CONTRACTS 1.0

NAVIGATING REAL ESTATE OFFERS AND CONTRACTS

CONTRACTS 1.0

The material contained within this course, including this handout, was developed exclusively for the

Tennessee Real Estate Education Foundation (TREEF) in cooperation with Tennessee REALTORS

The material is for the sole use of course instructors approved by the Tennessee Real Estate Commission

and TREEF. Any unauthorized use is strictly prohibited.

0218-TR-C101.2

Contracts 1.0 | Page 2

CONTRACTS 1.0

NAVIGATING REAL ESTATE OFFERS AND CONTRACTS

Course Designed by:

John Giffen, CRB, CRS, CDEI, GRI, Broker

for the Tennessee Real Estate Education Foundation

in cooperation with Tennessee REALTORS

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Contracts 1.0: Navigating Real Estate Offers and Contracts

Course Outline

________________________________________________________________

A Note for Instructors

Course Introduction

Contracts 1.0 Skill Assessment

Unit 1 Contract Basics

• What is a Contract?

• What Makes a Contract Legal?

• Who Can Sign a Contract?

• A Few Words on Multiple Offers

• Binding the Agreement

Unit 2 Contract Timelines and Performance Dates

• Definition of Days

• Time is of the Essence

• Loan Obligations

• Financing Contingency Waived

• Binding Agreement Date

• Preprinted Deadlines

• Notification and Termination of the Agreement

• Defaulting on the Contract

• CLASS EXERCISE #1 – Performance Dates and Deadlines

Unit 3 Inspections and Repairs

• Inspecting the Property

• A Note About Home Inspections in Tennessee

• Septic and Well Inspections

• Costs Associated with Inspections and Repairs

• Home Inspectors

• Inspection Contingency in the Purchase and Sale Agreement

• A Note About “As Is” Properties

• Lender Requirements

• CLASS EXERCISE #2 – Inspections and Repairs

Unit 4 Special Stipulations

• Overview of Special Stipulations

• Points to Remember

• CLASS EXERCISE #3 – Special Stipulations

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Unit 5 Pre-Printed Items in the Purchase and Sale Agreement

• Key Points for Pre-Printed Items in the Purchase and Sale Agreement

•

Important Pre-Printed Components in the RF401 Purchase and Sale Agreement

Unit 6 Disclosures and Disclaimers

• Disclosing the Condition of the Property

• Required Property Condition Disclosures and Disclaimers

• CLASS EXERCISE #4 – Proper Disclosures

Unit 7 Completing the Offer

• Before You Write an Offer

•

Two Very Important Rules Concerning Offers

•

CLASS EXERCISE #5 – Writing the Offer

Appendix

• Tennessee REALTORS

RF401 Purchase and Sale Agreement

• Tennessee REALTORS

Forms Resource Guide

• Optional CLASS EXERCISE

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Course Introduction and Learning Objectives

Course Overview

This course will resolve common problems, misconceptions and misunderstandings related to the

Tennessee REALTORS

Purchase and Sale Agreement (RF401) and provide guidance to its proper use as

well as related Tennessee REALTORS

forms. Students will practice filling out a sample contract and will

learn how to explain its various provisions to a buyer or seller.

Learning Objectives

Upon completion of the course, students will be able to:

• Review of real estate contract fundamentals and good practices for REALTORS

in Tennessee.

• Explain the meaning and significance of the various Timelines, Dates, Notices, and Actions

required by both parties as found in the Tennessee REALTORS

RF401 Purchase and Sale

Agreement.

• Understanding the Inspection and Repairs section in the RF401Tennessee REALTORS

Purchase and Sale Agreement.

• Correctly identify any required Disclosures and Disclaimers that must be included in or

accompany the RF401 Purchase and Sale Agreement in various given situations.

• Explain to customers and clients what items should and should not be included under Special

Stipulations in the RF401 Purchase and Sale Agreement (RF401).

• Recognize and advise consumers correctly as to the Preprinted Items in the Tennessee

REALTORS

RF401 Purchase and Sale Agreement.

• Properly complete, through a skill exercise, the Tennessee REALTORS

RF401 Purchase and

Sale Agreement on behalf of a prospective purchaser, and clearly explain the significance of

each contract section.

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CONTRACTS 1.0 SKILL ASSESSMENT

Choose the best answer to the following questions:

1. When should you review and explain the Tennessee REALTORS

Purchase and Sale

Agreement (RF401) with buyers?

a. Af

ter the offer is submitted

b. Before they make an offer

c. When the offer is accepted

2. When should you review and explain the Tennessee REALTORS

Purchase and Sale Agreement

(RF401) to sellers?

a. Before they receive an offer

b. When they receive an offer

c. After they accept an offer

3. Which of the following statements is TR

UE?

a. It’s most important to be familiar with the Tennessee REALTORS

Purchase and Sale

Agreement (RF401) form because you can address every issue by altering the boilerplate

language.

b. Most Tennessee REALTOR

forms are rarely used.

c. It’s important to be familiar with the function of all Tennessee REALTORS

forms so you

understand how they work together to address different issues.

4. Which of the following is NOT an example of ambiguous language?

a. Seller to provide Buyer with $500 credit

b. Seller will provide Buyer with $500 credit at closing towards Buyer’s closing costs

c. Portion of closing costs to be paid by Seller

d. Buyer to take possession as determined prior to closing

5. Which of the following is the most acceptable method of delivering an offer?

a. In person

b. By fa

c. By email

d. All of the above equally acceptable, with proper documentation

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6. Which of the following statements is TRUE?

a. The Buyer always gets to select the Title Company

b. The Seller always gets to select the Title Company

c. In situations where the sale is being funded by a federally insured loan, the Buyer gets to

choose the Title Company if the Buyer is paying for the title insurance policy

d. In situations where the property is being funded by a federally insured loan, the Seller gets

to choose the Title Company if the Buyer is paying for the title insurance policy

7. Which of the following inspections is NOT legally permissible and not permitted under the

Inspection Section?

a. Home inspection performed by a licensed home inspector

b. Home inspection performed by a licensed contractor

c. Home inspection performed by Buyer

8. One primary function of the Tennessee REALTORS

Purchase and Sale Agreement

(RF401) is to

a. Reduce risk and liability for REALTORS

and brokers

b. Confuse REALTORS

and brokers

c. Address every possible situation that might arise during a transaction

9. The Tennessee REALTORS

Counter Offer Form (F8) states, “all terms and conditions

proposed in previous counter offers, if any, are not included in this counter offer

unless restated herein.”

a. True

b. False

10. Per the Tennessee REALTORS

Purchase and Sale Agreement (RF401), when a Buyer is

terminating the contract due to Home Inspection OR financial contingency, both Buyer and

Seller must sign the Trust Money Disbursement and Release form?

a. True

b. False

11. When Trust Money is either not received by the Holder or not honored for any

reason, the holder does not have to notify Buyer and Seller of the Buyer’s failure to deposit

the money agreed to in the RF401 Purchase and Sale Agreement.

a. True

b. False

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UNIT 1 – CONTRACT BASICS

What is a Contract?

A contract is a legally binding agreement between two or more people. This means that there are

promises to pay money, transfer property or to do or not do something exchanged between the

parties.

What Makes a Contract Legal?

1. It Must Have a Legal Purpose

Parties cannot execute a contract to do an illegal act. The purpose of the contract must conform

to the law. A contract between parties that involves fraud upon another would be void.

2. Legally Competent Parties

The parties to a contract must all be legally competent to enter into an agreement. This includes

being of legal age and of sound body and mind at the time of entering in to a contract. In

Tennessee, the legal age for signing contracts is 18 years old.

3. Agreement by Offer and Acceptance

In real estate this is illustrated by an offer to purchase a property by a buyer and the acceptance

of that offer by the owner/seller.

4. Consideration

Consideration is anything of legal value offered and exchanged in the contract. This could be

money, services or other valuable goods.

5. Consent

This element requires the parties to the contract have consented willingly and knowingly to the

terms of the contract. There cannot be fraud, misrepresentation, or undue duress on any party to

the contract.

Who Can Sign a Contract?

All owners of real estate should sign the contract of sale. If a husband puts his name only on a

Purchase and Sale Agreement when both he and his wife own the property, then the buyer cannot

force the wife to transfer the property in the absence of her written agreement.

If a party to the agreement cannot sign one or both of the parties can assign a Power of Attorney to

someone who can sign in their absence. (NOTE: Powers of Attorney should be NOTARIZED and a

copy should be made available from your client to you and your broker for your file(s).)

KEY POINT TO REMEMBER: Statute of Frauds

Contracts for the sale of real estate must be in writing and signed by all parties to be enforceable in the state of

Tennessee. This is due to the “statute of frauds,” which in Tennessee holds that, in order to be enforceable, the

promise or agreement, or some memorandum or note thereof, shall be in writing, and signed by the party to

be charged therewith. Tennessee courts have generally held that an oral contract for the sale of real estate is not

enforceable, even though the parties may have “partially” performed the contract.

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Offer and Acceptance

An offer to purchase real estate can be fairly simple and quick or complex and lengthy. Either way,

both the listing agent and the buyer’s agent must manage the process in a legal and ethical manner.

Once an offer is made it can be accepted, rejected or countered. Remember, a counter offer

constitutes the rejection of the offer and it must be in writing. Also, a party cannot extend a counter

offer, have it rejected, and them attempt to accept the original offer. If a party rejects an offer outright, it

needs to be noted in writing and signed/dated and returned to the offeror.

TREC Rule on Offers (1260-2-.08)

“A broker or affiliate broker promptly shall tender every written offer to purchase or sell obtained

on a property until a contract is signed by all parties. Upon obtaining a proper acceptance of an

offer to purchase, or any counteroffer, a broker or affiliate broker promptly shall deliver true

executed copies of same, signed by the seller, to both the purchaser and the seller. Brokers

and affiliate brokers shall make certain that all of the terms and conditions of the real estate

transaction are included in the contract to purchase. In the event an offer is rejected, the broker

or affiliate broker shall request the seller to note the rejection on the offer and return the

same to the offeror or the offeror’s agent.”

A Few Words On Multiple Offers

Key Points on Multiple Offers

• Standard of Practice of the REALTOR

Code of Ethics states that the existence of offers

should only be disclosed with the seller’s consent.

• The seller alone determines whether one or more of the prospective buyers will be informed

that there are multiple offers.

• Sellers who elect to disclose multiple offers risk that a buyer will walk away from a possible

“bidding war.”

• Alternatively, sellers may elect to leverage the existence of multiple offers to get the best price

and terms.

Binding the Agreement

The Purchase and Sale Agreement becomes binding once the receipt of acceptance has been made

and the receiving broker/agent signs the binding agreement information. This can be done on the

original Purchase and Sale Agreement or on the final Counter Offer form.

An Example of the Binding Process of the Purchase and Sale Agreement

1. The Buyer makes an offer. (Selling Agent submits the offer to the Listing Agent.)

2. The Seller counters the offer. (The Listing Agent submits the Counter Offer to the Selling

Agent.)

3. The Buyer accepts the counter offer. (The Selling Agent submits the accepted Counter Offer

to the Listing Agent.)

4. The Listing Agent binds the offer. The last party to receive the acceptance of the

offer/counter offer is the one who binds the agreement.

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UNIT 2 – CONTRACT TIMELINES AND PERFORMANCE DATES

Failure to meet a contractual deadline may result in a breach of contract, forfeiture of Trust

money, unenforceable performance and, in some cases, liability for civil damages. When a

preprinted deadline needs to be changed, you should first check to see if the issue is addressed by

another Tennessee REALTORS

form. If not, the EXACT verbiage should be copied with only the

number of days for performance changed. By altering the verbiage within the attorney approved

Purchase and Sale

Agreement (RF401), you could end up making the party’s performance

unenforceable.

