Richard Urriza La Compte  License Number : 01432457  Issuance Date : May 06, 2004  Expiration Date : May 05, 2012 Richard La Compte
Real Estate Agent
(707) 631-4528
email: rulacompte@aol.com
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Green Valley Financial Corp. - Office Info
For Your Real Estate Needs !

Here are some forms and related documentation with relevance for your real estate transaction.

Residential Purchase Agreement

Date _____________, at ____________________, California, Received From _______________________ ("Buyer"), A Deposit Of _____________________ Dollars $ ___________, toward the Purchase Price Of ________________________ Dollars $ _______________, For Purchase Of Property Situated In __________________, County Of __________, California, Described As ________________, ("Property").

1. FINANCING: Obtaining the loans below is a contingency of this Agreement. Buyer shall act diligently and in good faith to obtain the designated loans. Obtaining deposit, down payment and closing costs is not a contingency.

A. BUYER'S DEPOSIT shall be held uncashed until Acceptance and then deposited within 3 business days after .. $__________ Acceptance or  _____________,  with Escrow Holder,  into Broker's trust account, or  ____________, by  Personal Check,  Cashier's Check,  Cash, or  _________________
B. INCREASED DEPOSIT shall be deposited with _________ .. $_________ within _______ Days After Acceptance, or  _______________
C. FIRST LOAN IN THE AMOUNT OF ...$__________ NEW First Deed of Trust in favor of LENDER, encumbering the Property, securing a note payable at maximum interest of ________% fixed rate, or ________% initial adjustable rate with a maximum interest rate cap of ________%, balance due in ______ years. Buyer shall pay loan fees/points not to exceed ___________.  FHA  VA: Seller shall pay (i) _% discount points, (ii) other fees not allowed to be paid by Buyer, not to exceed $__________, and (iii) the cost of lender required repairs not otherwise provided for in this Agreement, not to exceed $ ___________.
D. ADDITIONAL FINANCING TERMS: __________ ... $_________  seller financing, (C.A.R. Form SFA-14);  junior or assumed financing, (C.A.R. Form PAA-14, paragraph 5)
E. BALANCE OF PURCHASE PRICE (not including costs of obtaining loans and other closing costs) to be deposited ... $__________ with escrow holder within sufficient time to close escrow.
F. TOTAL PURCHASE PRICE ... $__________
G. LOAN CONTINGENCY shall remain in effect until the designated loans are funded (or  ______ Days After Acceptance, by which firne Buyer shall give Seller written notice of Buyer's election to cancel this Agreement if Buyer is unable to obtain the designated loans. If Buyer does not give Seller such notice, the contingency of obtaining the designated loans shall be removed by the method specified in paragraph 16B.)
H. LOAN APPLICATIONS; PREQUALIFICATION: For NEW financing, within 5 (or  ______) Days After Acceptance, Buyer shall provide Seller a letter from lender or mortgage loan broker stating that, based on a review of Buyer's written application and credit report, Buyer is pre-qualified for the NEW loan indicated above. If Buyer fails to provide such letter within that time, Seller may cancel this Agreement in writing.
I.  APPRAISAL CONTINGENCY: (If checked) This Agreement is contingent upon Property appraising at no less than the specified total purchase price. If there is a loan contingency, the appraisal contingency shall remain in effect until the loan contingency is removed. If there is no loan contingency, the appraisal contingency shall be removed within 10 (or  ______) Days After Acceptance.
J. ALL CASH OFFER: If this is an all cash offer, Buyer shall, within 5 (or  ______) Days After Acceptance, provide Seller written verification of sufficient funds to close this transaction. Seller may cancel this Agreement in writing within 5 Days After: (i) time to provide verification expires, if Buyer fails to provide verification; or (ii) receipt of verification, if Seller reasonably disapproves it.


2. ESCROW: Close Of Escrow shall occur ____ Days After Acceptance (or  on (date)). Buyer and Seller shall deliver signed escrow instructions consistent with this Agreement  within ____ Days After Acceptance,  at least ____ Days before Close Of Escrow, or  _______________. Seller shall deliver possession and occupancy of the Property to Buyer at _____ AM/PM,  on the date of Close Of Escrow,  no later than ____ Days After date of Close Of Escrow, or  __________________________. Property shall be vacant, unless otherwise agreed in writing. If transfer of title and possession do not occur at the same time, Buyer and Seller are advised to (a) consult with their insurance advisors, and (b) enter into a written occupancy agreement. The omission from escrow instructions of any provision in this Agreement shall not constitute a waiver of that provision.


