Contract Changes Effective January 1, 2016

TREC has formally adopted revisions to several TREC contracts, and use of these forms will be mandatory as of January 1, 2016. Several of the changes proposed in earlier drafts of the contracts were not adopted, and some changes are completely new.  Here are a few of the highlights:

• Notices of Termination will have to be given by 5 pm local time on the date specified in Paragraph 23.  The 5 pm deadline does not apply to other notices provided under the contract.

• TREC did not adopt the Buyer’s right to extend the Closing Date if Buyer’s lender was required to provide additional loan disclosures based on the new TILA-RESPA disclosure rules.This prior proposed revision to Paragraph 9A of the contract generated much discussion and was ultimately rejected by TREC. Any delays in closing caused by the new loan disclosure rules will have to be resolved by Amendment.

• The new Third Party Financing Addendum replaces the old Third Party Financing Addendum for Credit Approval. The new addendum includes the third party financing “Property Approval” language that used to be found in paragraph 4 of the contract, in addition to the “Credit Approval” language in the prior version of the form.

• The new Third Party Financing Addendum also authorizes lenders and title companies to deliver closing disclosure documents to the Realtors in the transaction.This authorization replaces the TAR form Authorization to Furnish TILA-RESPA Integrated Disclosures, which will no longer be offered in the TAR forms library effective January 1.

• The new contracts include the revision to paragraph 7A that “Any hydrostatic testing must be separately authorized by Seller in writing.”Many of the vendors who provide hydrostatic testing have their own forms for the Seller to sign authorizing this testing.Neither TREC nor TAR has provided a form for use by licensees to obtain this authorization.