The Tennessee REALTORS

Purchase and Sale Agreement (RF401) contains several

performance requirements with time limits associated with them. Can you name some of them?

_____________________________________________________________________

Definition of Days

• All days are in the Tennessee REALTORS

Purchase and Sale Agreement (RF401) are calendar

days NOT business days.

• The "start" / "commencement" date is the day following the Binding Agreement Date.

• IMPORTANT: The ONLY "drop dead" performance dates in this Agreement are the Closing Date,

Day of Possession, Completion of Repair Deadline and Offer Expiration Date. These

performance dates are actual CALENDAR DAYS which means if the date falls on a Saturday,

Sunday or holiday, then it will occur on that day rather than rolling to the next business day.

• Be very careful when selecting these dates and CONSULT YOUR CALENDAR first. Holidays are

defined by federal law (5 U.S.C. § 6103.) These are: New Year’s Day (January 1), Martin Luther

King, Jr. Day (3

Monday in January), Washington’s Birthday (3

Monday in February), Memorial

Day (last Monday in May), Independence Day (July 4

), Labor Day (1

Monday in September),

Columbus Day (2

Monday in October), Veteran’s Day (November 11

), Thanksgiving Day (4

Thursday in November) and Christmas Day (December 25

)

Lines 397-405: “the term day(s) used throughout this Agreement shall be deemed to be calendar day(s)

ending at 11:59 p.m. local time unless otherwise specified in this Agreement. Local time shall be determined

by the location of the Property. In the event a performance deadline, other than the Closing Date, Date of

Possession, Completion of Repair Deadline (Repair/Replacement Amendment), and Offer Expiration date,

occurs on a Saturday, Sunday or legal holiday, the performance deadline shall be extended to the next

following business day. Holidays as used herein are those days’ deemed federal holidays pursuant to 5 U.S.C.

6103. In calculating any time period under this Agreement, the commencement date shall be the day following

the initial date (e.g. Binding Agreement Date).”

(Slight paraphrasing for spacing purposes only.)

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Time is of the Essence

• A contract clause that emphasizes punctual performance is an essential requirement of the

contract. Thus, if any party to the contract does not perform within the specified time period (the

drop-dead date), that party is in default, provided the non-defaulting party has made a valid notice

of demand of performance.

• If no demand is made, then the clause may be waived. The clause may also be waived by the

subsequent acts of the parties such as accepting tardy payments or signing escrow instructions that

allow for extensions of time in which to perform. However, if the contract terminates by its

language, consult with an attorney if the parties want to “revive” a dead contract or execute a new

one.

Loan Obligations

• The loan obligations paragraph in the Tennessee REALTORS

RF401 Purchase and Sale

Agreement is one that sometimes is overlooked by the parties in the contract.

• This paragraph contains performance time frames related to the loan the buyer would be receiving

in order to purchase the property.

• The buyer is required to make application for a loan and pay for a credit report.

• In addition, the buyer has obligations to obtain homeowners insurance, pay for an appraisal,

cooperate with the lender on any requests for documentation, and confirm that the purchase is not

contingent on the lease or sale of any property. The buyer must also communicate this to the seller

in writing. The Notification Form (RF656) is designed to do this. Many agents still do not use the

Notification Form and fail to have their buyer clients/customers give the proper notice to the seller of

these deadlines. This places their client/customer in default that can result in lawsuits.

• And, they must work in good faith to ensure these obligations are satisfied.

Financing Contingency Waived

• The box on line 136 of the Tennessee REALTORS

RF401 Purchase and Sale Agreement should

only be checked if the buyer is not purchasing the property conditioned upon his ability to secure a

loan. A loan may be obtained, but the Agreement is not contingent upon the loan. This is typically

known as an “ALL CASH” transaction.

• The buyer cannot use “failure to obtain financing/loan” to get the Trust Money/Earnest Money

refunded. There are NO financial contingencies. Per the Agreement, the buyer has only five (5)

days to provide proof they have the funds to close the transaction. The buyer should obtain

Certified/notarized documentation confirming they have the money from the funds source in order to

satisfy this performance requirement.

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Binding Agreement Date

The Tennessee REALTORS

Purchase and Sale Agreement (RF401) defines when the Binding

Agreement Date will be:

“This instrument shall become a “Binding Agreement” on the date (“Binding Agreement Date”) the last offeror, or

licensee of last offeror, receives notice of offeree’s acceptance. Notice of acceptance of the final offer was

received on day of __, at (time) by (name).” The date should be filled in by the last offeror (the person to receive

the acceptance of the final counter offer or their agent. This will allow the agent to add the date on which it was

actually received. All timelines will start on the next day for purposes of calculating days

.”

• The Binding Agreement Date is an EXTREMELY CRITICAL DATE. It is very important that this is

completed because it marks the time and date the contract went into effect.

• This time and date "starts the clock" on the time deadlines in the Purchase and Sale Agreement.

(e.g. Inspection deadlines, etc. ) Note that it is referred to throughout the contract.

The agent who receives the finally executed contract from the agent representing the last signor

of the contract is the one who completes this section. If this is not done, it creates havoc for trying

to establish deadlines. It could even mean that a court could void the contract. FILL THIS IN!

Preprinted Deadlines

• Preprinted deadlines are just as important as those you write in the Agreement!

• If it’s in the contract, it must be done by the date specified.

• Failing to meet deadlines may constitute a breach. An agent that allows a deadline to pass

unnoticed may have a complaint filed against them with TREC and/or the local REALTOR

board

as well as possibly facing a lawsuit.

• It is imperative to discuss the pre-printed deadlines in the Tennessee REALTORS

Purchase

and Sale Agreement (RF401) with buyer clients BEFORE submitting an offer.

• If, for any reason, they will be unable to meet a required pre-printed deadline, this should be noted

clearly BEFORE an offer is made or counter offer is submitted. For seller clients, you must discuss

pre-printed deadlines and filled in dates.

• If for any reason, they will be unable to meet a required date or deadline, this should be noted

clearly in a counteroffer.

Notification and Termination of the Agreement

• A party to a contract may elect to terminate the agreement due to various reasons. Some of

these include the inability to remove the contingencies noted in the agreement or non-performance

on the part of either the Buyer or the Seller.

• The Tennessee REALTORS

Notification form (RF656) form serves as a notification form for all

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notices required in the Purchase and Sale Agreement (RF401). This form assists licensees in

creating a paper trail of their compliance.

• If trust money/earnest money has been paid by the buyer, the holder of the money must decide

if, when and how the money is to be distributed. The Tennessee REALTORS

Earnest

Money/Trust Money Disbursement and Mutual Release of Purchase and Sale Agreement form (RF

481) should be used to distribute the funds and release the buyer, seller and all licensees from all

obligations agreed upon in a purchase and sales agreement previously agreed upon. Keep in mind

that if either party wants to pursue legal action, they SHOULD NOT complete this form. The parties

waive all rights to sue if they use this form!

Defaulting on the Contract

If either party to the contract fails to perform as outlined in the terms and conditions of the agreement,

the terminating party may have the right to pursue any and all legal rights and remedies against the

defaulting party following termination.

• If a Buyer fails to perform, there are consequences – Trust Money is forfeited as damages to

the Seller and are applied as a credit against Seller’s damages. The Seller may sue the Buyer

for damages or specific performance.

• If a Seller fails to perform, there are consequences – the Buyer’s Trust Money is returned to

them and the Buyer may sue the Seller for damages or specific performance.

Possible Causes for Default:

• Failure to close within the timeframe specified in the contract.

• Ignoring the terms and conditions of the contract.

• Failure to perform in “good faith.”

• Terminating the agreement without cause

o Buyer decides they don’t want to purchase the property.

o Seller decides they don’t want to sell the property.

__________________________________________________________________________________

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CLASS EXERCISE #1: Performance Dates/Timelines

In the following exercise, there are several examples of how performance dates/timelines impact the

parties in a real estate transaction utilizing the RF401 Purchase and Sale Agreement. Review each

one carefully and provide the best way to handle each scenario.

1. In the offer to purchase the home owned by Tom Smith (Seller), Jane Wilson (Buyer) puts 6:00 p.m.

on Friday as the time limit for the Seller to respond. The Seller is driving back home from the beach

on Thursday evening and requests additional time to review the offer. He would like to extend the

time limit of the offer. How should this be handled?

2. After extending the time limit of the offer, Mr. Smith (Seller) counters the offer submitted by Ms.

Wilson (Buyer). Ms. Wilson reviews Mr. Smith’s counter offer and makes one minor change that

does not impact the price or closing date. The listing agent, Bill Taylor, sends the counter offer to

Carolyn Jones, the buyer’s agent. She, in turn, submits it to her buyer for her review. The buyer is

in full agreement with the terms and conditions of the Seller’s counter offer and accept it. They have

a deal! The signed counter offer noting acceptance is returned to the listing agent, Mr. Taylor. Who

binds the contract?

3. The Purchase and Sale Agreement states that the buyer, Ms. Wilson (buyer), will pay to the listing

broker the Earnest Money/Trust Money in the amount of $5,000 within three (3) days of the Binding

Agreement Date. The end of the third day has arrived and the listing agent, Bill Taylor, or the listing

broker has not yet received the money. What should happen in this situation?

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4. Ms. Wilson, the buyer, is applying for a conventional loan to purchase the Seller’s home. Bill Taylor,

the listing agent, received a pre-approval letter from Acme Bank with the offer. However, three (3)

days after the Binding Agreement Date the seller, Mr. Smith, has still not received Notification that

the Buyer has made loan application with Acme and paid for the credit report. What does the seller

need to do?

5. 14 days after Binding Agreement Date, Mr. Smith, the seller, or his agent, Bill Taylor, have not

received notification that the Buyer has signed Intent to Proceed with lender and/or evidence of

hazard insurance. What should the Seller do?

6. Ms. Wilson, the Buyer, has all inspections completed within the time frame specified in the contract.

Her agent, Carolyn Jones, sends an RF654 Repair/Replacement Proposal to the listing agent, Bill

Taylor, noting the items they would like the seller to repair. The Purchase and Sale Agreement

states a 3-day resolution period. Mr. Smith, the seller, is not in agreement with the buyer’s list of

repairs and sends back another RF654 detailing what he is willing to do. The buyer is disappointed

but wants to continue negotiating. At the end of the third day there is no resolution. What happens

now?

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7. The contract for the purchase of the seller’s home was contingent on the appraised value equaling

or exceeding the purchase price of $325,000. The appraisal for the property was submitted to Jane

Wilson, the buyer, via email on Tuesday afternoon by her lender. The appraiser valued the

property at $315,000. Ms. Wilson told Carolyn Jones, her agent, she needed to think about how

she wanted to respond. If the buyer decides to terminate the agreement, when does she need to

notify the seller? What happens if she notifies the seller of her intention four days later on

Saturday? What needs to happen if the buyer still wants the home even though it appraised for

$10,000 less than the purchase price?

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UNIT 3 – INSPECTIONS AND REPAIRS

Inspecting the Property

• Buyers have the right to inspect the property they are purchasing. It is important to discuss

inspections and all that is involved in having the property inspected. Stress the importance of the

timelines associated with the inspection period and the resolution period.

• The word “Inspections” in the contract includes ALL inspections and reports related to the

condition of the property. This would include wood destroying insects, swimming pool, structural

inspections, etc. The buyer is responsible for any and all costs associated with inspections.

• All Inspections should focus on the structural or system integrity of the property and not

cosmetic issues. A buyer cannot terminate a contract if they don’t like the color of the paint in the

living room or the wallpaper in the kitchen.

• The termite inspection is included and if the buyer waives the inspections, they could “except”

the termite inspection or any other specific inspection to add it back in by inserting the “exception” in

the Special Stipulations paragraph.