3. OCCUPANCY: Buyer  does,  does not, intend to occupy Property as Buyer's primary residence.


4. ALLOCATION OF COSTS: (Check boxes which apply. If needed, insert additional instructions in blank lines.)

GOVERNMENTAL TRANSFER FEES:
A.  Buyer  Seller shall pay County transfer tax or transfer fee.________________
B.  Buyer  Seller shall pay City transfer tax or transfer fee.__________________
TITLE AND ESCROW COSTS:
C.  Buyer  Seller shall pay for owner's title insurance policy, issued by ____________________ company. (Buyer shall pay for any title insurance policy insuring Buyer's Lender, unless otherwise agreed.)
D.  Buyer  Seller shall pay escrow fee. ______________ Escrow holder shall be _________________.
SEWER/SEPTIC/WELL COSTS:
E.
 Buyer  Seller shall pay for sewer connection, if connection required by Law prior to Close Of Escrow. ________________
F.  Buyer  Seller shall pay to have septic or private sewage disposal system inspected. ________________________
G.  Buyer  Seller shall pay to have domestic wells tested for water potability and productivity. __________________
OTHER COSTS:
H.
 Buyer  Seller shall pay Homeowners' Association transfer fees. ______________________
I.  Buyer  Seller shall pay Homeowners' Association document preparation fees. ___________________
J.  Buyer  Seller shall pay for zone disclosure reports. _____________________
K.  Buyer  Seller shall pay for Smoke Detector installation and/or Water Heater bracing. ____________________ Seller, prior to close of escrow, shall provide Buyer a written statement of compliance in accordance with state and local Law, unless exempt.
L.  Buyer  Seller shall pay the cost of compliance with any other minimum mandatory government retrofit standards and inspections required as a condition of closing escrow under any Law. ____________________________
M.  Buyer  Seller shall pay the cost of a one-year home warranty plan, issued by _______________, with the following optional coverage: ________________. Policy cost not to exceed $______.
PEST CONTROL REPORT:
N.
 Buyer  Seller shall pay for the Pest Control Report ("Report"), which, within the time specified in paragraph 16, shall be prepared by __________________, a registered structural pest control company. _____________
O. (1) Buyer shall have the right to disapprove the Report as specified in paragraph 16, UNLESS any box in 4 O
(2) is checked below
OR (2) (Applies if any box is checked below)
(a)  Buyer  Seller shall pay for work recommended to correct conditions described in the Report as "Section 1."
(b)  Buyer  Seller shall pay for work recommended to correct conditions described in the Report as "Section 2," if requested by Buyer.

Buyer and Seller acknowledge receipt of copy of this page, which constitutes Page 1 of ___ Pages. Buyer's Initials (_____) (_____) Seller's Initials (_____) (_____)

THIS FORM HAS BEEN APPROVED BY THE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF ANY PROVISION IN ANY SPECIFIC TRANSACTION. A REAL ESTATE BROKER IS THE PERSON QUALIFIED TO ADVISE ON REAL ESTATE TRANSACTIONS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.

The copyright laws of the United States (Title 17 U.S. Code) forbid the unauthorized reproduction of this form, or any portion thereof, by photocopy machine or any other means, including facsimile or computerized formats. Copyright © 1991-1999, CALIFORNIA ASSOCIATION OF REALTORS®, INC. ALL RIGHTS RESERVED.

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Real Estate Transfer Disclosure Statement

THIS DISCLOSURE STATEMENT CONCERNS THE REAL PROPERTY SITUATED IN THE CITY OF _________________________, COUNTY OF ____________________, STATE OF CALIFORNIA, DESCRIBED AS ______________________________________. THIS STATEMENT IS A DISCLOSURE OF THE CONDITION OF THE ABOVE DESCRIBED PROPERTY IN COMPLIANCE WITH SECTION 1102 OF THE CIVIL CODE AS OF (date) ________________. IT IS NOT A WARRANTY OF ANY KIND BY THE SELLER(S) OR ANY AGENT(S) REPRESENTING ANY PRINCIPAL(S) IN THIS TRANSACTION, AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PRINCIPAL(S) MAY WISH TO OBTAIN.

I
COORDINATION WITH OTHER DISCLOSURE FORMS

This Real Estate Transfer Disclosure Statement is made pursuant to Section 1102 of the Civil Code. Other statutes require disclosures, depending upon the details of the particular real estate transaction (for example: special study zone and purchase-money liens on residential property).

Substituted Disclosures: The following disclosures have or will be made in connection with this real estate transfer, and are intended to satisfy the disclosure obligations on this form, where the subject matter is the same:
 Inspection reports completed pursuant to the contract of sale or receipt for deposit.
 Additional inspection reports or disclosures: ________________________________

II
SELLER'S INFORMATION

The Seller discloses the following information with the knowledge that even though this is not a warranty, prospective Buyers may rely on this information in deciding whether and on what terms to purchase the subject property. Seller hereby authorizes any agent(s) representing any principal(s) in this transaction to provide a copy of this statement to any person or entity in connection with any actual or anticipated sale of the property.

