New Forms Cover Commercial Sales, Termination, Appraisals and SSNs
By Henry Lerner, Esq.
Several new or revised forms approved by the Standard Forms Oversight Committee have just been released or will be released this month. To get a sample copy of any form and a copy of the Guidelines for Preparation and Use, please go to the Standard Forms section of the PAR web site.
Commercial Agreement of Sale
The Commercial Agreement of Sale (Form A/S-C) is one of the last remaining legal-sized forms to be converted to letter-size format. Along with its changed paper size, the form was also updated to maintain consistency with the style and format of the residential Agreement.
A major goal of this update was to not change the substantive content of the form, however, some of the formatting changes were significant enough that commercial practitioners should definitely take a few minutes to reacquaint themselves with the form.
Appraisal Contingency
The Agreement of Sale Subcommittee has worked for a couple of years to develop an appraisal contingency. A few complex versions were floated to members at various stages in the drafting process but it has been a difficult process to find a consensus on this particular form. After much work, a newly simplified version of the form has been approved for release.
The new Form ACA makes an Agreement of Sale contingent upon the property being appraised at or above a value agreed upon by the parties. If the appraisal comes in at or above the stated amount, the buyer agrees to move forward with the transaction. If the appraised value is below the stated amount, the buyer has the right to terminate the Agreement unless the parties reach some other mutually acceptable agreement. Failure to terminate the Agreement waives the buyer’s rights under the contingency.
Social Security Number Authorization
The Pennsylvania Social Security Number Privacy Act will go into effect on December 26. A primary element of this new law is that it is a summary criminal offense to display an individual’s Social Security Number (SSN) to anyone without a valid reason to see it.
To balance the legitimate needs for a client’s SSN in a transaction against the privacy requirements of the new law, PAR is recommending that brokers either not collect the SSN or that they limit how and where it is collected. For those who will get a client’s SSN, PAR has created a new SSN Authorization form (Form SSA) to be the single point of collection for this information. Ideally, a broker will have the client fill out this form once – a different form for each individual client – and the form will be flagged in the file as the only time that information will be collected.
(For more information on the law, go to www.parealtor.org)
Termination and Release Forms
An increasing number of inquiries to PAR and to the PAR Legal Hotline indicated that when buyers or sellers had the right to terminate an Agreement of Sale they were often attempting to do so by sending a release form to the other party instead of sending an actual termination letter. To address this situation, PAR has created a new form called the Notice of Termination of Agreement of Sale (Form TER).
To use Form TER, the terminating party would identify the basis for termination – the paragraph number or addendum that provides the right to terminate – sign the form and deliver it to the other party. Because a termination is unilateral, it isn’t necessary for the non-terminating party to agree to the termination or sign the form; the termination is effective when delivered.
Form TER is printed with a somewhat revised Agreement of Sale Release and Distribution of Deposit Money form (Form REL) on the bottom of the page. While the instructions in Form TER clearly state that the parties aren’t required to agree to release the deposit money in order for the termination to take effect, the Release form is integrated onto the page to help the parties move from the termination to a final resolution of the transaction without needing to pull out a separate form. For those instances where a different termination form is used, or where the parties delay their agreement to the distribution of the deposits, Form REL is also published as a standalone form.