A Note About Home Inspections in Tennessee

State law [T.C.A §62-6-302(3a)] defines a home inspection as a “visual analysis for the purpose of

providing a professional opinion of the condition of a residential building, ancillary building, any

reasonably accessible installed components, and the operation of the building systems, including any

controls normally operated by the owner of the building, for the following components:

• Heating systems;

• Cooling systems;

• Electrical systems;

• Plumbing systems;

• Structural components;

• Foundations;

• Roof covering;

• Exterior and Interior components;

• Any other site aspects that affect the

residential dwelling.”

Therefore, if the Buyer is receiving an inspection that covers ALL of the above mentioned

components, then it must be performed by a licensed home inspector. A Buyer is permitted to

get an inspection of individual systems without using a licensed home inspector. However, the

person performing the limited inspection must meet state requirements for licensure and/or

experience. (i.e. a licensed electrician to inspect the electrical, a licensed plumber to inspect the

plumbing, an experienced roofer to inspect the roof.) Additionally, the buyer is permitted to

conduct the inspection himself/herself. If the seller will not accept this, it should be negotiated in

the contract itself.

Septic and Well Inspections:

The buyer may ask the seller to provide a septic letter at Seller's expense. Pursuant to TREC Rule

1260-02-.37: “A licensee preparing an offer to buy shall provide in the offer and make the buyer

aware that, for a fee, a septic system inspection letter is available through the Tennessee

Department of Environment and Conservation, Division of Ground Water Protection.”

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The buyer may ask Seller to provide a well test at Seller's expense. Address this in Special

Stipulations. The seller may already have had the well tested and have the results on file. You can

ask the seller's representative.

Costs associated with Inspections and Repairs

All inspections are performed at the buyer’s expense unless otherwise specified in the Special

Stipulations section of the Purchase and Sale Agreement. The termite inspection costs are the

responsibility of the Buyer unless the Buyer is receiving a VA loan. Government regulations within

VA loan requirements will not allow the Buyer to pay for a termite inspection. (See Tennessee

REALTORS

RF625 VA/FHA Addendum that addresses this issue.) The form states that the

Buyer will order the inspection BUT the Seller will be responsible for paying for it. Buyers and

Sellers should negotiate any needed repair costs, in good faith, using the RF654

Repair/Replacement Proposal or the RF655 Repair/Replacement Amendment.

Home Inspectors

Home Inspectors in Tennessee are licensed and regulated by the Home Inspector Licensing

Program of the Tennessee Department of Commerce & Insurance. Tenn. Code Ann. §62-6-301(5)

defines a home inspector as “any person who is licensed under this part as a home inspector and

who engages in the business of performing home inspections and writing home inspection

reports.” Clients and customers should be encouraged to use a licensed home inspector.

Although buyers may inspect the property themselves, this may not carry the same weight in the

eyes of the seller as a report from a licensed home inspector.

Inspection Contingency in the Purchase and Sale Agreement

The RF401 Purchase and Sale Agreement provides a buyer with an opportunity to make the

offer/contract contingent upon a formal inspection of the property prior to closing on the

transaction. Any and all inspections should be completed during the inspection period as noted in

Section 7, Paragraph D in RF401 Purchase and Sale Agreement.

Reporting Inspection Results to the Seller

Once all inspections are completed the buyer has three (3) options in how they report the results

to the seller:

1. They can provide a list of written specified objections and immediately TERMINATE the

Agreement. NOTE: DO NOT PROVIDE A FULL COPY OF THE REPORT!!! This is no

longer a requirement. Agents SHOULD NOT automatically send the home inspection

report with the list of repairs or termination notice. The Seller can request a copy (be

careful as it can create an obligation on the part of the listing agent if adverse facts are

revealed in this report.), but the buyer is not required to disclose it.

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2. They can accept the property in its present “AS IS” condition with any and all faults and no

expressed warranties

3. Furnish the seller with a list of items they would like repaired and/or replaced prior to

closing.

Inspection Contingency Resolution Period

If the buyer chooses #3, the parties enter the “resolution period” and the RF654 Repair/Replacement

Proposal form should be used for negotiating the items the buyer wants repaired and/or replaced.

This form is signed only by the party making the proposal and does not go to the lender unless the

lender requests it.

Once the buyer and seller agree on what items will be repaired and/or replaced, then the final

agreement will be submitted on Tennessee REALTORS

RF655 Repair/Replacement

Amendment with both parties’ signatures. It then becomes an amendment to the Purchase and

Sale Agreement and must be submitted to the lender.

Remember to watch the performance dates associated with the resolution period. If a

written resolution cannot be reached within this time frame, the contract is terminated and the

buyer is entitled to a full refund of their Trust Money/Earnest Money.

A Note About “As Is” Properties

Buyers

When purchasing properties offered “as is,” buyers are still entitled to make any and all desired

inspections – they can and should do so!

• Buyers may still attempt to negotiate any needed repairs.

• Buyers may cancel the contract based on any items disapproved in the inspection report

or any defects disclosed by the seller.

• Purchasing a property “as is” does not limit a buyer’s options under the RF401 Purchase

and Sale Agreement although, in practice, an “as is” Seller will be less likely to complete or

negotiate needed repairs.

Sellers

• In practice, Sellers may offer a property “as is” because they don’t wish to make any

repairs or because they are unaware of what problems may exist.

• Sellers offering a property “as is” are still required to fully disclose any property defects of

which they have knowledge via the RF201 Tennessee Residential Property Condition

Disclosure, unless exempt. It is especially important that Sellers answer honestly when a

buyer inquires about a specific issue, i.e. plumbing or wiring.

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Offering a property “as is” does not obligate buyers to accept the property “as is” until

they’ve completed all desired evaluations and inspections. In the event a Seller offers a

property “as is” and a Buyer agrees to waive their statutory right to a Tennessee Residential

Property Condition Disclosure, an RF204 Tennessee Residential Property Condition Disclaimer

form may be used. The ONLY time this form may be used is when the Buyer of property agrees to

waive their statutory rights to a Residential Property Condition Disclosure.

Lender Requirements

It is important to familiarize yourself with lender requirements in your area related to appraisals and

inspections. Know what lenders expect to receive before they order the required items for the loan

obligations.

• If a lender needs the appraisal and/or inspection report before ordering loan documents, the

deadlines you fill in at the direction of the Buyer, included in the RF401 Purchase and Sale

Agreement should allow for this to happen to avoid putting the buyer at risk for breach. The

parties may also wish to include in the special stipulations that the appraisal and/or

inspection report must be obtained on or before a specific date.

• Buyers should be advised to stay in regular contact with the Lender to ensure their

obligations are fulfilled. Lenders should be made aware of the contractual deadlines for the

loan obligation. Using the RF708 Timeline Compliance Checklist for Purchase and Sale

Agreement is a tool you can utilize to make sure everyone involved in the transaction is

aware of the deadlines contained in the contract between the Buyer and Seller.

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CLASS EXERCISE #2: Inspections and Repairs

In the following examples, there are five scenarios related to property inspections and the inspection

contingency contained in the RF401 Purchase and Sale Agreement. Read each one carefully and decide

how you would handle the particular situation.

Scenario 1:

The buyer, John Taylor, is making an offer on the home owned by Betty Anderson, the

seller. The offer is contingent on inspections. John is willing to pay for any and all

inspections, which he expects to have completed within 10 days. If repairs are needed,

John is willing to negotiate with the seller. How would you address this in the offer?

Scenario 2:

Drew and Carolyn Carson, the buyers, completed their inspection on a home they are

purchasing. They obtained an inspection report identifying needed replacement of the HVAC

system, estimated at

$4,000. They want the seller to replace the system before they continue with

the transaction. How would you proceed if you represent the buyers?

Scenario 3:

You represent the seller, Tony Cleaver. The buyer requests repairs to the roof, estimated at

$3,000. The seller, Betsy Andrews, is willing to pay no more than $500 towards the needed

repairs. How would you proceed?

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Scenario 4:

You represent the Buyers, Artie and Julie Brown, who want to submit an offer on a home built

almost two years ago. They want to close quickly and an existing home warranty is transferrable.

They opt not to perform any inspections but notice water damage on an upstairs ceiling and two

cracked panes in the living room bay window during a walkthrough after the contract is accepted.

What are the Buyer’s options?

Scenario 5:

You represent the Buyer, Tom Gray, who is under contract on a home in an older section of town.

During the home inspection, the home inspector discovered several hairline cracks in the exterior

brick and also inside the home. The inspector recommended Tom call a licensed structural engineer

to inspect the cracks to determine if there were any major structural issues with the home. The

structural engineer cannot inspect the property for another 5 days due to his work schedule. The

inspection period ends two days from now. How would you address this situation?

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UNIT 4 – SPECIAL STIPULATIONS

Special Stipulations

• A real estate sales contract contains numerous stipulations and clauses that expand the agreement

between the seller and the buyer into concerns that go beyond the financial negotiations and the

various contingency agreements.

• In the RF401 Purchase and Sale Agreement many stipulations are addressed throughout the

Agreement. However, there are usually “special stipulations” that either the buyer or seller would

like to include in the Agreement not addressed in the “boilerplate” language of the Purchase and

Sale Agreement.

• Some example of “special stips” range from making the contract contingent on the sale of a home

to requiring the property be clean at the time of the final inspection (final walk-through.)

• Whatever the stipulation may be, it is important to keep the language simple and understandable.

Remember that your Tennessee real estate license does not allow you to practice law and draft

language that is not congruent with other parts of the contract or the integrity of the transaction.

• Be careful with the stipulation you insert and how it may impact the parties if they agree to it. Seek

the advice of your principal broker or closing/title attorney for assistance in drafting the correct

wording for the special stipulation(s) you would like to add to the agreement.

Points to Remember

• The preprinted portions of the RF401 Purchase and Sale Agreement have been approved by the

Tennessee REALTORS

forms committee and Tennessee REALTORS

attorneys.

• Handwritten provisions prevail! When you write something in the special stipulations section, it

should be consistent with the rest of the RF401 Purchase and Sale Agreement. Whenever

possible, use the same verbiage included in the preprinted portion, referencing the specific line

number(s), only changing what is absolutely necessary!

• Before writing something into the special stipulations section, you should FIRST check to make

sure the issue is not addressed by another Tennessee REALTORS

form.

• NEVER include phrases such as TBD, actual costs, negotiable, etc. Always be as specific as

possible, especially when it comes to dates, amounts and actions required of either party. If you do

not, then the contract may not be enforceable.

• The Special Stipulations Library (RF707) exists to assist you in addressing items in this section.

• If you’re using the special stipulations section to write in a contingency, there is likely another more

appropriate Tennessee REALTORS

form.

• The special stipulations section can be appropriately used to make simple changes to a preprinted

item, such as a required deadline, if the line number is referenced and exact verbiage reprinted,

with only the number of days changed.

• The special stipulations section should NEVER be used to write a new contract.

• If you do not have enough space in the special stipulations section use Form RF621 – Blank

Addendum.

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CLASS EXERCISE #3 – Special Stipulations

Class participants should divide into groups to address the following situations. In your groups, decide whether

the item should be addressed in the special stipulations section and, if so, how. If the item should NOT be

addressed in this section, identify how an alternative form or section of the Purchase and Sale Agreement

(RF401) would address it. Choose a representative who should be prepared to share the group’s answers with

the entire class.

1. The offer is contingent on the actual square footage of the property to be no less than 3,200 square

feet.

2. The mirrors in the Master Bedroom bathroom are to remain with the property.

3. Seller to pay all of buyer’s title expenses.

4. The offer is contingent on the sale of the buyer’s current home in California.

5. The buyer wants the seller to ensure the property is “broom clean” and free of any trash/debris.

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6. The buyer wants the seller to replace the damaged garage door.