THE FOLLOWING ARE REPRESENTATIONS MADE BY THE SELLER(S) AND ARE NOT THE REPRESENTATIONS OF THE AGENT(S), IF ANY. THIS INFORMATION IS A DISCLOSURE AND IS NOT INTENDED TO BE PART OF ANY CONTRACT BETWEEN THE BUYER AND SELLER.

Seller  is  is not occupying the property.
A. The subject property has the items checked below (read across):

 Range
 Dishwasher
 Washer/Dryer Hookups
 Burglar Alarms
 TV. Antenna
 Central Heating
 Wall/Window Air Conditioning
 Septic Tank
 Patio/Decking
 Sauna
 Hot Tub
 Locking Safety Cover*
 Security Gate(s)Garage:  Attached
Pool/Spa Heater:  Gas
Water Heater:  Gas
Water Supply:  City
Gas Supply:  Utility
 Window Screens
 Oven
 Trash Compactor
 Smoke Detector(s)
 Satellite Dish
 Central Air Conditioning
 Sprinklers
 Sump Pump
 Built-in Barbecue
 Pool  Child Resistant Barrier*
 Automatic Garage Door Opener(s)*
 Not Attached
 Solar
 Water Heater Anchored, Braced, or Strapped*
 Well
 Bottled
 Window Security Bars
 Quick Release Mechanism on Bedroom Windows*
 Microwave
 Garbage Disposal
 Rain Gutters
 Fire Alarm
 Intercom
 Evaporator Cooler(s)
 Public Sewer System
 Water Softener
 Gazebo
 Spa  Locking Safety Cover*
 Number Remote Controls____
 Carport
 Electric
 Private Utility or Other_______

THIS FORM HAS BEEN APPROVED BY THE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF ANY PROVISION IN ANY SPECIFIC TRANSACTION. A REAL ESTATE BROKER IS THE PERSON QUALIFIED TO ADVISE ON REAL ESTATE TRANSACTIONS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.

The copyright laws of the United States (Title 17 U.S. Code) forbid the unauthorized reproduction of this form, or any portion thereof, by photocopy machine or any other means, including facsimile or computerized formats. Copyright © 1990-1999, CALIFORNIA ASSOCIATION OF REALTORS®, INC. ALL RIGHTS RESERVED.

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Disclosure Regarding Real Estate Agency Relationships
As required by Civil Law

When you enter into a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand what type of agency relationship or representation you wish to have with the agent in the transaction.

SELLER'S AGENT
A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only. A Seller's agent or a subagent of that agent has the following affirmative obligations:
To the Seller:
A Fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth above.

BUYER'S AGENT
A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Seller's agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations:
To the Buyer:
A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth above.

AGENT REPRESENTING BOTH SELLER & BUYER
A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.

In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer.
(b) Other duties to the Seller and the Buyer as stated above in their respective sections.

In representing both Seller and Buyer, the agent may not, without the express permission of the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered.

The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.

Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with this disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.

This disclosure form includes the provisions of Sections 2079.13 to 2079.24, inclusive, of the Civil Code set forth on the hereof. Read it carefully.

THIS FORM HAS BEEN APPROVED BY THE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF ANY PROVISION IN ANY SPECIFIC TRANSACTION. A REAL ESTATE BROKER IS THE PERSON QUALIFIED TO ADVISE ON REAL ESTATE TRANSACTIONS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.

This form is available for use by the entire real estate industry. It is not intended to identify the user as a REALTOR®. REALTOR® is a registered collective membership mark which may be used only by members of the NATIONAL ASSOCIATION OF REALTORS® who subscribe to its Code of Ethics.

The copyright laws of the United States (Title 17 U.S. Code) forbid the unauthorized reproduction of this form, or any portion thereof, by photocopy machine or any other means, including facsimile or computerized formats. Copyright © 1987-1999, CALIFORNIA ASSOCIATION OF REALTORS®, INC. ALL RIGHTS RESERVED.

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Property Transaction Questions and Answers

The purchase of property is a very significant act for many people. You have taken an important step by contacting a real estate professional to assist you with your transaction. Agency relationships are more satisfying to both principal and agent if all parties understand the scope of the responsibilities of each in the transaction.

Your real estate professional will be assisting you in many ways during the course of your real estate transaction. However, there are many other professionals who are better equipped to answer certain questions, perform certain tasks or handle certain aspects of the transaction. Some issues are also the buyer's or seller's responsibility. To avoid misunderstandings, and to make sure you have adequate information so that you know what to expect, these questions and answers cover some common issues regarding the responsibilities of the seller, the buyer, the real estate professional and other appropriate professionals.

