legal Top 10 Residential Forms Changes in 2023 BY LEGAL JOHN (JOHN WAIT), GENERAL COUNSEL I spent months workshopping what my pen name might be for this Insight article. There were focus groups, teams of writers, and too many consultants to count. The Forms Guy has been a staple in this publication for years, and the pressure to get the branding just right to fill those shoes seemed impossible. That was until, with no known premeditation, Brooke Rudd-Gaglie began calling me “Legal John” at the Winter Leadership Meetings in January. The simplicity of the name was perfect, and I immediately fired my entire branding team. So no, I am not the Forms Guy. I am Legal John, and it is my privilege to take a minute and highlight ten big forms changes that just came out on July 1. For those of you that may not know, these forms changes represent eight months of hard work by our Forms Committee members and NC REALTORS® staff. The chairs of the Forms Committee, Laurie Linder and Patrice Willetts, did an excellent job and worked very well with Bob Ramseur, chair of the Joint Forms Task Force. Leigh Morgan somehow kept me organized and made sure the train stayed on the track at the staff level. I’d like to thank every REALTOR®, staff member, and NC Bar Association attorney who worked on these forms changes for their dedication and thoughtful contribution. I have always believed that the forms speak to REALTOR® values and should be a source of pride. As someone who works regularly with forms from other states, I have a deep appreciation for the years 12 INSIGHT • August 2023
of work that have made our forms what they are today, and I believe these most recent changes will continue to make our forms some of the best in the country. So, without further ado, here are ten big forms changes for 2023. 1. New Governmental Compliance Paragraph in the Offer to Purchase and Contract (Form 2-T). The parties may discover that the property does not comply with governmental regulations during a transaction. Sometimes these issues are small, and sometimes they are big. This new paragraph has been carefully drafted to address those scenarios where the property is in material violation of a law, ordinance, or other governmental regulation. It is important to note that this new paragraph is a brand-new condition in the contract, much like paragraph 11 and the condition that the property be in substantially the same or better condition at closing. Conditions, if they are not met, do not ordinarily result in a breach of the contract, which is true in this case. Under this new condition, if the seller discloses a violation, then the buyer will have no right to terminate for that disclosed violation. If a governmental violation is discovered after the Effective Date, the seller can either remedy the violation or decline to fix it. Depending on the seller’s decision, the buyer can either proceed and close or terminate and receive a refund of their earnest money and due diligence fee as their sole remedy.
Who are you?! You’re not the Forms Guy!
2. New Default Language for Who is Named in the Deed in Form 2-T. Previous versions of the Offer to Purchase and Contract offered a blank for agents to identify who was to be named on the deed at the time of contract. According to closing attorneys, the blank was often filled out incorrectly, which created issues later in the transaction if the name needed to be changed. The pre-printed language has now been adjusted to allow the deed to be made out to: (1) the buyer; (2) a corporation, limited liability company, or other business entity of which the buyer is the sole owner or shareholder; (3) a trust for which the buyer is the beneficiary; or (4) any relative of the buyer. These four options are automatic and do not require the agent’s input. There is still a blank in the revised paragraph, but it should now rarely be used, and if it is, a specific name must be inserted rather than “TBD.” 3. New Options to Identify OffSite or Separate Septic Lots, Boat Slips, Garages, Parking Spaces, and Storage Units in Form 2-T. Checkboxes have been added to the first page of the contract to indicate whether the sale will include a separate or off-site septic lot, boat slip, garage,