7. The buyer wants to make sure the house has Radon levels within the acceptable EPA range.

8. The home is located behind another existing home and the driveway runs along the front neighbor’s

property (although it is part of the saleable property.) The buyer wants assurance their access

won’t be obstructed.

9. The buyer is obtaining an FHA loan to purchase the property.

10. The buyer wants to use the property for his dental office. The property is zoned residential, but

other homes on the same street have been converted to commercial use. He wants to make the

offer contingent on receiving approval from the city zoning board to use the house for his office.

11. The buyer wants the Dining Room curtains to stay with the property.

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12. The buyer wants the seller to be responsible for any special assessments levied on the property

before closing.

13. The property includes a large parcel of land and the buyer wants to make the offer contingent on a

survey.

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UNIT 5 – PRE-PRINTED ITEMS IN THE PURCHASE AND SALE AGREEMENT

Key Points for Pre-Printed Items in the Purchase and Sale Agreement

• The biggest lesson you can learn related to filling out contracts is one you learned a long time

ago – color inside the lines! Your goal is to fill in the existing picture, NOT draw a new one!

• The preprinted portions of the Tennessee REALTORS

RF401 Purchase and Sale Agreement

create obligations for the parties. To correctly explain them to clients and customers, you must

understand them yourself! ALL preprinted items should be thoroughly explained to buyers and

sellers, especially when the item requires action on their part.

• Do NOT strike through ANY portion of preprinted language. You should address any

changes in the Special Stipulations section or another appropriate Tennessee REALTORS

form (i.e. the RF651 Counter Offer).

• Some fixtures are preprinted as included in the sale. If your seller does not wish to include them,

you must note this specifically in writing – never assume anything. Please note that items

included in the Listing Agreement or MLS/MLS info sheet are NOT part of the binding

agreement between the parties.

• Pay special attention to notices required in the preprinted language and be sure to use the

appropriate Notification form, if applicable.

• ALL preprinted items should be thoroughly explained to buyers and sellers, especially when the

item requires action on their part.

Important Pre-Printed Components in the RF401 Purchase and Sale Agreement

• Items included in the purchase

• Items that REMAIN with the property

• Items that WILL NOT REMAIN with the

property

• Financial Contingency and Appraisal

• Closing Expenses

• Handling of Earnest Money/Trust Money

• Closing Date/Possession, Prorations

and Warranties Transfer

• Title Conveyance

• Inspection Contingency

• Legal terms and explanations

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UNIT 6 – DISCLOSURES AND DISCLAIMERS

Disclosing the Condition of the Property

When a homeowner elects to sell their home, under state law, they must disclose the condition of the

property to any prospective buyer. Under the Tennessee Residential Property Condition Disclosure

Act, the Property Condition Disclosure provides the buyer with information concerning the property

and its condition, if known by the seller. If the seller wants to sell the property without any

representations and warranties, they can complete a Property Condition Disclaimer.

Sellers must fill out the Tennessee Residential Property Condition Disclosure (RF201) form so it can

be presented to buyers before they submit an offer. The buyer prior to reaching a binding agreement

on the purchase of the property should carefully review any of these disclosures/disclaimers. The

law states it must be submitted “prior to the acceptance of a real estate purchase contract” T.C.A.

§66-5-203. The disclosure must include any defects known to the owner (see T.C.A. §66-5-202). It is

in the seller’s best interests to disclose any adverse facts about the property – better to have it all out

in the open beforehand and reduce their liability.

•

• In addition, licensees are responsible for ensuring the buyer clearly understands these disclosure

forms and be able to answer any questions the client may have concerning them. The licensee,

however, should never complete any of these forms for their client. It is imperative that only the

seller FULLY COMPLETES any disclosure/disclaimer on the property condition. Additionally,

the licensee should never advise what should be disclosed and what should not be disclosed.

These are legal questions and answering them in the practice of law. If a seller has a question

concerning what should be disclosed, he should speak with his/her own attorney.

Required Property Condition Disclosures and Disclaimers

There are three Tennessee REALTORS

forms that deal with the Tennessee Residential Property

Disclosure Act. One of these three forms should be completed in every transaction involving residential

property. ALL of these should be completed by the SELLER and disclosed to potential buyers.

Form RF 201 Tennessee Residential Property Condition Disclosure form

This form is the one most commonly used by licensees for their sellers to complete. This is the one

that is given to the seller where he/she discloses information about the property.

Note: Remember, if the seller or licensee is aware of any adverse fact concerning the

property it must be disclosed even if an Exemption form is used.

Form RF 204 Tennessee Residential Property Disclaimer form

The Disclaimer form is RF 204. This is the form that you use when the seller wants to sell the

property “as is”. The seller is stating that he is not going to make repairs and is not disclosing

anything. However, in these circumstances, the buyer MUST agree to this disclaimer. If not, then the

Condition Disclosure form must be completed if the sale is to proceed.

If the buyer agrees to accept the Disclaimer, the seller is not obligated to present the disclosure

statement (and the buyer does not have to sign it).

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In certain situations (such as someone has a power of attorney for the seller), you can explain that

the seller is not able to provide an adequate disclosure form (get the seller’s permission or the

person holding the power of attorney before stating this to the buyer). This may make them more

agreeable to accept the Disclaimer, especially if they understand that they can make whatever

inspections they wish and can terminate the contract if they are not happy with the outcome of the

inspections.

Form RF 205 Additional Required Residential Disclosures

Per T.C.A.§ 66-5-212, all sellers are required to the presence of exterior injection wells, percolation

test(s), foundation relocations, sinkholes, etc. This information can be found on RF201 and RF204. If a

seller elects to complete RF203 (TN Residential Property Condition Exemption Notification) they will also

need to complete an RF205. (This form was added in January 2018.)

Form RF203 Tennessee Residential Property Condition Exemption Notification

For “exempt” properties, no form is required, but an agent should use the RF 203 so that their file has

documentation in it clarifying that the seller is exempt. Be aware, however, that if the RF203 is

completed and RF205 must accompany it.

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CLASS EXERCISE #4: Proper Disclosures

For the following items, identify which form(s) should be used to make the disclosure.

Issue

Form

1. Lead-based paint was found and removed from the

basement of the seller’s home.

RF209 (LBP Disc), RF201(Prop Cond

Disc)

2. The seller knows the roof has a minor leak.

RF201 (Prop Cond Disc)

3. The buyer has agreed to waive their right to the seller’s

property disclosure

RF204 (Prop Cond Disclaimer)

4. The seller added a room to the rear of the house without a

permit.

RF201 (Prop Cond Disc)

5. The home has four bedrooms but the seller admits the

septic permit only allows for three.

RF201 (Prop Cond Disc)

6. During periods of heavy rain, the backyard tends to have a

great deal of standing water.

RF201 (Prop Cond Disc)

7. The home was previously treated for radon.

RF201 (Prop Cond Disc)

8. The seller just replaced the refrigerator, which is included

in the sale.

RF656 (Notification), RF401

9. The seller’s home was previously treated twice for termite

damage.

RF201 (Prop Cond Disc)

10. A neighbor’s fence encroaches two feet onto the left side

of the seller’s property but they have refused to move it.

RF201 (Prop Cond Disc)

11. The buyer is considering waiving their right to an

inspection.

RF656 Notification

RF204 (Disclaimer Notice),

RF712 Get A Home Inspection and

Property Survey

12. The seller’s property contains an exterior injection well,

which is in working order.

RF201, 203 and/or 204 (Ext Inj Well

Disc)

13. During the contract period, the seller discovers a

significant amount of water damage in the rear wall of an

upstairs closet.

RF201 (Prop Cond Disc)

14. The developer of a vacant lot of land now listed for sale

has paid a $400 impact fee to the city with the installation

of utilities.

RF207 (Impact Fee Disc)

15. The seller has never occupied the property.

RF203 Prop. Cond. Exempt

16. The seller’s property contains a large storage shed they

are planning on having moved to their new home.

RF653 Amendment to the Purchase

Agreement; RF401 Purchase and

Sale Agreement

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UNIT 7 – COMPLETING THE OFFER

Before You Write an Offer

The following are suggestions of items you and your client should have prior to writing an offer to

purchase:

1. Agency determined, and proper paperwork completed - Tennessee REALTORS

form RF 302 -

Confirmation of Agency Status disclosure form and possibly RF 301 - Working with a Real

Estate Professional.

2. TN Residential Property Disclosure (RF 201), Disclaimer (RF 204), Exemption (RF 203) and/or

Additional Required Residential Disclosures (RF205).

3. Lead Based Paint disclosure (RF 209), if applicable

4. Disclaimer Notice (RF 304)

5. Good Faith Estimate from buyers lender

6. Vendor lists (RF 711)

7. If any known percolation tests, soil absorption rates, or if property contains Exterior Injection

Well, you may use Tennessee REALTORS

form (RF 205). You may also want to use RF 205

if the property is located in a PUD or if the seller has knowledge that a single-family residence

on the property has been moved from one foundation to another.

Two Very Important Rules Concerning Offers

1. TREC Rule Concerning Offers

TREC RULE 1260-02-.08 OFFERS TO PURCHASE. A broker or affiliate broker promptly shall

tender every written offer to purchase or sell obtained on a property until a contract is

signed by all parties. Upon obtaining a proper acceptance of an offer to purchase, or any

counteroffer, a broker or affiliate broker promptly shall de

liver t

rue executed copies of same,

signed by the seller, to both the purchaser and the seller. Brokers and affiliate brokers shall

make certain that all of the terms and conditions of the real estate transaction are included in the

contract to purchase. In the event an offer is rejected, the broker or affiliate broker shall

request the seller to note the rejection on the offer and return the same to the offeror or the

offeror’s agent.

NOTE: The NAR Code of Ethics and Standards of Practice provides additional requirements for handling

offers. Standard of Practice 1-7 requires that listing brokers “continue to submit to the seller/landlord all offers

and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in

riting”,

but does not require them to continue to market the property after an offer has been accepted.

Standards of Practice 1-8 concerns buyer’s/tenant’s agents and states that they are required to “submit to

buyers/tenants all offers and counter offers until acceptance but have no obligation to continue to show

properties to their clients after an offer has been accepted unless otherwise agreed in writing.”

2. Statute of Frauds

Contracts for the sale of real estate must be in writing and signed by all parties to be

enforceable in the state of Tennessee. This is due to the “statute of frauds,” which in Tennessee

holds that, in order to be enforceable, the promise or agreement, or some memorandum or

note thereof, shall be in writing, and signed by the party to be charged therewith. Tennessee

courts have generally held that an oral contract for the sale of real estate is not enforceable, even

though the parties may have “partially” performed on the contract.

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CLASS EXERCISE #5 – Writing the Offer

After reviewing the Tennessee REALTORS

RF401 Purchase and Sale Agreement, students will divide into

groups. Using the following set of circumstances, each group will fill out the Purchase and Sale Agreement AND

reference any other additional forms if needed. A representative from each group will be asked to present a

portion of the offer as they would assist the buyer in filling it out.

You have been showing property to Tom and Beverly Smith for almost three months. Today, they found

their “dream” home and have decided to purchase Robert and Martha Jones’ 30 year old home at 3450

Golf Course Lane. The home is a four bedroom, two and one-half bath brick home in Elmwood, TN. It

was built in 1968. They are willing to offer $305,000 for the property, assuming they successfully close

on their current home at 550 East River St. in Columbus, Ohio, upon which they have a contract

scheduled to close in three weeks.

They would like to purchase the home using the VA entitlement that was earned by Mr. Smith while

serving in the U.S. Army. They would like to put down as little as possible and prefer to have the

current owner pay for all their costs from the lender.

