REINCheck

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VO [00:00:06] You're listening to REIN check with Andrea Rice contracts and industry specialist at REIN, where you get the latest member news and information delivered straight from the source, REIN MLS.

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Andrea Rice [00:00:20] Hello and welcome to REIN Check, I'm your host, Andrea Rice, and today we are checking in with REIN Sales Managers Advisory Committee Member, Lee Cross.

Andrea Rice [00:00:31] And today we're going to be talking about the ten-day settlement extension in paragraph eight of the Standard Purchase Agreement as part of our second episode in a three-part series designed to bring clarity to the Standard Purchase Agreement. Lee, thank you so much for being here today.

Lee Cross [00:00:48] Thanks for having me. Good to be here.

Andrea Rice [00:00:50] Yes. And I know you guys can't see our faces, but you may be familiar with Lee.

Andrea Rice [00:00:56] He often helps out in our broker symposiums and is very generous with his time and knowledge to help get this information out. So thank you, Lee. We always appreciate that.

Andrea Rice [00:01:08] This section of the REIN contract allows the settlement date to be extended under certain circumstances. Can you explain when the settlement extension can be invoked according to the contract?

Lee Cross [00:01:21] Sure, so it's really two times. The one for the buyer's side and one traditionally for the seller's side. On the buyer's side, it's basically if the loan is not ready to go and close. And on the seller's side, it's if we have any title issues that the examiner.

Andrea Rice [00:01:41] OK, so those are the times when it can be extended. So it typically defaults to ten days, but that can be changed, correct?

Lee Cross [00:01:50] Right. Agents, when they're filling out the contract, can put anywhere from zero to however many numbers they can fit in that blank that they want. Typically, it's in the ten-day range. If you know it's going to be a harder loan to get closed then folks will often add

Lee Cross [00:02:09] a couple more days. Go to 15 or 20 days as needed.

Andrea Rice [00:02:15] OK, so that's good to know, you know, it defaults to ten days if you do nothing, but if you need more than 10 days, less than 10 days, whatever your particular circumstance calls for, you have the flexibility to put that in. And you detail the two specific instances that can invoke that ten-day settlement extension.

Andrea Rice [00:02:36] And those are the only two instances, the ones that you detailed that can invoke that extension. Is that correct?

Lee Cross [00:02:44] That is correct. Per the contract, the only time it's supposed to go past the settlement date is if you have a title issue or if the loan is not ready to go.

Andrea Rice [00:02:54] So, Lee, you've been in the business for quite a while and as you know, there seems to be some confusion when it comes to the settlement date extension. And there's some misconception that you can invoke that extension under paragraph eight of the purchase agreement for things other than the two instances that you discussed earlier. Can you shed some light on why there might be this confusion or maybe how the settlement could be extended for other reasons outside of this paragraph?

Lee Cross [00:03:30] So you're 100 percent right. There is certainly a lot of confusion in our local area about that. People sometimes feel they have a blanket ten days to use no matter what, but that's really not the case. And on the buyer's side, with closing the loan, obviously there's a little more wiggle room there because it's not quite as black and white as the title issue. But remember, the buyers already pledged in paragraph six that they will promptly and diligently work with the lender in good faith to try to get there was that's fast as they can to help meet the deadlines. If you're extending the closing date for a reason that's not

Lee Cross [00:04:16] you're waiting on the lender and or title issue, you really probably should look at doing an addendum to keep all the parties on the same page.

Andrea Rice [00:04:25] OK, that's good to know, that's a good point, you know, I actually

Andrea Rice [00:04:31] I had a situation a few years ago where I was selling one home and then buying another home.

Andrea Rice [00:04:38] So obviously I had to close on the one I was selling before I could close on the one I was purchasing.

Andrea Rice [00:04:45] And the person purchasing the home I was selling had some issues with the lender and they actually, you know, invoked that ten-day extension under paragraph eight. And

Andrea Rice [00:05:01] at the time, I guess I didn't see it coming or I didn't think about it, that this was a potential thing that could happen. But of course, when it does happen, it's kind of a domino effect because now I have to wait 10 days to close on this house

Andrea Rice [00:05:15] so I'm going to have to wait those ten days to close down the house that I'm purchasing as well. And I'm just curious, is there anything that you would advise agents that they could do to prepare buyers or sellers from, you know if they see this as a potential, is there anything that agents can do to kind of make it easier or prepare their buyers and sellers for that type of a situation?

