*Effective 8/21: Changes to Appraisal Section of Purchase and Sale Agreement*
As of August 21, the Tennessee REALTORS® Residential Forms Committee has made the following changes to the appraisal section of the 2017 Purchase and Sale Agreement, with revisions to forms RF401, RF403, and RF404, RF656, and RF708 (red = former; blue = new):
This Agreement IS CONTINGENT upon the appraised value either equaling or exceeding the agreed
upon Purchase Price. If the appraised value is equal to or exceeds Purchase Price, this contingency is satisfied. In consideration of Buyer having conducted an appraisal, the sufficiency of such consideration being hereby acknowledged, if the appraised value of the Property does not equal or exceed the Purchase Price, Buyer shall terminate this Agreement or waive appraisal contingency via the Notification form or equivalent written notice within two (2) days following Buyer’s receipt of Appraisal; Buyer shall promptly notify the Seller via the notification form or written equivalent notice. Buyer shall then have 3 days to either:
- waive the appraisal contingency via the notification form or equivalent written notice
- terminate the agreement by giving notice to seller via the notification form or equivalent written notice. Upon timely termination, Buyer is entitled to a refund of the Earnest money.
iIn the event Buyer fails to do so to either waive the appraisal or terminate the agreement as set forth above, this contingency is deemed satisfied. Thereafter, failure to appraise shall not be used as the basis for loan denial or termination of contract. Seller shall have the right to request any supporting documentation showing appraised value did not equal or exceed the agreed upon purchase price. Upon timely termination, Buyer is entitled to refund of the Earnest Money/Trust Money.
In the new version of the agreement, the buyer shall promptly notify the seller if the appraised value of the property does not equal or exceed the purchase price. After notification, the buyer has three (3) days either to waive the appraisal contingency or to terminate the agreement. This language allows buyers and sellers to negotiate a new purchase price and execute an amendment to the contract within those three days if the parties wish to do so.
This is a change from the former requirement that the buyer must terminate the agreement or waive the contingency within two (2) days following the buyer’s receipt of an appraisal, where the value does not equal or exceed the purchase price.
This change appears in the Residential Purchase and Sale Agreement (RF401), the Lot/ Land Purchase and Sale Agreement (RF404), and the New Construction Purchase and Sale Agreement (RF403). In addition, the Notification form (RF656) and the Purchase and Sale Agreement Timeline Checklist (RF708) have been edited in support of the Purchase and Sale Agreement.
If you have any questions regarding the changes, please contact TR’s Legal and Ethics Hotline at 800-899-5297.