They need a response by tomorrow afternoon, as they like another home that will meet their needs

as well and want to make sure they are able to secure one of these two homes. Although, they aren’t

particularly interested in the storage shed in the backyard, as well as the hot tub on the deck, they

really do not want those items to stay with the property.

Additionally, the property has a septic system, an exterior 500 lb. propane gas tank and a shared

driveway with the home next door.

The Smiths are unfamiliar with the typical arrangements that agents make for clients for appraisals,

inspections, etc. and are leaving those things up to your judgment. However, they very much want to

have possession at time of closing and would like to close in forty-five days.

The name of your company is Acme Realty. You suggest – and your client agrees – to offer 1% of the

offered price as Trust Money, with your firm holding it in an escrow account.

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PPENDIX

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Tennessee REALTORS

Forms Resource Guide

TAR FORM

PURPOSE

RF 302– Confirmation of Agency Status

To confirm the required agency disclosures

have been made – this is NOT the same as

an agency agreement!

RF303– Notification of Change in Status

or Agency Relationship

To confirm a change in agency status

RF 143 & RF144– Buyer Representation

Agreement (Non-Exclusive)

As a non-exclusive agency agreement for

buyer agency

RF141 & RF142– Buyer Representation

Agreement (Exclusive)

As an exclusive agency agreement for buyer

agency

RF654– Repair/Replacement Proposal

When the sale is contingent on the buyer

completing inspections during the

inspections period, this form is to be used as

a worksheet to negotiate the repairs

RF655– Repair/Replacement Amendment

When the parties agree on repairs, those

repairs are listed on this amendment.

RF657– Closing Date/Possession

Amendment

To make a change to the closing date and/or

possession date specified in the RF401

RF651– Counter Offer

To submit a Counter Offer – this form should

ALWAYS be used instead of scratching out

portions of the original offer!

RF401 – Purchase and Sale

Agreement

As the standard offer to purchase for

residential properties

RF304– Disclaimer

Notice by licensees to notify parties they are

NOT experts on property

condition/inspection issues

RF209– Lead-Based Paint

Disclosure

To fulfill statutory requirements for lead-

based paint disclosures

RF201– Tennessee Residential

Property Condition Disclosure

By the seller to disclose material facts about

a property

RF202– Sellers’ Property Update

To update the property condition disclosure

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RF305– Personal Interest Disclosure and

Consent

To verify disclosure and obtain written

consent when the licensee has a present or

contemplated personal interest in the

property

RF706– Interpleader

When a Broker must interplead Trust Money

dispute

RF161– Agreement to Show Property

To obtain a Seller’s written consent to market

and show their property

RF656– Notification

To adhere to requirements for notice for

certain items within the RF401

RF658– Authorized to Make Repairs

When the buyer wants to obtain the seller’s

consent to have access to the property prior

to closing for the purpose of completing

repairs

RF481– Trust Money Disbursement and

Mutual Release of Purchase of PSA

Release

To establish how Trust Money will be

dispersed

RF707– Special Stipulations Language

To provide examples of appropriate

language to use in the Special Stipulations

sections for common issues

RF623– Sellers’ Right to Continue to

Market Property

Enables seller to give Buyer XX hours to

remove certain contingencies in the event an

acceptable offer is received

RF624– Sellers’ Notice to Buyer of

Receipt of Acceptable Offer

Form to give notice of acceptable offer and

removal (or non-removal) of contingencies

RF711– Vendor List

When the licensee recommends vendors

such as inspectors, lenders, etc.

RF660– Buyers Final Inspection

To properly document Buyer’s final

inspection

RF203– Tennessee Residential Property

Condition Exemption Notification

When a property or transaction is exempt

from statutory disclosure requirements

RF204– Tennessee Residential Property

Condition Disclaimer

When the Buyer waives their right to receive

the Property Condition Disclosure form

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RF621– Blank Addendum

Blank, as stated.

RF625– FHA/VA Loan Addendum

When the Buyer is getting a FHA or VA loan

RF714– Water Supply and Waste Disposal

Notification

When a property is served by a well, septic

or other water or waste system

RF708– Timeline Compliance Checklist

for P&S Agreement

As a worksheet to keep up with timelines and

deadlines within the RF401

RF208– Subsurface Sewage

To request information from governmental

agency charged with keeping septic records

RF205– Additional Required

Residential Disclosures

When the property is served by an exterior

injection well or when soil absorption rates or

percolation tests have been performed. Also

includes disclosure for PUD’s, sinkholes,

house moved from one foundation to

another.

RF101– Exclusive Right to Sell

Listing Agreement (Designated

Agency)

As an Exclusive Right to Sell Listing

Agreement for Designated Seller Agency

RF102– Exclusive Right to Sell

Listing Agreement (Seller

Agency)

As an Exclusive Right to Sell Listing

Agreement for traditional Seller Agency

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Version 01/01/2018

RF401 – Purchase and Sale Agreement, Page 1 of 10

This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

PURCHASE AND SALE AGREEMENT

1. Purchase and Sale. For and in consideration of the mutual covenants herein and other good and valuable consideration, 1

the receipt and sufficiency of which is hereby acknowledged, the undersigned buyer 2

_______________________________________________________________________ (“Buyer”) agrees to buy and the 3

undersigned seller _________________________________________________________________________ (“Seller”) 4

agrees to sell all that tract or parcel of land, with such improvements as are located thereon, described as follows: 5

All that tract of land known as: _______________________________________________________________________ 6

(Address) _______________________________________ (City), Tennessee, __________ (Zip), as recorded in 7

_____________________________ County Register of Deeds Office, _________ deed book(s), _________ page(s), 8

and/or ______________________________________ instrument number and as further described as: 9

___________________________________________________________________________________ together with all 10

fixtures, landscaping, improvements, and appurtenances, all being hereinafter collectively referred to as the “Property.” 11

A. INCLUDED as part of the Property (if present): all attached light fixtures and bulbs including ceiling fans; 12

permanently attached plate glass mirrors; heating, cooling, and plumbing fixtures and equipment; all doors, storm 13

doors and windows; all window treatments (e.g., shutters, blinds, shades, curtains, draperies) and hardware; all wall-14

to-wall carpet; range; all built-in kitchen appliances; all bathroom fixtures and bathroom mirrors; all gas logs, 15

fireplace doors and attached screens; all security system components and controls; garage door opener and all (at 16

least ____) remote controls; an entry key; swimming pool and its equipment; awnings; permanently installed 17

outdoor cooking grills; all landscaping and all outdoor lighting; mailbox(es); attached basketball goals and 18

backboards; TV mounting brackets (but excluding flat screen TVs); antennae and satellite dishes (excluding 19

components); and central vacuum systems and attachments. 20

B. Other items that REMAIN with the Property at no additional cost to Buyer: 21

_________________________________________________________________________________________________ 22

_________________________________________________________________________________________________ 23

_________________________________________________________________________________________________ 24

C. Items that WILL NOT REMAIN with the Property: 26

_________________________________________________________________________________________________ 27

_________________________________________________________________________________________________ 28

D. LEASED ITEMS: Leased items that remain with the Property: (e.g., security systems, water softener systems, fuel 29

tank, etc.): ____________________________________________________________________________________. 30

Buyer shall assume any and all lease payments as of Closing. If leases are not assumable, the balance shall be paid 31

in full by Seller at or before Closing. 32

□ Buyer does not wish to assume a leased item. (THIS BOX MUST BE CHECKED IN ORDER FOR IT TO 33

BE A PART OF THIS AGREEMENT.) 34

Buyer does not wish to assume Seller’s current lease of ____________________________________________; 35

therefore, Seller shall have said lease cancelled and leased items removed from Property prior to Closing. 36

E. FUEL: Fuel, if any, will be adjusted and charged to Buyer and credited to Seller at Closing at current market prices. 37

2. Purchase Price, Method of Payment and Closing Expenses. Buyer warrants that, except as may be otherwise 38

provided herein, Buyer will at Closing have sufficient cash to complete the purchase of the Property under the terms of 39

this Purchase and Sale Agreement (hereinafter “Agreement”). The purchase price to be paid is: 40

$____________________, ________________________________________________________________ U.S. Dollars, 41

(“Purchase Price”) which shall be disbursed to Seller or Seller’s Closing Agency by one of the following methods: 42

i. a Federal Reserve Bank wire transfer; 43

ii. a Cashier’s Check issued by a financial institution as defined in 12 CFR § 229.2(i); OR 44

iii. other such form as is approved in writing by Seller. 45

A. Financial Contingency – Loan(s) To Be Obtained. This Agreement is conditioned upon Buyer’s ability to obtain 46

a loan(s) in the principal amount up to _________% of the Purchase Price listed above to be secured by a deed of 47

trust on the Property. “Ability to obtain” as used herein means that Buyer is qualified to receive the loan described 48

DRAFT SPECIMEN

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This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

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at (615) 321-1477.

herein based upon Lender’s customary and standard underwriting criteria. In consideration of Buyer, having acted 49

in good faith and in accordance with the terms below, being unable to obtain financing by the Closing Date, the 50

sufficiency of such consideration being hereby acknowledged, Buyer may terminate this Agreement by providing 51

written notice via the Notification form or equivalent written notice. Seller shall have the right to request any 52

supporting documentation regarding loan denial. Upon termination, Buyer is entitled to a refund of the Earnest 53

Money/Trust Money. Lender is defined herein as the financial institution funding the loan. 54

The loan shall be of the type selected below (Select the appropriate boxes. Unselected items will not be part of 55

this Agreement): 56

□ Conventional Loan □ FHA Loan; attach addendum 57

□ VA Loan; attach addendum □ Other _____________________________________________ 58

Buyer may apply for a loan with different terms and conditions and also Close the transaction provided all other 59

terms and conditions of this Agreement are fulfilled, and the new loan does not increase any costs charged to Seller. 60

Buyer shall be obligated to Close this transaction if Buyer has the ability to obtain a loan with terms as described 61

herein and/or any other loan for which Buyer has applied and been approved. 62

Loan Obligations: The Buyer agrees and/or certifies as follows: 63

(1) Within three (3) days after the Binding Agreement Date, Buyer shall make application for the loan and 64

shall pay for credit report. Buyer shall immediately notify Seller or Seller’s representative of having 65

applied for the loan and provide Lender’s name and contact information, and that Buyer has instructed 66

Lender to order credit report. Such certifications shall be made via the Notification form or equivalent 67

written notice; 68

(2) Within fourteen (14) days after the Binding Agreement Date, Buyer shall warrant and represent to Seller 69

via the Notification form or equivalent written notice that: 70

a. Buyer has secured evidence of hazard insurance which will be effective at Closing and Buyer shall 71

notify Seller of the name of the hazard insurance company; 72

b. Buyer has notified Lender of an Intent to Proceed and has available funds to Close per the signed 73

Loan Estimate; and 74

c. Buyer has requested that the appraisal be ordered and affirms that the appraisal fee has been paid. 75

(3) Buyer shall pursue qualification for and approval of the loan diligently and in good faith; 76

(4) Buyer shall continually and immediately provide requested documentation to Lender and/or loan 77

originator; 78

(5) Unless otherwise stated in this Agreement, Buyer represents that this loan is not contingent upon the lease 79

or sale of any other real property and the same shall not be used as the basis for loan denial; and 80

(6) Buyer shall not intentionally make any material changes in Buyer’s financial condition which would 81

adversely affect Buyer’s ability to obtain the Primary Loan or any other loan referenced herein. 82

Should Buyer fail to timely comply with section 2.A.(1) and/or 2.A.(2) above and provide notice as required, Seller 83

may make written demand for compliance via the Notification form or equivalent written notice. If Buyer does not 84

furnish Seller the requested documentation within two (2) days after such demand for compliance, Buyer shall be 85

considered in default and Seller’s obligation to sell is terminated. 86

□ B. Financing Contingency Waived (THIS BOX MUST BE CHECKED TO BE PART OF THIS AGREEMENT.) 87

