10-5-2

By James L. Goldsmith, Esq.

I am sure you are excited about the release of the new PAR standard residential agreement! Regardless of your excitement, it will be in your hands soon, if not already. None of the changes are dramatic, but as with previous releases, it is an improvement.

A good place to look for change in any new release is in the inspection contingency and the newest version includes changes that I anticipate you will like. They bring greater certainty to the time within which repairs can be negotiated.

Changes made a number of years ago introduced the 10-5-2 formula. 10-5-2 refers to the days within which inspections can be completed, corrective proposals negotiated and/or the agreement terminated/accepted by the buyer. While all preprinted dates and times may be mutually revised, for purposes of this article I refer to the number of days preprinted in the agreement.

"10" refers to the number of days within which a buyer may complete inspections and either submit a corrective proposal or terminate the agreement. "5" is the number of days given the seller to accept or reject corrective proposals submitted by the buyer. These 5 days run from the end of the buyer's 10-day inspection period, regardless of when it is that the buyer submits a corrective proposal. Thus, the seller will always have until day 15 to accept or reject the buyer's proposals (or negotiate a resolution that satisfies less than the 100% of the buyer's proposal - a mutual resolution in writing signed by all parties). From the date of seller's response indicating that seller will not do 100% of what buyer asks, buyer has 2 days to terminate the agreement or elect to purchase the property either in its as-is condition or by accepting whatever it is the seller has offered.

While the process can take 17 days, there was never any certainty that the buyer would have the full 17 days in which to engage in protracted negotiations. The buyer's drop-dead deadline (take it or leave it) was 2 days following the seller's reply to the corrective proposal. And while the seller had the right to wait until day 15, there was never a guarantee that the seller would do so.

The new agreement gives a full 17 days for those protracted negotiations. Here is how. Like the old agreement, buyer is given 10 days to complete inspections and submit a corrective proposal(s). When this inspection period concludes, the parties are given a 5-days Negotiation Period within which to negotiate a mutually agreeable resolution to the issues that have arisen via the inspections. This 5-day Negotiation Period is not reduced unless the seller agrees to satisfy all terms of the buyer's corrective proposal. Even the seller's prompt response that she will make no repairs or changes, will not shorten this 5-day Negotiation Period. At the conclusion of the 5-day Negotiation Period, buyer will have 2 days to terminate the agreement or make a last ditch effort to reach a mutual, written resolution. Buyer also has the right to accept the property in the condition as reported (for obvious reasons, the buyer is down to terminating the agreement or taking the best deal seller has offered).

Assuming that negotiations will take the full time allotted, the process will take 17 days. The only possibilities of shortening this period is by agreement of the parties, by seller agreeing to satisfy all of buyer's corrective proposal(s) earlier than the end of the 5-day negotiation period, or by buyer terminating the agreement by the conclusion of the inspection period.

Counting the days has always been a problem for some. If, after reading this, you are confused, reread. Better yet, don't take my word, study the agreement and reach your own conclusion.