George Clements Greenville, SC Real Estate

George Clements ~ Greenville, SC Real Estate

Paragraph 15 of the Contract For Sale is entitled "Disclaimer" and looks something like this:

15. DISCLAIMER: Except in the case of a new home being sold by the builder, the Purchaser acknowledges the Seller gives no guarantee or warranty of any kind, expressed or implied, as to the physical condition of the Property, unless otherwise provided for in the Contract. Seller does not warrant the condition of any improvements, services, appliances or systems thereto, or as the merchantability or fitness for a particular purpose of the Property or improvements thereon. Any implied warranty is hereby disclaimed by the Seller. Purchaser and Seller will indemnify and hold listing and/or selling Brokers and their agents harmless from any breach of contract, and any negligent or intentional acts or omissions of any inspectors, repair companies, or other service providers employed by Purchaser or Seller, including any and all such service providers introduced or recommended to Purchaser and/or Seller by listing and/or selling Brokers and their agents.

This clause is basically saying that if the home is being resold by an individual that the seller does not guarantee or warranty anything. If the home where brand new and being sold by a builder then there is usually a warranty for 1 year. If the purchaser buys the house and then 10 weeks later the HVAC goes out or a leak in the roof forms, the purchaser can do nothing about it.

Puchasers need to realize that no home is perfect and that things decay and fall apart. This is just a fact of life. All systems and structures of a home are going to eventually decay and fall apart and it is just a matter of when. A seller cannot look into the future and know when this is going to happen. A roof could have no problems for another 15 years or it could need replaced or repaired in 1 year. Every house is different.

If the seller lied about a problem they knew about then the purchaser would have to take it up with the seller. According to this clause, the agents cannot be held responsible for the seller's actions. The agents are also not responsible for anything missed by a service provider.

It is important that purchasers understand that no home is perfect and there will be issues that come up from time to time.

George Clements ~ Greenville, SC Real Estate

Paragraph 14 of the Contract For Sale deals with default of the contract and looks something like this:

14. DEFAULT: If Purchaser or Seller fails to perform any covenant of this Contract, the other party may seek any available legal or equitable remedy, and may terminate this Contract. If termination is due to default by Purchaser, Seller shall be entitled to retain the earnest money deposit. If termination is due to default by Seller, Purchaser shall be entitled to a refund of the earnest money deposit, and Seller shall reimburse Purchaser for Purchaser’s actual costs incurred, as defined herein below. However, it is expressly understood and agreed that Escrow Agent shall not release any earnest money until both parties execute a written release of the other from this Contract and any rights, obligations and claims arising hereunder. Said release shall also provide Escrow Agent with conclusive instructions regarding the disbursement of the earnest money. If either party refuses to execute the release contemplated by this paragraph, Escrow Agent shall hold the earnest money in trust until said release is executed, or until the disposition of the matter by a court of competent jurisdiction. If litigation is required to resolve the matter, the prevailing party shall be entitled to an award of costs and expenses of the action, including reasonable attorney’s fees. Furthermore, the parties expressly agree to indemnify and hold Escrow Agent harmless from any claims or damages arising from Escrow Agent’s refusal to release the earnest money in a manner inconsistent with the provisions of this paragraph. For the purposes of this contract, “actual costs incurred” by the Purchaser shall include all documented costs, expenses or obligations incurred for or by Purchaser or broker in an effort to consummate this sale. Such costs include, but are not limited to: costs of loan application, credit report, appraisal, survey, inspections and reports, title examination and broker’s fee or commission for this sale.

This is a pretty long clause that covers what happens if the purchaser or seller back out of the contract for no reason listed in the contract. An example of a good reason listed in the contract would be if the contract is contingent on the purchaser obtaining financing and they are not able to.

The basic idea of this paragraph is that if the purchaser backs out then the seller gets to keep the earnest money and if the seller backs out then the purchaser gets their earnest money back.

The "Escrow Agent" listed here is whichever real estate company is holding the earnest money, either the purchaser's company or the seller's company. The real estate company cannot release the earnest money unless they have it in writing that both the seller and the purchaser are getting out of the contract.

If the seller pulls out of the contract then they are responsible for any costs that the purchaser has had to close the transaction. This would be costs like attorney fees, inspections, loan costs, etc. Basically anything they had to pay for so far to get the transaction closed.

George Clements ~ Greenville, SC Real Estate

Paragraph 13 of the Contract For Sale deals with damage to the property before closing and looks something like this:

13. FIRE OR CASUALTY: In the event the Property is destroyed or damaged by fire or other casualty prior to closing,
Purchaser or Seller will have the option for ten (10) days thereafter of proceeding hereunder, or of terminating this Contract by written notification to the other party.

This is a pretty simple clause that is pretty self explanatory. It is says that if the property is destroyed by a fire or other disaster while the property is under contract and before the closing that the seller and purchaser have 10 days to end the contract.

So, let's say that you had a house under contract and were set to close on it in two weeks but then there was a fire at the house that caused damage. You go to the house after the fire and see that you do not want to buy it anymore. According to the contract, you have 10 days to let the seller know in writing that you do not want to buy the property anymore. The seller could also notify you that he will not sell it anymore.

George Clements ~ Greenville, SC Real Estate

Paragraph 12 of the Contract For Sale deals with personal property and looks something like this:

12. PERSONAL PROPERTY, FIXTURES, ETC.: No personal property will be transferred or conveyed as a part of this ale, except as referenced in MLS or listed herein:___________. Personal property should be transferred or sold separately by a Bill of Sale.