(e.g. “All Cash”, etc.): Buyer’s obligation to close shall not be subject to any financial contingency. Buyer reserves 88

the right to obtain a loan. Buyer will furnish proof of available funds to close in the following manner: 89

_____________________________________ (e.g. bank statement, Lender’s commitment letter) within five (5) 90

days after Binding Agreement Date. Should Buyer fail to do so, Seller may make written demand for compliance 91

via the Notification form or equivalent written notice. If Buyer does not furnish Seller with the requested notice 92

within two (2) days after such demand for compliance, Buyer shall be considered in default and Seller’s obligation 93

to sell is terminated. Failure to Close due to lack of funds shall be considered default by Buyer. 94

In the event this Agreement is contingent upon an appraisal (See Paragraph 2.C. below), Buyer must order the 95

appraisal and provide Seller with the name and telephone number of the appraisal company and proof that appraisal 96

was ordered within five (5) days of the Binding Agreement Date. Should Buyer fail to do so, Seller may make 97

written demand for compliance via the Notification form or equivalent written notice. If Buyer does not furnish 98

Seller with the requested notice within two (2) days after such demand for compliance, Buyer shall be considered in 99

default and Seller’s obligation to sell is terminated. 100

C. Appraisal (Select either 1 or 2 below. The sections not checked are not a part of this Agreement). 101

□ 1. This Agreement IS NOT contingent upon the appraised value either equaling or exceeding the agreed upon 102

Purchase Price. 103

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This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

□ 2. This Agreement IS CONTINGENT upon the appraised value either equaling or exceeding the agreed 104

upon Purchase Price. If the appraised value is equal to or exceeds Purchase Price, this contingency is 105

satisfied. In consideration of Buyer having conducted an appraisal, the sufficiency of such consideration 106

being hereby acknowledged, if the appraised value of the Property does not equal or exceed the Purchase 107

Price, Buyer shall promptly notify the Seller via the notification form or written equivalent notice. Buyer 108

shall then have 3 days to either: 109

1. waive the appraisal contingency via the notification form or equivalent written notice 110

OR 111

2. terminate the agreement by giving notice to seller via the notification form or equivalent written 112

notice. Upon timely termination, Buyer is entitled to a refund of the Earnest money. 113

In the event buyer fails to either waive the appraisal or terminate the agreement as set forth above, this 114

contingency shall be deemed satisfied. Thereafter, failure to appraise shall not be used as the basis for loan 115

denial or termination of contract. Seller shall have the right to request any supporting documentation 116

showing appraised value did not equal or exceed the agreed upon purchase price. 117

D. Closing Expenses. 118

1. Seller Expenses. Seller shall pay all existing loans and/or liens affecting the Property, including all penalties, 119

release preparation costs, and applicable recording costs; any accrued and/or outstanding association dues or 120

fees; fee (if any) to obtain lien payoff/estoppel letters/statement of accounts from any and all associations, 121

property management companies, mortgage holders or other liens affecting the Property; Seller’s closing fee, 122

document preparation fee and/or attorney’s fees; fee for preparation of deed; notary fee on deed; and financial 123

institution (Bank, Credit Union, etc.) wire transfer fee or commercial courier service fee related to the 124

disbursement of any lien payoff(s). Seller additionally agrees to permit any withholdings and/or to pay any 125

additional sum due as is required under the Foreign Investment in Real Property Tax Act. Failure to do so will 126

constitute a default by Seller. 127

In the event Seller is subject to Tax Withholding as required by the Foreign Investment in Real Property 128

Tax Act, (hereinafter “FIRPTA”), Seller additionally agrees that such Tax Withholding must be collected 129

from Seller by Buyer’s Closing Agent at the time of Closing. In the event Seller is not subject to FIRPTA, 130

Seller shall be required as a condition of Closing to sign appropriate affidavits certifying that Seller is not 131

subject to FIRPTA. It is Seller’s responsibility to seek independent tax advice or counsel prior to the Closing 132

Date regarding such tax matters. 133

2. Buyer Expenses. Buyer shall pay all transfer taxes and recording fees on deed of conveyance and deed of trust; 134

Buyer’s closing fee, document preparation fee and/or attorney’s fees; preparation of note, deed of trust, and 135

other loan documents; mortgage loan inspection or boundary line survey; credit report; required premiums for 136

private mortgage, hazard and flood insurance; required reserved deposits for insurance premiums and taxes; 137

prepaid interest; re-inspection fees pursuant to appraisal; insured Closing Protection Letter; association fees as 138

stated within paragraph 4.E.; and any costs incident to obtaining and closing a loan, including but not limited to: 139

appraisal, origination, discount points, application, commitment, underwriting, document review, courier, 140

assignment, photo, tax service, notary fees, and any wire fee or other charge imposed for the disbursement of 141

the Seller’s proceeds according to the terms of this Agreement. 142

3. Title Expenses. Cost of title search, mortgagee's policy and owner's policy (rates to be as filed with the 143

Tennessee Department of Commerce and Insurance) shall be paid as follows: 144

_________________________________________________________________________________________. 145

Simultaneous issue rates shall apply. 146

Not all of the above items (Seller Expenses, Buyer Expenses and Title Expenses) are applicable to every 147

transaction and may be modified as follows: 148

_________________________________________________________________________________________________149

_________________________________________________________________________________________________ 150

Closing Agency for Buyer: ______________________________________________________________________ 151

Closing Agency for Seller: ______________________________________________________________________ 152

3. Earnest Money/Trust Money. Buyer has paid or will pay within _______ days after the Binding Agreement Date to 153

_________________________________________________________________ (name of Holder) (“Holder”) located at 154

_________________________________________________________________ (address of Holder), a Earnest 155

Money/Trust Money deposit of $_______________ by check (OR 156

_____________________________________________) (“Earnest Money/Trust Money”). 157

A. Failure to Receive Earnest Money/Trust Money. In the event Earnest Money/Trust Money (if applicable) is not 158

timely received by Holder or Earnest Money/Trust Money check or other instrument is not honored for any reason 159

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This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

by the bank upon which it is drawn, Holder shall promptly notify Buyer and Seller of the Buyer’s failure to deposit 160

the agreed upon Earnest Money/Trust Money. Buyer shall then have one (1) day to deliver Earnest Money/Trust 161

Money in immediately available funds to Holder. In the event Buyer does not deliver such funds, Buyer is in default 162

and Seller shall have the right to terminate this Agreement by delivering to Buyer or Buyer’s representative written 163

notice via the Notification form or equivalent written notice. In the event Buyer delivers the Earnest Money/Trust 164

Money in immediately available funds to Holder before Seller elects to terminate, Seller shall be deemed to have 165

waived his right to terminate, and the Agreement shall remain in full force and effect. 166

B. Handling of Earnest Money/Trust Money upon Receipt by Holder. Earnest Money/Trust Money (if applicable) 167

is to be deposited promptly after the Binding Agreement Date or the agreed upon delivery date in this Earnest 168

Money/Trust Money paragraph or as specified in the Special Stipulations paragraph contained at paragraph 19 169

herein. Holder shall disburse Earnest Money/Trust Money only as follows: 170

(a) at Closing to be applied as a credit toward Buyer’s Purchase Price; 171

(b) upon a written agreement signed by all parties having an interest in the funds; 172

Money/Trust Money; 174

(d) upon a reasonable interpretation of the Agreement; or 175

(e) upon the filing of an interpleader action with payment to be made to the clerk of the court having 176

jurisdiction over the matter. 177

Holder shall be reimbursed for, and may deduct from any funds interpleaded, its costs and expenses, including 178

reasonable attorney’s fees. The prevailing party in the interpleader action shall be entitled to collect from the other 179

party the costs and expenses reimbursed to Holder. No party shall seek damages from Holder (nor shall Holder be 180

liable for the same) for any matter arising out of or related to the performance of Holder’s duties under this Earnest 181

Money/Trust Money paragraph. Earnest Money/Trust Money shall not be disbursed prior to fourteen (14) days after 182

deposit unless written evidence of clearance by bank is provided. 183

4. Closing, Prorations, Special Assessments and Warranties Transfer. 184

A. Closing Date. This transaction shall be closed (“Closed”) (evidenced by delivery of warranty deed and payment of 185

Purchase Price, the “Closing”), and this Agreement shall expire, at 11:59 p.m. local time on the _______ day of 186

_________________________, __________(“Closing Date”), or on such earlier date as may be agreed to by the 187

parties in writing. Such expiration does not extinguish a party’s right to pursue remedies in the event of default. 188

Any extension of this date must be agreed to by the parties in writing via the Closing Date/Possession Date 189

Amendment or equivalent written agreement. 190

1. Possession. Possession of the Property is to be given (Select the appropriate boxes below. Unselected items 191

will not be part of this Agreement): 192

□ at Closing as evidenced by delivery of warranty deed and payment of Purchase Price; 193

OR 194

□ as agreed in the attached and incorporated Temporary Occupancy Agreement; 195

B. Prorations. Real estate taxes, rents, dues, maintenance fees, and association fees on said Property for the calendar 196

year in which the sale is Closed shall be prorated as of the Closing Date. In the event of a change or reassessment of 197

taxes for the calendar year after Closing, the parties agree to pay their recalculated share. Real estate taxes, rents, 198

dues, maintenance fees, and association fees for prior years and roll back taxes, if any, will be paid by Seller. 199

C. Special Assessments. Special assessments approved or levied prior to the Closing Date shall be paid by the Seller 200

at or prior to Closing unless otherwise agreed as follows: 201

_____________________________________________________________________________________________. 202

D. Warranties Transfer. Seller, at the option of Buyer and at Buyer’s cost, agrees to transfer Seller’s interest in any 203

manufacturer’s warranties, service contracts, termite bond or treatment guarantee and/or similar warranties which by 204

their terms may be transferable to Buyer. 205

E. Association Fees. Buyer shall be responsible for all homeowner or condominium association transfer fees, related 206

administration fees (not including statement of accounts), capital expenditures/contributions incurred due to the 207

transfer of Property and/or like expenses which are required by the association, property management company 208

and/or the bylaws, declarations or covenants for the Property (unless otherwise specifically addressed herein and/or 209

unless specifically chargeable to Seller under applicable bylaws, declarations, and/or neighborhood covenants). 210

5. Title and Conveyance. 211

A. Seller warrants that at the time of Closing, Seller will convey or cause to be conveyed to Buyer or Buyer’s assign(s) 212

good and marketable title to said Property by general warranty deed, subject only to: 213

(1) zoning; 214

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at (615) 321-1477.

