THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, September 1, 1996 TAG: 9608290184
SECTION: CAROLINA COAST PAGE: 39 EDITION: FINAL
COLUMN: Real Estate
SOURCE: Chris Kidder
LENGTH: 102 lines
An Outer Banks Realtor complained to me recently about the new ``Offer to Purchase and Contract Form'' (Standard Form No. 2) developed over the past 18 months by the North Carolina Association of Realtors in conjunction with the North Carolina Bar Association.
At first glance, the copy-intensive, two-page form seems to replace a relatively simple one-page form introduced in 1987 for most transactions involving single-family homes and homesites. Prospective buyers and sellers should begin seeing it any day.
The Outer Banks Association of Realtors has ``strongly recommended'' that its members begin using the form on Sept. 1, says OBAR executive officer Cheryl Killgore.
But the old form relied on a page of standard provisions which appeared on its backside. ``Unfortunately, a lot of consumers didn't read them or, in some cases, may not even have received a copy of the back page,'' says Richard Dana, chairman of the NCAR committee responsible for creating the new form.
The new form incorporates both of the standard provisions and addresses lead-based paint, property disclosure, home inspection, association assessments and other details, which have emerged as issues since the old form was created. Other items were moved to one of the 10 standardized addenda that accompany the new form.
``The vast majority of our members are excited about the new form,'' says Killgore. ``They feel the form protects everyone.'' Even before the official OBAR recommendation, several Outer Banks real estate agencies were planning to use the form.
The ``Offer to Purchase and Contract Form,'' while endorsed by NCAR and NCBA, is not required for an offer or contract to be legally binding. But since North Carolina law prohibits real estate agents from drafting contracts, they must stick with a standardized form or use some other contract form prepared by an attorney.
While protection is an important function of any written contract, the sheer number of words in this improved contract may discourage consumers from reading it. Having been on the consumers' side of the desk, I know that trying to comprehend pages of legalese - while the agent sits waiting and watching - is an exercise in futility.
Agents who want to be truly consumer-friendly will either read through the form point by point with their customers or usher customers to a quiet corner somewhere, tell them to read the contract thoroughly on their own, and leave them to do the job at their own pace.
Those who take the time to read the contract in its entirety - and every buyer or seller should - will find the form is reasonably easy to follow. It scored a low 18 on the Kidder Adverbial Excess Scale for the use of herein, hereto, therefrom and words of similar pomposity; the standard North Carolina Deed of Trust surpasses that score in less than one page.
In large letters right above the signature lines, the new form says: ``If you do not understand this offer to purchase and contract or feel that it does not provide for your legal needs, you should consult a North Carolina real estate attorney before you sign it.''
``I got a lot of static about that statement,'' says Dana. ``At first, as a real estate agent, I wasn't sure how I felt about it. But I decided that it's really just good risk management.''
The Realtor who complained about the new form felt that prominent advice, coupled with the length of the form, might be a subtle move on the part of the bar association to increase the role for attorneys in run-of-the-mill residential real estate transactions. More time spent means more hours billed. The consumer is the one who pays, he said.
Even though the real estate industry has spent a lot of time and money trying to create the perfect contract - and changing the forms every two or three years because it can't be done, said the Realtor, he'd like to see more emphasis on agent and consumer education.
Whether informed agents and consumers would cut down on the real estate transactions that end up in court is as open to debate as the premise that a new form will reduce one's legal risks.
The reason you can't write a perfect contract is because somebody, somewhere, always finds a way to press the letter of the law beyond current interpretation: Education and new forms don't change that. Once loopholes are found, people use them.
The new form doesn't change the process of making or accepting an offer on a house - it simply spells it out in more detail. Before you call an attorney, ask your real estate agent to explain what you don't understand. If the agent can't answer your questions, ask to speak to the broker-in-charge.
Real estate agents can't give legal advice but, as in the past and barring unusual circumstances, most buyers and sellers don't need legal advice at this point.
But if your questions aren't answered to your satisfaction, take the advice on the new form: Consult a lawyer. Buying and selling property for most of us involves the better part of our financial assets; every detail is important.
The old form, the new form, or any other form required in the real estate transaction, is a legally binding document: Don't sign it without understanding what rights and responsibilities you're accepting or signing away.
While we're on the subject of lawyers and real estate, you might be interested in a paperback book published last year: The American Bar Association Guide to Home Ownership (Random House, 193 pp, $12). It would make a good housewarming gift for first-time homeowners.
The publisher's claim that the book contains ``all the law every homeowner should know'' may be a stretch but it is, in fact, an easily read explanation of many things. Chapters on financing, disputes with neighbors, remodeling, homeowners insurance and other topics include useful definitions and examples. MEMO: Chris Kidder covers Outer Banks real estate for The Carolina
Coast. Send comments and questions to her at P.O. Box 10, Nags Head,
N.C. 27959 or e-mail to realkidd(AT)aol.com by CNB