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August 1, 2017 • Stay Connected!
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QUESTION:  Buyer and Seller are under contract. Contract has a Form 22Q and a Form 22EF. Form 22EF paragraph three shows Buyer is relying on contingent funds from sale of 22Q house. 22Q house failed to close. Buyer informed Seller within two days of said failure. 22Q paragraph three states if house fails to close through no fault of Buyer, the agreement is terminated and Earnest Money is refunded to Buyer. However, Form 22EF paragraph four states if Buyer fails to close because contingent funds identified in paragraph three are not available, buyer is in default and Seller shall be entitled to remedies provided in the agreement (Earnest Money). These seem to contradict each other (22Q:3 and 22EF:4). Was Form 22EF necessary to disclose the contingent funds or did Form 22Q accomplish this? If 22Q accomplished this, why would one also use 22EF?



ANSWER:  Form 22EF should NOT be used to notify seller that buyer is relying on contingent funds that are already the subject of a pending sale contingency. Form 22EF attempts to make this clear in paragraph 1(b) which says: "Non-Contingent Funds" means funds that Buyer currently has in its possession and for which there is no contingency, such as ... pending sale of buyer's property (NWMLS Form 22Q or equivalent)." When buyer and seller agree to include a Form 22Q in the transaction, seller is on notice that buyer is relying on the proceeds of the pending sale in order to complete the purchase of seller's property. Providing that same information again, in a Form 22EF, is needlessly and dangerously, redundant. Inclusion of a Form 22EF in this situation creates, as described by the question asked, an internal conflict of terms within the agreement.

 

The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org . Please tell us your NRDS number when you e-mail the Hotline with your question.


 

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