(2) setback requirements and general utility, sewer, and drainage easements of record on the Binding 215

Agreement Date upon which the improvements do not encroach; 216

(3) subdivision and/or condominium declarations, covenants, restrictions, and easements of record on the 217

Binding Agreement Date; and 218

(4) leases and other encumbrances specified in this Agreement. 219

If title examination, closing or loan survey pursuant to Tenn. Code Ann. § 62-18-126, boundary line survey, or other 220

information discloses material defects, Buyer may, at Buyer's discretion: 221

(1) accept the Property with the defects OR 222

(2) require Seller to remedy such defects prior to the Closing Date. Buyer shall provide Seller with written 223

notice of such defects via the Notification form or equivalent written notice. If defects are not remedied 224

prior to Closing Date, Buyer and Seller may elect to extend the Closing Date by mutual written agreement 225

evidenced by the Closing Date/Possession Amendment form or other written equivalent. If defects are not 226

remedied by the Closing Date or any mutually agreed upon extension thereof, this Agreement shall 227

terminate, and Buyer shall be entitled to refund of Earnest Money/Trust Money. 228

Good and marketable title as used herein shall mean title which a title insurance company licensed to do business in 229

Tennessee will insure at its regular rates, subject only to standard exceptions. The title search or abstract used for 230

the purpose of evidencing good and marketable title must be acceptable to the title insurance agent and the issuing 231

title insurance company. Seller agrees to execute such appropriate affidavits and instruments as may be required by 232

the issuing title insurance company. 233

B. Deed. Deed is to be made in the name of ___________________________________________________________. 234

The manner in which Buyer takes title determines ownership and survivorship rights. It is the Buyer’s responsibility 235

to consult the closing agency or attorney prior to Closing. 236

6. Lead-Based Paint Disclosure (Select the appropriate box. Items not selected are not part of this Agreement). 237

□ does not apply. □ does apply (Property built prior to 1978). 238

7. Inspections. 239

A. Buyer’s Right to Make Inspection(s). All inspections/reports, including but not limited to the home inspection 240

report, those required/recommended in the home inspection report, Wood Destroying Insect Infestation 241

Inspection Report, septic inspection and well water test, are to be made at Buyer's expense, unless otherwise 242

stipulated in this Agreement. The parties hereto agree that in the event Buyer shall elect to contract with a third 243

party inspector to obtain a “Home Inspection” as defined by Tennessee law, said inspection shall be conducted by a 244

licensed Home Inspector. However, nothing in this paragraph shall preclude Buyer from conducting any inspections 245

on his/her own behalf, nor shall it preclude Buyer from retaining a qualified (and if required by law, licensed) 246

professional to conduct inspections of particular systems or issues within such professional’s expertise or licensure, 247

including but not limited to inspection of the heating/cooling systems, electrical systems, foundation, etc., so long as 248

said professional is not in violation of Tenn. Code Ann. § 62-6-301, et seq. as may be amended. Seller shall cause 249

all utility services and any pool, spa, and similar items to be operational so that Buyer may complete all 250

inspections and tests under this Agreement. Buyer agrees to indemnify Seller from the acts of himself, his 251

inspectors and/or representatives in exercising his rights under this Purchase and Sale Agreement. Buyer’s 252

obligations to indemnify Seller shall also survive the termination of this Agreement by either party, which shall 253

remain enforceable. Buyer waives any objections to matters of purely cosmetic nature (e.g. decorative, color or 254

finish items) disclosed by inspection. Buyer has no right to require repairs or alterations purely to meet 255

current building codes, unless required to do so by governmental authorities. 256

B. Initial Inspections. Buyer and/or his inspectors/representatives shall have the right and responsibility to enter the 257

Property during normal business hours, for the purpose of making inspections and/or tests of the Property. Buyer 258

and/or his inspectors/representatives shall have the right to perform a visual analysis of the condition of the 259

Property, any reasonably accessible installed components, the operation of the Property’s systems, including any 260

controls normally operated by Seller including the following components: heating systems, cooling systems, 261

electrical systems, plumbing systems, structural components, foundations, roof coverings, exterior and interior 262

components, any other site aspects that affect the Property, and environmental issues. 263

C. Wood Destroying Insect Infestation Inspection Report. If desired by Buyer or required by Buyer’s Lender, it 264

shall be Buyer’s responsibility to obtain at Buyer’s expense a Wood Destroying Insect Infestation Inspection Report 265

(the “Report”), which shall be made by a Tennessee licensed and chartered pest control operator. 266

The foregoing expense may be subject to governmental guidelines relating to VA Loans (See VA/FHA Loan 267

Addendum if applicable). 268

DRAFT SPECIMEN

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This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

The inspection shall include each dwelling, garage, and other permanent structure on the Property excluding 269

_____________________________________________________ for evidence of active infestation and/or damage. 270

Buyer shall cause such Report to be delivered to Seller simultaneously with any repairs requested by the Buyer or 271

the end of the Inspection Period, whichever is earlier. If the Report indicates evidence of active infestation, Seller 272

agrees to treat infestation at Seller’s expense and provide documentation of the treatment to Buyer prior to Closing. 273

Requests for repair of damage, if any, should be addressed in the Buyer's request for repairs pursuant to 274

Subparagraph 8.D., Buyer’s Inspection and Resolution below. 275

D. Buyer’s Inspection and Resolution. Within ________ days after the Binding Agreement Date (“Inspection 276

Period”), Buyer shall cause to be conducted any inspection provided for herein, including but not limited to the 277

Wood Destroying Insect Infestation Inspection Report AND shall provide written notice of such to Seller as 278

described below. In the event Buyer fails to timely make such inspections and respond within said timeframe as 279

described herein, the Buyer shall have forfeited any rights provided under this Section 7, and in such case shall 280

accept the Property in its current condition, normal wear and tear excepted. 281

In said notice Buyer shall either: 282

(1) In consideration of Buyer having conducted Buyer’s good faith inspections as provided for herein, the 283

sufficiency of such consideration being hereby acknowledged, Buyer shall furnish Seller with a list of 284

written specified objections and immediately terminate this Agreement via the Notification form or 285

equivalent written notice. All Earnest Money/Trust Money shall be returned to Buyer upon termination. 286

OR 287

(2) accept the Property in its present “AS IS” condition with any and all faults and no warranties expressed or 288

implied via the Notification form or equivalent written notice. Seller has no obligation to make repairs. 289

OR 290

(3) furnish Seller a written list of items which Buyer requires to be repaired and/or replaced with like quality or 291

value in a professional and workmanlike manner. Seller shall have the right to request any supporting 292

documentation that substantiates any item listed. 293

a. Resolution Period. Seller and Buyer shall then have a period of ______ days following receipt of 294

the above stated written list (“Resolution Period”) to reach a mutual agreement as to the items to 295

be repaired or replaced with like quality or value by Seller, which shall be evidenced by the 296

Repair / Replacement Amendment or written equivalent(s). The parties agree to negotiate repairs 297

in good faith during the Resolution Period. In the event Seller and Buyer do not reach a mutual 298

written resolution during such Resolution Period or a mutually agreeable written extension thereof 299

as evidenced in an Amendment to this Agreement signed by both parties within said period of 300

time, this Agreement is hereby terminated. If terminated, Buyer is entitled to a refund of the 301

Earnest Money/Trust Money. 302

□ E. Waiver of All Inspections. THIS BOX MUST BE CHECKED TO BE PART OF THIS AGREEMENT. 303

Buyer, having been advised of the benefits of inspections, waives any and all Inspection Rights under this 304

Paragraph 8 (including but not limited to the Wood Destroying Insect Infestation Inspection Report). 305

8. Final Inspection. Buyer and/or his inspectors/representatives shall have the right to conduct a final inspection of 306

Property on the Closing Date or within ___ day(s) prior to the Closing Date only to confirm Property is in the same or 307

better condition as it was on the Binding Agreement Date, normal wear and tear excepted, and to determine that all 308

repairs/replacements agreed to during the Resolution Period, if any, have been completed. Property shall remain in such 309

condition until Closing at Seller’s expense. Closing of this sale constitutes acceptance of Property in its condition as of 310

the time of Closing, unless otherwise noted in writing. 311

9. Buyer’s Additional Due Diligence Options. If any of the matters below are of concern to Buyer, Buyer should address 312

the concern by specific contingency in the Special Stipulations Paragraph of this Agreement. 313

A. Survey and Flood Certification. Survey Work and Flood Certifications are the best means of identifying boundary 314

lines and/or encroachments and easements or flood zone classifications. Buyer may obtain a Mortgage Inspection or 315

Boundary Line Survey and Flood Zone Certifications. 316

B. Insurability. Many different issues can affect the insurability and the rates of insurance for property. These include 317

factors such as changes in the Flood Zone Certifications, changes to the earthquake zones maps, the insurability of 318

the buyer, and previous claims made on the Property. It is the right and responsibility of Buyer to determine the 319

insurability, coverage and the cost of insuring the Property. It is also the responsibility of Buyer to determine 320

whether any exclusions will apply to the insurability of said Property. 321

C. Water Supply. The system may or may not meet state and local requirements. It is the right and responsibility of 322

Buyer to determine the compliance of the system with state and local requirements. [For additional information on 323

DRAFT SPECIMEN

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Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

this subject, request the “Water Supply and Waste Disposal Notification” form.] 324

D. Waste Disposal. The system may or may not meet state and local requirements. It is the right and responsibility of 325

Buyer to determine the compliance of the system with state and local requirements. In addition, Buyer may, for a 326

fee, obtain a septic system inspection letter from the Tennessee Department of Environment and Conservation, 327

Division of Ground Water Protection. [For additional information on this subject, request the “Water Supply and 328

Waste Disposal Notification” form.] 329

E. Title Exceptions. At Closing, the general warranty deed will be subject to subdivision and/or condominium 330

declarations, covenants, restrictions and easements of record, which may impose obligations and may limit the use 331

of the Property by Buyer. 332

10. Disclaimer. It is understood and agreed that the real estate firms and real estate licensee(s) representing or assisting 333

Seller and/or Buyer and their brokers (collectively referred to as “Brokers”) are not parties to this Agreement and do not 334

have or assume liability for the performance or nonperformance of Seller or Buyer. Buyer and Seller agree that Brokers 335

shall not be responsible for any of the following, including but not limited to, those matters which could have been 336

revealed through a survey, flood certification, title search or inspection of the Property; the insurability of the Property or 337

cost to insure the Property; for the condition of the Property, any portion thereof, or any item therein; for any geological 338

issues present on the Property; for any issues arising out of the failure to physically inspect Property prior to entering 339

into this Agreement and/or Closing; for the necessity or cost of any repairs to the Property; for hazardous or toxic 340

materials; for the tax or legal consequences of this transaction; for the availability, capability, and/or cost of utility, 341

sewer, septic, or community amenities; for any proposed or pending condemnation actions involving Property; for 342

applicable boundaries of school districts or other school information; for the appraised or future value of the Property; 343

for square footage or acreage of the Property; for any condition(s) existing off the Property which may affect the 344

Property; for the terms, conditions, and availability of financing; and/or for the uses and zoning of the Property whether 345

permitted or proposed. Buyer and Seller acknowledge that Brokers are not experts with respect to the above matters and 346

that they have not relied upon any advice, representations or statements of Brokers (including their firms and affiliated 347

licensees) and waive and shall not assert any claims against Brokers (including their firms and affiliated licensees) 348

involving same. Buyer and Seller understand that it has been strongly recommended that if any of these or any other 349

matters concerning the Property are of concern to them, that they secure the services of appropriately credentialed 350

experts and professionals of Buyer’s or Seller’s choice for the independent expert advice and counsel relative thereto. 351

11. Brokerage. As specified by separate agreement, Seller agrees to pay Listing Broker at Closing the agreed upon 352

compensation. The Listing Broker will direct the closing agency to pay the Selling Broker, from the compensation 353

received, an amount in accordance with the terms and provisions specified by separate agreement. The parties agree and 354

acknowledge that the Brokers involved in this transaction may receive compensation from more than one party. All 355

parties to this Agreement agree and acknowledge that any real estate firm involved in this transaction shall be deemed a 356

third party beneficiary only for the purposes of enforcing their commission rights, and as such, shall have the right to 357

maintain an action on this Agreement for any and all compensations due and any reasonable attorney’s fees and court 358

costs. 359

12. Default. Should Buyer default hereunder, the Earnest Money/Trust Money shall be forfeited as damages to Seller and 360

shall be applied as a credit against Seller’s damages. Seller may elect to sue, in contract or tort, for additional damages 361

or specific performance of the Agreement, or both. Should Seller default, Buyer’s Earnest Money/Trust Money shall be 362

refunded to Buyer. In addition, Buyer may elect to sue, in contract or tort, for damages or specific performance of this 363