Examples of personal property that are commonly listed here are things like washer/dryer, lawn mower, picnic table, refrigerator, or some thing that really goes well with the rest of the house. MLS sheets list which appliances convey with the property. Stoves and dishwashers are almost always included but washer/dryer and refrigerators are only offered about half of the time. According to this phrase, if personal property is listed in the MLS then it comes with the sale of the property.

If you are not sure what category a particular item in your house would fall into, just let me know and we'll get an answer for you.

George Clements ~ Greenville, SC Real Estate

Paragraph 11 of the Contract For Sale deals with "NON-RESIDENT TAX." The paragraph looks something like this:

11. NON-RESIDENT TAX: Seller covenants and agrees to comply with the provisions of Section 12-8-580 of the Code of laws of South Carolina, 1976, (as amended), regarding withholding requirements of owners who are not residents of South Carolina as defined in the said statute.

I thought it would be best to show what "Section 12-8-580 of the Code of laws of South Carolina" says. Hold on, it's long.

SECTION 12‑8‑580. Withholding by buyer of real property or associated tangible personal property from nonresident seller.

(A)(1) A person who purchases real property, or real property and associated tangible personal property, from a nonresident seller shall withhold:

(a) seven percent of the gain recognized on the sale by a nonresident individual, partnership, trust, or estate and five percent for a nonresident corporation or other nonresident entity if the seller provides the buyer with an affidavit, described in subsection (E), stating the amount of gain;

(b) seven percent of the amount realized on the sale for a nonresident individual, partnership, trust, or estate and five percent by a nonresident corporation or any other nonresident entity if the seller does not provide the buyer with an affidavit described in subsection (E); or

(c) the entire net proceeds payable to the nonresident seller, if the amount required to be withheld in subitem (1) or (2) exceeds the net proceeds payable to the seller.

(2) If a seller finances all or part of the transaction, in lieu of remitting the tax due on each installment payment, the seller may give the buyer an affidavit stating that, for state income tax purposes, he will elect out of installment sales treatment, as defined by Section 453 of the Internal Revenue Code, and remit the entire amount of tax to be due over the period of the installment agreement.

(B)(1) For purposes of this section a sale is a transfer where gain or loss is computed in accordance with Internal Revenue Code Section 1001 with modifications provided in Chapter 6 of this title for South Carolina income tax purposes.

(2)(a) A sale does not include tax exempt or tax deferred transactions, other than installment sales.

(b) A sale does not include a transaction to the extent the gain on the sale of a principal residence is excluded in accordance with Internal Revenue Code Section 121. Any gain in excess of this permitted exclusion is subject to the provisions of this section.

(3) The department may exempt certain other classes of transactions from the provisions of this section when it determines that the benefits to the State are insufficient to justify the burdens imposed on the buyer and seller. The department may revoke the exemption granted by this item if it determines that the nonresident is not cooperating with the department in the determination of the nonresident taxpayer’s correct South Carolina tax liability. The revocation does not revive the duty of a person purchasing real property or associated tangible personal property from a nonresident seller to withhold until the person receives notice of the revocation.

(C)(1) For purposes of this section, a nonresident is:

(a) an individual whose permanent home is outside of this State on the date of the sale;

(b) a corporation incorporated outside of this State;

(c) a partnership whose principal place of business is located outside of this State;

(d) a trust administered outside of this State; or

(e) an estate of a decedent whose permanent home was outside of this State at the time of death.

(2) However, a nonresident seller is considered a resident for purposes of this section if:

(a)(i) the seller is a corporation incorporated outside of this State that has its principal place of business in this State and does no business in its state of incorporation; or

(ii) the seller is a nonresident who:

(I) has filed at least one South Carolina income tax return and is not delinquent with respect to filing South Carolina income tax returns;

(II) has been in business in this State during the last two taxable years, including the year of sale, and shall continue in substantially the same business in the State after the sale; and

(III) has a certificate of authority to do business in this State if the seller is a corporation or is registered to do business in this State if the seller is a limited partnership.

(b) the seller provides the buyer an affidavit described in subsection (E) certifying that the above requirements are met and that the seller shall report the sale on a timely filed South Carolina income tax return.

(D)(1) The buyer shall remit the amount withheld to the department with the appropriate form on or before the fifteenth day of the month following the month in which the sale takes place. However, the department may extend the time for withholding and remitting payments for seller financed sales.

(2) The buyer is liable for the collection and payment of an amount due pursuant to this section. A lending institution, real estate agent, or closing attorney is not liable for the collection of an amount due from the buyer pursuant to this section. However, a lending institution, real estate agent, or closing attorney that has in fact withheld taxes is required timely to remit the amount withheld within the timeframe provided in item (1) of this subsection.

(E) The buyer may rely on an affidavit provided by the seller if the buyer does not know the affidavit is false and the seller, under penalties of perjury, states the following:

(1) the seller’s name, address, and social security or other federal tax identification number;

(2) the date of the sale; and

(3) a description of the property.

(F) If a withholding payment:

(1) results in excess withholding based on the amount of gain required to be recognized from the sale; or

(2) contains a computational error;

the seller may file an amended nonresident withholding statement with the department and request a refund for any amount over withheld or pay any amount due.