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New Changes for Residential Contract of Sale: Solar Panels, Deposits, and More
There have been some important updates to the Residential Contract of Sale that all real estate professionals should be aware of, especially when it comes to solar panels and deposits. Here is a summary of the October 2021 changes and best practice tips.
Understanding the New Forms
Maryland REALTORS® prepared two new forms, the Solar Panel Addendum to Exclusive Right to Sell Residential and the Brokerage Agreement and the Solar Panel Addendum to Residential Contract of Sale. First, let’s look at the Solar Panel Addendum.
Solar Panel Addendum to Exclusive Right to Sell Residential Brokerage Agreement
Solar panels are becoming a common upgrade to many homes. With that in mind, this form was created to facilitate the sale of a property with solar panels.
Practice Tip: The listing agent should have the Seller complete the form, stating whether the solar panels are owned, leased, or being financed. They need to provide contact information for the entity to whom payments are being made; stating the amount of such payments and any ancillary fees; and providing information on any warranty. Importantly, the Addendum asks the Seller to provide a copy of all solar panel documentation and informs the Seller that such documentation will be provided to the Buyer for review pursuant to the Solar Panel Addendum to the Residential Contract of Sale.
Solar Panel Addendum to the Residential Contract of Sale
This form was created for the Seller to provide information about, and documentation related to the solar panels to the Buyer and to allow the Buyer time to review that information.
Practice Tip: Similar to the Condo and HOA resale package process, the Buyers are provided with a period during which they may review the solar panel documents. The Buyers must then decide to either terminate the contract or proceed with the transaction.
If you are handling the sale of a home that currently has solar panels, it’s important you are aware of these changes to the contract.
Revised Forms: What to Know
Maryland REALTORS® revised the Contracts, the Property Inspections Addendum, the Water Yield Test Addendum, the On-Site Sewage Disposal System (OSDS) Inspection and Test Addendum, and the Escrow Agreement between Buyer, Seller and Escrow Agent. Here is a breakdown of these revisions:
Residential Contract of Sale
1. Page 1, Paragraph 7 (Payment Terms) – Section (a) of the paragraph was modified to allow more flexibility regarding the timing for delivery of the deposit. The Contract will now specify whether the Buyer has delivered the deposit OR whether the Buyer will deliver the deposit within an agreed upon number of days of the Date of Contract Acceptance. Additionally, Maryland law requires a written Escrow Agreement if the deposit will not be held by a Maryland licensed real estate broker. Also, the existing language in Section (c) was changed to bold font to make this legal requirement more visible to the parties.
- Practice Tip: The real estate industry continues to evolve, with offers increasingly being executed electronically and with decreasing numbers of Buyers utilizing checks. The revised paragraph allows the parties to agree that the deposit shall be made within a specified number of days of the Date of Contract Acceptance. Additionally, the parties will state how the deposit is being made, which may be via check, money order, wire transfer, or any other form acceptable to both parties. Page 3, Paragraph 18 (Addenda/Disclosures) – the list of possible Contract Addenda was modified in insert “Solar Panel” consistent with the newly created Solar Panel Addendum to Residential Contract of Sale form.
2. Page 5, Paragraph 24 (Settlement Costs) – A new sentence was added to make the Seller aware that if Seller cannot attend settlement as scheduled, the title company may require the Seller to pay additional costs incurred by the title company in connection with Seller’s request.
- Practice Tip – There are a variety of reasons why the Seller may not be able to attend settlement as originally scheduled. The listing agent should ensure that the Seller is aware of this language and should make sure that the Seller contacts the title company to work out the details—including any additional fees the Seller may be required to pay if Seller cannot attend settlement as originally scheduled.
3. Page 10, Paragraph 60 (Buyer and Seller May Conduct the Transaction Electronically Using Electronic Signatures) – A new sentence was added, requiring the parties to cooperate and re-sign documents if a title company or mortgage company requires wet signatures.
Overall, it’s important to understand these changes and be prepared for your next Residential Contract of Sale. To learn more about these changes, please contact Velocity Title. Our in-house real estate attorneys and experts are here to help you navigate any changes to your processes. At Velocity Title, you’re more than just a number. Contact us today or learn more here.