Lee Cross [00:05:46] To me, it's a communication thing and giving their clients a heads up early on throughout the process. One of the phrases I use a lot is, you know if February 15th is the day we're aiming for, but we don't always get that day sometimes it goes a couple of days after, we need to be ready to go before then per the contract. But sometimes we're waiting on the lender or lawyers with title issues. I think the more you can warn people, the higher chance you have of not having to invite your client into your house to have a place to stay. So they're not.

Andrea Rice [00:06:23] That's right.

Lee Cross [00:06:24] Which we all try to avoid. So, it's not a perfect system. And there are a lot of things that are out of client's controls, just like your example where you needed your house to sell so you can buy the one. The next one. It comes down often to communication and everybody working together to get it done.

Andrea Rice [00:06:45] Right, right, and I think I think, you know, that in my situation, especially if you had three different agents involved, three different clients, and it really was a matter of communication. And the more you can communicate, I think, because all of the agents communicated so well in that situation that, you know, it kept the temperature low, you know.

Andrea Rice [00:07:08] No one was flying off the handle. The deals weren't falling apart.

[00:07:12] You know, maybe the clients were a little frantic, but the agents were able to keep the temperature low and just get it get everything closed, even though it was a couple of days later than everyone would have wanted. So, I think that clears up the two specific instances when you can invoke that extension under paragraph eight of the purchase agreement. What are some other items that maybe we want to pay attention to in this paragraph?

Lee Cross [00:07:43] So there are a couple other items that are in this paragraph that are important just to have in the back of your mind. One is the buyers can choose whoever they want to represent them in closing, be that a lawyer or title company. The sellers cannot force the buyers to use their lawyer. And that's a state of Virginia code that you cannot contract around. And that's part of what's in the contract. Also, the other one is that both the listing firm, selling firm, and buyer and seller have the right to see both draft and final copies of the settlement statement or whatever we're calling the CD, Alta, HUD. Whatever shows the final financial details, both all parties have the right to get a copy of both the draft and the finalized version, just to both double-check that if their closing costs that's being used, that they're actually being used per the agreement. And the real estate company's need them for our files.

Andrea Rice [00:08:44] Yes, great. Those are some good things to keep in mind when you're thinking about the contract and this particular section. Great points, Lee. Before we wrap up, is there anything additional that you would like to add?

Lee Cross [00:08:58] So as we talked about a couple of times, communication is so important when you're dealing with issues and moving parts. Any time you're buying and selling houses is stressful. As the professionals, it is our job as much as reasonably possible to help keep the emotions and stress out of the transactions, especially when you get down to closing dates, when theoretically the buyer and seller both rowing the boat in the same direction, we both have the same goal. So, it's hard to overcommunicate. And it also helps as you go, just to make sure everybody's taking a deep breath and you're working with the other side. And keep in mind, moving is hard, right? They spend weeks packing everything up, cleaning houses, and it's stressful for everybody. So, this is really your time to shine as a professional and help get it done.

Andrea Rice [00:09:54] Yeah, and I would like to say that I was a model buyer and seller in that situation, but I'm pretty sure if you ask my agent, I was not, right? So, the agent plays a very important role in, you know, just keeping everyone calm like you said.

Andrea Rice [00:10:12] And it is stressful, but it's at the end of the day, you know, like you said, if that's what needs to happen if a few more days need to be tacked on to get the deal done, I mean.

Lee Cross [00:10:26] That's just what it is, right, just a few more days and. Everybody keep working together and it tends to work it. And you also should encourage your lender and or if you're on the seller side, your lawyer title company to have good open lines of communication with the other sides as well. It really comes down to an information thing at the end. And the sooner you know you're in trouble or the closing settlement dates in trouble, the sooner you let the other side know is always appreciated.

Andrea Rice [00:10:57] Right. Well, thank you, Lee, and thank everyone out there for listening. If you enjoyed this episode

Andrea Rice [00:11:06] please be sure to check in next time when we continue our three-part series designed to bring clarity to the purchase agreement. We'll be checking in with SMAC's Kelly Corbett to discuss paragraph 13 of the purchase agreement to gain a better understanding of what is included in the cap.

Andrea Rice [00:11:21] And if you missed episode one where we talked about items to convey, I invite you to go to REINMLS.com/podcast and check that out. And as always, if you have any suggestions for our Sales Managers Advisory Committee, be sure to reach out to us at SMAC@reininc.com and we will get your suggestion on an upcoming meeting agenda.

Andrea Rice [00:11:44] Thank you all and have a great rest of your day.

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VO [00:11:51] You've been listening to REIN check with Andrea Rice, stay in the know from those who know. Delivered straight from the source, REIN MLS.

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