Agreement, or both. In the event that any party hereto shall file suit for breach or enforcement of this Agreement 364

(including suits filed after Closing which are based on or related to the Agreement), the prevailing party shall be entitled 365

to recover all costs of such enforcement, including reasonable attorney’s fees. In the event that any party exercises its 366

right to terminate due to the default of the other pursuant to the terms of this Agreement, the terminating party retains the 367

right to pursue any and all legal rights and remedies against the defaulting party following termination. The parties 368

hereby agree that all remedies are fair and equitable and neither party will assert the lack of mutuality of remedies, rights 369

and/or obligations as a defense in the event of a dispute. 370

13. Home Protection Plan. This is not a substitution for Home Inspection. Exclusions to coverage may apply. (Select the 371

appropriate box below. Items not selected are not part of this Agreement). 372

□ Home Protection Plan. ______________________________ to pay $________ for the purchase of a limited home 373

protection plan to be funded at Closing. Plan Provider: ________________________________________________. 374

Ordered by: ________________________________________________________________ (Real Estate Company) 375

□ Home Protection Plan waived. 376

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Version 01/01/2018

RF401 – Purchase and Sale Agreement, Page 8 of 10

This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

14. Other Provisions. 377

A. Binding Effect, Entire Agreement, Modification, Assignment, and Binding Agreement Date. This Agreement 378

shall be for the benefit of, and be binding upon, the parties hereto, their heirs, successors, legal representatives and 379

assigns. This Agreement constitutes the sole and entire agreement between the parties hereto and no modification of 380

this Agreement shall be binding unless signed by all parties or assigns to this Agreement. No representation, 381

promise, or inducement not included in this Agreement shall be binding upon any party hereto. It is hereby agreed 382

by both Buyer and Seller that any real estate agent working with or representing either party shall not have the 383

authority to bind the Buyer, Seller or any assignee to any contractual agreement unless specifically authorized in 384

writing within this Agreement. Any assignee shall fulfill all the terms and conditions of this Agreement. The 385

parties hereby authorize either licensee to insert the time and date of receipt of the notice of acceptance of the final 386

offer and further agree to be bound by such as the Binding Agreement Date following the signatory section of this 387

Agreement, or Counter Offer, if applicable. 388

B. Survival Clause. Any provision contained herein, which by its nature and effect is required to be performed after 389

Closing, shall survive the Closing and delivery of the deed and shall remain binding upon the parties to this 390

Agreement and shall be fully enforceable thereafter. 391

C. Governing Law and Venue. This Agreement is intended as a contract for the purchase and sale of real property 392

and shall be governed by and interpreted in accordance with the laws and in the courts of the State of Tennessee. 393

D. Time of Essence. Time is of the essence in this Agreement. 394

E. Terminology. As the context may require in this Agreement: (1) the singular shall mean the plural and vice versa; 395

(2) all pronouns shall mean and include the person, entity, firm or corporation to which they relate; (3) the masculine 396

shall mean the feminine and vice versa; and (4) the term day(s) used throughout this Agreement shall be deemed to 397

be calendar day(s) ending at 11:59 p.m. local time unless otherwise specified in this Agreement. Local time shall be 398

determined by the location of Property. In the event a performance deadline, other than the Closing Date (as 399

defined in paragraph 4 herein), Date of Possession (as defined in paragraph 4 herein), Completion of Repair 400

Deadline (as defined in the Repair/Replacement Amendment), and Offer Expiration Date (as defined in paragraph 401

20 herein), occurs on a Saturday, Sunday or legal holiday, the performance deadline shall extend to the next 402

following business day. Holidays as used herein are those days deemed federal holidays pursuant to 5 U.S.C. § 403

6103. In calculating any time period under this Agreement, the commencement shall be the day following the initial 404

date (e.g. Binding Agreement Date). 405

F. Responsibility to Cooperate. Buyer and Seller agree to timely take such actions and produce, execute, and/or 406

deliver such information and documentation as is reasonably necessary to carry out the responsibilities and 407

obligations of this Agreement. Except as to matters which are occasioned by clerical errors or omissions or 408

erroneous information, the approval of the closing documents by the parties shall constitute their approval of any 409

differences between this Agreement and the Closing. Buyer and Seller agree that if requested after Closing, they 410

will correct any documents and pay any amounts due where such corrections or payments are appropriate by reason 411

of mistake, clerical errors or omissions, or the result of erroneous information. 412

G. Notices. Except as otherwise provided herein, all notices and demands required or permitted hereunder shall be in 413

writing and delivered either (1) in person; (2) by a prepaid overnight delivery service; (3) by facsimile transmission 414

(FAX); (4) by the United States Postal Service, postage prepaid, registered or certified, return receipt requested; or 415

(5) Email. NOTICE shall be deemed to have been given as of the date and time it is actually received. Receipt of 416

notice by the real estate licensee or their Broker assisting a party as a client or customer shall be deemed to be notice 417

to that party for all purposes under this Agreement as may be amended, unless otherwise provided in writing. 418

H. Risk of Loss. The risk of hazard or casualty loss or damage to Property shall be borne by the Seller until transfer of 419

title. If casualty loss prior to Closing exceeds 10% of the Purchase Price, Seller or Buyer may elect to terminate this 420

Agreement with a refund of Earnest Money/Trust Money to Buyer. 421

I. Equal Housing. This Property is being sold without regard to race, color, sex, religion, handicap, familial status, or 422

national origin. 423

J. Severability. If any portion or provision of this Agreement is held or adjudicated to be invalid or unenforceable for 424

any reason, each such portion or provision shall be severed from the remaining portions or provisions of this 425

Agreement, and the remaining portions or provisions shall be unaffected and remain in full force and effect. In the 426

event that the contract fails due to the severed provisions, then the offending language shall be amended to be in 427

conformity with state and federal law. 428

DRAFT SPECIMEN

Version 01/01/2018

RF401 – Purchase and Sale Agreement, Page 9 of 10

This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

K. Contract Construction. This Agreement or any uncertainty or ambiguity herein shall not be construed against any 429

party but shall be construed as if all parties to this Agreement jointly prepared this Agreement. 430

L. Section Headings. The Section Headings as used herein are for reference only and shall not be deemed to vary the 431

content of this Agreement or limit the scope of any Section. 432

15. Seller’s Additional Obligations. If Seller has any knowledge of an exterior injection well, a sinkhole as defined 433

pursuant to Tenn. Code Ann. § 66-5-212(c), and/or a percolation test or soil absorption rate on the Property, Seller shall 434

be obligated to counter this offer by disclosure of the existence of the above including any tests and reports unless 435

disclosure has already been received and acknowledged in writing by Buyer. Seller shall also disclose in the same 436

manner whether any single family residence located on the Property has been moved from an existing foundation to 437

another foundation where such information is known to the Seller. Seller shall also be obligated to counter this offer to 438

disclose if the Property is located in a Planned Unit Development (PUD) as defined pursuant to Tenn. Code Ann. § 66-5-439

213 unless said disclosure has already been received in writing and acknowledged by Buyer. If the Property is in a PUD, 440

Seller agrees to make available copies of the development’s restrictive covenants, homeowner bylaws, and master deed 441

to Buyer upon request. 442

16. Method of Execution. The parties agree that signatures and initials transmitted by facsimile, other photocopy 443

transmittal, or by transmittal of digital signature as defined by the applicable State or Federal law will be acceptable and 444

may be treated as originals and that the final Purchase and Sale Agreement containing all signatures and initials may be 445

executed partially by original signature and partially on facsimile, other photocopy documents, or by digital signature as 446

defined by the applicable State or Federal law. 447

17. Exhibits and Addenda. All exhibits and/or addenda attached hereto, listed below, or referenced herein are made a part 448

of this Agreement: 449

_________________________________________________________________________________________________ 450

_________________________________________________________________________________________________ 451

_________________________________________________________________________________________________452

_________________________________________________________________________________________________ 453

18. Special Stipulations. The following Special Stipulations, if conflicting with any preceding paragraph, shall control: 454

_________________________________________________________________________________________________ 455

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DRAFT SPECIMEN

Version 01/01/2018

RF401 – Purchase and Sale Agreement, Page 10 of 10

This form is copyrighted and may only be used in real estate transactions in which ___________________________________________ is involved as a TAR authorized user.

Unauthorized use of the form may result in legal sanctions being brought against the user and should be reported to the Tennessee Association of Realtors

at (615) 321-1477.

19. Time Limit of Offer. This Offer may be withdrawn at any time before acceptance with Notice. Offer terminates if not 479

countered or accepted by __________ o’clock □ a.m./ □ p.m.; on the ______ day of ____________________, ________. 480

LEGAL DOCUMENTS: This is an important legal document creating valuable rights and obligations. If you have 481

any questions about it, you should review it with your attorney. Neither the Broker nor any Agent or Facilitator is 482

authorized or qualified to give you any advice about the advisability or legal effect of its provisions. 483

NOTE: Any provisions of this Agreement which are preceded by a box “□” must be marked to be a part of this 484

Agreement. By affixing your signature below, you also acknowledge that you have reviewed each page and have 485

received a copy of this Agreement. 486

IMPORTANT NOTICE: Never trust wiring instructions sent via email. Cyber criminals are hacking email accounts 487

and sending emails with fake wiring instructions. These emails are convincing and sophisticated. 488

Always independently confirm wiring instructions in person or via a telephone call to a trusted and verified phone 489

number. Never wire money without double-checking that the wiring instructions are correct. 490

Buyer hereby makes this offer. 491

_____________________________________________ _____________________________________________ 492

BUYER BUYER 493

_______________ at __________ o’clock □ am/ □ pm _______________ at __________ o’clock □ am/ □ pm 494

Offer Date Offer Date 495

Seller hereby: 496

□ ACCEPTS – accepts this offer. 497

□ COUNTERS – accepts this offer subject to the attached Counter Offer(s). 498

□ REJECTS this offer and makes no counter offer. 499

_____________________________________________ _____________________________________________ 500

SELLER SELLER 501

_______________ at __________ o’clock □ am/ □ pm _______________ at __________ o’clock □ am/ □ pm 502

Date Date 503

Binding Agreement Date. This instrument shall become a “Binding Agreement” on the date (“Binding Agreement Date”) 504

the last offeror, or licensee of the offeror, receives notice of offeree’s acceptance. 505

Notice of acceptance of the final offer was received by ________________________________________ on 506

_______________ at __________ o’clock □ am/ □ pm 507

____________________________________________________________________________________________________ 508

For Information Purposes Only:

Listing Company: _______________________________ Selling Company: _________________________________

Listing Firm Address: ____________________________ Selling Firm Address: ______________________________

Firm License No.: _______________________________ Firm License No.: _________________________________

Firm Telephone No.: _____________________________ Firm Telephone No.: _______________________________

Listing Licensee: ________________________________ Selling Licensee: __________________________________

Licensee License Number: ________________________ Licensee License Number: ___________________________

Licensee Email: _________________________________ Licensee Email: ____________________________________

Home Owner’s / Condominium Association (“HOA/COA”):

____________________________________________________________________________________________________

HOA / COA Phone: ______________________________ HOA/COA Email: __________________________________

Property Management Company: ________________________________________________________________________

Phone: ________________________________________ Email: ___________________________________________

NOTE: This form is provided by TAR to its members for their use in real estate transactions and is to be used as is. By downloading and/or using this form,

you agree and covenant not to alter, amend, or edit said form or its contents except as where provided in the blank fields, and agree and acknowledge that

any such alteration, amendment or edit of said form is done at your own risk. Use of the TAR logo in conjunction with any form other than standardized

forms created by TAR is strictly prohibited. This form is subject to periodic revision and it is the responsibility of the member to use the most recent

available form

DRAFT SPECIMEN