1. What is “settlement” in Virginia?
A: The Virginia REALTORS® contract uses the Virginia Code definition of settlement, which says it happens at “the time when the settlement agent has received the duly executed deed, loan funds, loan documents, and other documents and funds required to carry out the terms of the contract between the parties and the settlement agent reasonably determines that prerecordation conditions of such contracts have been satisfied.” Our contract also states that at this time, possession (i.e., keys) should be transferred. Not all contracts state that possession should happen at the time of settlement, though, so make sure you check your contract.
2. What does “on or about” mean in the Virginia REALTORS® contract?
A: “On or about” is meant to provide a little flexibility in the closing date. If financing is delayed or some other issue pops up that requires closing to be postponed, the “on or about” language is meant to prevent the contract from terminating immediately if the date is not met. How much flexibility depends on the situation, but if you know that closing is going to be postponed for a certain number of days, it’s always a good idea to get a signed amendment extending the settlement date.
3. I got a letter from DPOR stating that I need to appoint another broker to succeed me in the event I die or become disabled. Was that sent to me in error? What do I need to do?
A: DPOR sent that letter to all Virginia brokers. A new law requires that, if you are a sole proprietor or the only broker in your firm, you have to appoint another broker to wind down your business in the event you die or become disabled. If there are other brokers in your firm, you can ignore this letter. If not, but you want someone like your estate administrator to close down your business, appoint another broker but reach out to them and explain how you want your business concluded in the event you become unavailable. Find more information about this in our latest article.
4. My buyers did a home inspection and terminated the contract based on the home inspection contingency. We sent the termination and release to the sellers, but they have not signed the release. When can we get the deposit back?
A: Assuming that the home inspection contingency states that upon termination the Earnest Money Deposit (EMD) goes back to the buyer (for example, if you check the “buyer” box on the VAR contingency ), your clients are entitled to receive it. However, if the settlement company is holding the EMD, they likely won’t send it back until they have a release signed by both parties. If the sellers refuse to sign, you might have to get a court order authorizing the settlement company to release. If the listing agency is holding the EMD, they can release the funds back to your buyer under the clear terms of the contract without a release. However, they do not have to do this and may choose to wait for a signed release as well.
5. The property my clients are looking at has an HOA that is $75/year, but membership is voluntary. Is this covered by the POA Act and does my client have the three-day right of rescission?
A: No, the POA act only covers mandatory associations. Because this association is voluntary, it is not covered and there is not an automatic three-day right of rescission.