright MLS (“Bright”) rules and recent changes to the Virginia Code.
On Oct. 16, 2019, Bright unveiled a new Off-MLS policy (the “Bright Policy”) to encourage greater competition and cooperation in the marketplace. The National Association of Realtors® Board of Directors approved the MLS Clear Cooperation 8.0 Policy, which is virtually identical to the Bright Policy, during its November 2019 Realtors® Conference & Expo in San Francisco.
The Bright Policy requires brokers to submit listings to the MLS within one (1) business day of “public marketing” of a property. “Public Marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.” The Bright Policy does not apply to marketing commercial, multifamily and land. The Bright Policy does not change the Coming Soon Policy, except that new construction may be able to stay in “coming soon” status for a longer period than previously allowed. As a refresher, the broker may list a property as “coming soon” for up to 21 days, if authorized by the seller. During this period, the broker may not show the property to prospective purchasers.
The Bright Policy impacted several NVAR forms, and volunteer leaders on the Standard Forms Committee acted quickly to make the necessary updates. Listing Agreements still constitute acceptable certification (if not using the Bright waiver form) that Bright will accept if the seller has chosen to go Office Exclusive.
The committee also made several technical changes to comply with recent amendments to the Virginia Code. These updates were approved by the NVAR board of directors at the November 2019 meeting to ensure that the forms would be effective Dec. 1, 2019.
Subsequent to NVAR board approval of the revised forms, Bright announced that enforcement of the Bright Policy was delayed to Feb. 1, 2020. In order to avoid confusion, there will be no Jan.1, 2020 release.
Q. What forms are covered by the December release?
A. The December 2019 release includes revisions to the Residential Sales Contract (K1321), the Sales Contract for Unimproved Land (K1209), the VRLTA Lease (K1354), Exclusive Right to Sell Listing Agreement (K1336), Exclusive Agency Listing Agreement (K1337), Exclusive Right to Sell Unimproved Land (K1355) and Exclusive Right to Lease Listing Agreement (K1281). As a result of these changes, the FIRPTA Addendum and the Pre-Marketing (“Coming Soon”) Addendum to the Listing Agreement (K1369) are no longer necessary and have been removed from the forms library. See page 12 to read more about the December 2019 forms changes.
To ensure the enforceability of transactions, remember to update form templates with each new release!
Q. If Buyer does not intend to occupy the property, does Seller still need to provide the resale disclosure packet/resale certificate otherwise required under the Virginia Property Owners’ Association and Condominium Acts?
A. It depends!
Virginia Code §55.1-1814 of the Property Owners’ Association Act states that unless requested by Buyer, Seller does not need to provide the resale disclosure packet in cases where Buyer is not acquiring the lot as his or her residence (or for the construction of a dwelling unit to be occupied for such purpose). The statute also allows Seller to conclusively rely on a statement in the contract that the Buyer is not acquiring the lot for his or her own residence.
Paragraph 15 of the Residential Sales Contracts contains a representation by Buyer regarding occupancy of the property. If Buyer selects that they do not intend to occupy the property as their primary residence, Seller may conclusively rely on this representation and need not deliver the disclosure packet unless requested to do so by Buyer.
What about Condominiums? Most assume that the substantive provisions of the Property Owners’ and Condominium Acts are identical. This is one area where that is not the case. §55.1-1995 of the Condominium Act lists several circumstances when a purchaser is not required to provide the resale certificate. Conspicuously missing from that list is any exception based on Buyer’s intention to occupy the property.
Best practice when representing Sellers is always to assume the disclosure packet is required. Realtors® who represent investment property Buyers should discuss the risks associated with owning properties subject to a property owners’ association and be sure to timely request the disclosure packet from Seller if clients do not intend to occupy the property.
Q. The parties agreed to amend the Residential Sales Contract to remove all requirements on Seller to comply with Property Owners’ or Condominium Owners’ Associations notices of violations related to the physical condition of Property. To accomplish this change, the parties signed Paragraph 2(B), Checkbox #5 of the Contingencies/Clauses Addendum (K1344). Later, Buyer discovered in the resale disclosure packet that Seller received a notice of violation for failure to pay association dues. Is Seller responsible for the unpaid dues?
Paragraph 20 of the Residential Sales Contract states that “[u]nless otherwise agreed to in writing, Seller will pay any special assessments and will comply with all orders or notices of violations of any … condominium unit owners’ association, homeowners’ or property owners’ association … against or affecting Property on Settlement Date.
Paragraph 2, B, Checkbox #5 of the Contingencies/Clauses Addendum amends the Contract by deleting “[a]ll requirements for Seller to comply with Property Owners’ or Condominium Owners’ Associations notices of violations related to the physical condition of Property” (emphasis added).
While Checkbox #5 may release Seller from violations related to paint colors, fencing, and landscaping, it is insufficient to excuse non-payment of association dues. Unpaid dues are monetary obligations and do not relate to the “physical condition of the property.” Paragraph 25 (Adjustments) also states that condominium unit owners’ association, homeowners’ and/or property owners association regular periodic assessments (if any) … are to be adjusted to the Date of Settlement”.
Unless otherwise agreed to in writing, Seller must resolve delinquent dues violations prior to or at Settlement.
As always, if you have any questions or wish to discuss specific situations, please contact the Legal Hotline at NVAR.com/legalhotline
Daniel B. Harris, Esq. is the NVAR staff attorney.