*This blog was created in accordance with the “New Forms” episode of the Caveat REALTOR® podcast, published 06/30/20
On July 1, 2020 Virginia REALTORS® will be releasing new and updated standard forms to coincide with new laws passed during the year’s General Assembly session, most of which go into effect at that time.
If you want a more in-depth look at this year’s changes, you can check out the Standard Forms section of our website. There, you’ll find a detailed summary of changes, along with redlines of the documents.
- First, there are two new forms to discuss, both of which deal with residential transactions. Form 600K is a Walk-Through Inspection Form, intended to help with a buyers’ pre-settlement walk through. This form allows buyers to note items that are not in the same or substantially similar condition as the date of the Contract, as well as any repairs that were agreed upon but not completed. This does not serve as a separate home inspection form; rather, it reminds the parties of the obligations that were originally agreed to in the contract.
Form 600L is our new Limited Access Addendum, which may remind some of you of decorator’s addendums you’ve seen in the past. The form clearly states up front that it doesn’t give the purchaser the right to occupy or take possession of the property, but it allows the purchaser access for things like decoration or storage. The form also covers risks and liability for both parties.
- Moving on to the edited forms, we updated our SUM-1 form to match the changes made to the Virginia Residential Property Disclosure Act. The lease (Form 200) also got several touch-ups. Paragraph 1(h) that outlines the rent has been reformatted to hopefully avoid confusion between the landlord and tenant; it’s now broken up into monthly amounts and one-time fees so the parties can quickly determine how much is due each month and how much is due over the entire term of the lease.
- There were also several changes related to new laws. Late fees are now capped at 10% of the total monthly rent or 10% of the balance due by the tenant, whichever is less. The Security Deposit paragraph now states that it must be returned with 45 days of the latter of the termination of the tenancy or when tenant surrenders possession. We also included language regarding the tenant’s ability to stop carrying a damage insurance policy and pay the security deposit at any time. In addition (and somewhat relatedly), new language has been added to the Standard Clause Booklet that can be used if a pet is allowed in a unit after the initial lease has been signed.
- We also updated Form 300, the Rental Application. Because source of funds is now a protected class for Fair Housing concerns, we removed the box in the rental application where a landlord can inquire about source of funds. We also added a note stating that all fund sources are subject to verification.
- Form 600, the Purchase Contract, had only one change this time around. Because state law now allows parties to extend the POA or COA termination deadline to up to seven days after receipt of the association docs (or 10 days if they have been mailed), we edited that portion of the contract to allow the parties to input their preferred time limit. If the number of days is left blank, it defaults to the highest number of days. We made the same update to Form 650, the Unimproved Land Purchase Contract.
- Form 600A, the Release of Contract, got a small addition of an “Other Terms” section at the end. This will allow the parties to include any negotiated terms or limitations as part of their release.
- The Property Management Agreement (Form 900) had several changes, due both to new laws and review by the Property Management Council. We added language to the Owner’s Representations paragraph to clarify how many rental properties the Owner has in Virginia. This is because a number of laws, including recent Fair Housing changes, are triggered based on the number of properties held by the owner. We also added language to deal with the new law that allows tenants to make their own repairs in certain situations.
- We clarified that the management fee will be the greater of either a set amount or a percentage of rents. We also clarified what exactly non-management fees are for in the next paragraph, and we explicitly stated that the paragraph doesn’t obligate the property manager to provide these services. We updated the Indemnification section to state that the paragraph won’t apply if the property manager knowing and intentionally violates a law or regulation.
- We now require the owner to update the property manager with any changes to info included in the PMA as soon as he or she becomes aware that the information is incorrect. We clarified that all services under the PMA terminate on the date of termination unless otherwise agreed to by the parties. We updated the Nonresident Owner language to clarify that all out-of-state owners must have a resident agent regardless of how many properties they own, and we corrected the term from “registered agent.”
- Finally, for Form 900, we updated the Drywall paragraph because the law no longer requires an agent to disclose defective drywall. Instead, agents must disclose any actual knowledge of lead-based pipes in the property. We also added language authorizing tenants to use a damage insurance policy instead of a security deposit. This paragraph has a field for landlords to identify acceptable insurance providers, if they choose to provide that information.
- Finally, we completely overhauled Form 1700, our independent contract agreement. This is the agreement between an agent and his/her firm, not between agents and clients. The updates are extensive, so we encourage you to go to our website and read the redline PDF. The changes throughout the form were made in large part to make it clear that the salesperson is not an employee of the firm. They also help provide protection to both firms and salespersons.