Problems With the Florida FR/Bar "As-Is" Real Estate Contract

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Many clients buy and sell real estate using the Form “As-Is” Residential Contract approved by the Florida Realtors and the Florida Bar, commonly known as the “AS-Is” FR/Bar Contract. While this contract is convenient to purchase and sell properties, there are multiple issues in that contract that must be addressed. Set forth in this article are the major issues in that form contract.


As previously written in other blogs (see, the FR/Bar “As-Is” Contract could result in a Buyer losing his or her deposit if he or she obtains a financing commitment but later the Buyer cannot meet the terms of that financing commitment. For example, let's assume that the Buyer is seeking to acquire a house for a purchase price of $550,000 and will be taking out a loan for 80% of the purchase price, which means that the Buyer will be paying at least 20% of the purchase price or $110,000 in cash in order to close the transaction. Under the "financing contingency" clause, the Buyer has a certain period of time within which to obtain a Loan Commitment, after which the financing contingency is waived. However, the FR/Bar "As-Is" Contract fails to adequately address the issue of what happens if the Buyer obtains the Loan Commitment, but for some reason cannot close on the purchase. A classic example is where the lender requires 6 months of reserves in order to finalize the loan but doesn’t tell the Buyer until after the financing contingency is waived. Therefore, what the contract needs to provide is that the purchase of the property should be subject to the Buyer actually obtaining the loan from the bank, including meeting underwriting approval and all other requirements of the lender. In the example above, what the contract needs to state is that "the contract, and the Buyer's obligation to close the transaction, shall be contingent upon the Buyer actually obtaining a loan from the lender." With this change, the problem would have been resolved.


The FR/Bar “As-Is” Contract requires that a Seller disclose unpermitted improvements that he or she is aware of. If the Seller fails to inform a Buyer of improvements that were made without permits, then the Seller could be held responsible even after the closing. Indeed, the FR/Bar “As-Is” Contract goes far beyond the requirements of the duty to disclose of Johnson v. Davis, 480 So.2d 625 (Fla. 1986), where the Supreme Court of Florida held that a Seller of residential real property must disclose any hidden or latent defects if he or she has knowledge of those conditions and such conditions materially affect the value of the property and such conditions are not readily observable or known to the Buyer.


Under the FR/Bar “As-Is” Contract, the Buyer (instead of Seller) has the obligation to close all open permits. However, the Buyer is really not in a position to do that, particularly because the Buyer is not yet the owner of the property. Indeed, the FR/Bar “As-Is” Contract provides that Seller’s obligation with respect to closing out open permits is merely “to cooperate” and, in addition, the Seller is not obligated to expend any money in connection therewith. As such, a Buyer is really handcuffed in that respect, particularly in the case where the closing of an open permit may require the contracting of an architect or other professional. The fix here is to impose on the Seller an obligation to close all open permits, including spending money if necessary.


The condominium rider of the FR/Bar “As-Is” Contract provides that the Seller is obligated to pay special assessments that are “pending” as of the Effective Date of the contract. In this respect, "pending" means any special assessment that “has been an item on the agenda, or reported in the minutes, of the Association” within the last 12 months, even if not levied or approved as of the Effective Date. While the condominium rider explains that "levied" for purposes of the paragraph is the date when the assessment is approved by the Association, it still provides that "pending" means assessments that are part of an agenda item. Therefore, the Seller needs to go back and review all agenda items and minutes of Association meetings to determine if there have been assessments discussed or listed therein in order to be sure that the Seller will not later be held liable for a special assessment. The fix here is to provide that the Seller is responsible only for assessments approved and actually levied by the Association as of the Effective Date.

There are other issues in the FR/Bar "As-Is" Contract, but these are some of the major issues that ought to be addressed when using the form contract.

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If you have any questions regarding real estate law, please contact me, Santiago J. Padilla, Esq., at (305) 824-2400 or contact us online.

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