DISCLOSURE RESPONSIBILITIES

Every property has defects; some small and some large. Some sellers have lived with a defect that they view as unimportant but which may be important to a buyer. Of course, sellers, buyers and agents have an obligation to deal honestly with each other. This section deals with what must be disclosed and the format in which it must be disclosed.

Question 1: What must a seller disclose about the condition of the property?

Answer: A seller must disclose known material defects about the property. Typically, a seller would make these disclosures on a Real Estate Transfer Disclosure Statement (TDS). However, if an item is not covered on a TDS, a seller must still make these disclosures about known material defects. In virtually all cases, a buyer will discover any problems once the buyer occupies the property. By disclosing all problems up front, the seller can avoid the surprise that many times provokes a lawsuit. Even if a matter has been repaired, the seller should disclose the previous defect and the repairs completed.

Question 2: What is the Transfer Disclosure Statement (TDS)?

Answer: The Transfer Disclosure Statement is a form required by state law which the seller completes (unless exempt) and delivers to a buyer. Among other things, it asks the seller to list the various features of the property and disclose whether or not any of those features are in operating condition. It also allows a seller to state whether the seller is aware of a variety of common issues such as environmental hazards, permits, homeowners' associations and other matters that might affect the property. Some areas have additional local disclosures required by the county or city.

Question 3: What are the seller's obligations regarding the TDS?

Answer: Generally, the seller must complete the TDS and deliver it to the buyer as soon as practicable before the transfer of title. Sellers should thoughtfully and carefully consider each question and answer it accurately, erring on the side of more, rather than less disclosure. Some transactions are exempt from this requirement. Agents do not have the obligation to verify statements made by the seller on this form.

Question 4: Does the seller have these same disclosure obligations in an "AS IS" sale?

Answer: Yes. The terminology "AS IS" simply means that the seller will normally not be paying for any repairs to the property. An "AS IS" sale does not exempt a seller from disclosing material information about the property. The seller must still accurately complete a TDS and deliver it to the buyer, unless otherwise exempt, and must still disclose other material facts affecting the value or desirability of the property.

Copyright 1997 California Association of REALTORS®. All Rights Reserved.

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Dispute Resolution Alternatives - Arbitration or Litigation

Dear Client or Customer:

The contract you are about to execute contains a provision for which you may select an alternative method of dispute resolution. The selection that is agreed to by all parties will dictate the method of dispute resolution to be used in the event a dispute were to arise as a result of said contract.

It is important to note that there are advantages and disadvantages to either method of dispute resolution you may select. It is, therefore, STRONGLY RECOMMENDED THAT IN THE EVENT YOU HAVE ANY QUESTIONS, YOU SEEK LEGAL COUNSEL'S ADVICE PRIOR TO MAKING SUCH A SELECTION.

The following is a brief list of some, but not all, of the advantages and/or disadvantages, which may be associated with differing methods of dispute resolution. This is not intended to provide legal advice or in any way make an affirmative recommendation with regards to which method of dispute resolution is better.

Arbitration

ADVANTAGES OF ARBITRATION - Parties to an arbitration are entitled to select, for a fee, legal counsel representation. In most cases an arbitration is a less formal method of dispute resolution. The arbitration is typically conducted outside the court system and therefore may avoid the strict procedural requirements imposed by the court. The trier-of-fact and law (arbitrator) can be a retired judge, lawyer, or businessperson. There are many independent providers of this service. Judicial Arbitration and Mediation Services/Endispute ("JAMS") is one, the American Arbitration Association ("AAA") is another. The local telephone directory can provide many others who provide this service as well.

The disputed issues can be brought before the trier-of-fact and law, in most cases, in less time than could be expected in the court system. The cost in terms of time, legal fees and legal costs can be less than directing a dispute through the court system. An arbitrated award is as enforceable as an award issued by the court.

DISADVANTAGES OF ARBITRATION - The greatest disadvantage of arbitration is the award of the arbitrator is final and may not be appealed except in unusual circumstances. There are some rare and limited cases when an award of an arbitrator may be set aside. These however, deal strictly with a party's ability to prove arbitrator bias or that a party did not receive due process. Legal discovery rights are more limited than in court proceedings. Arbitrators are not bound by normal rules of evidence or by specific California law or formal equitable principles, unless the arbitration provision in the contract requires the arbitrator to be bound by such rules, laws and principles.

IMPORTANT NOTE - If you wish to elected the arbitration method of dispute resolution, California Law requires that all parties to a contract initial the arbitration provision before it will become a part of the contract.

Litigation Through the Court System

ADVANTAGES OF LITIGATION THROUGH THE COURT SYSTEM - Parties to litigation in the court system are entitled to select, for a fee, legal counsel representation. In most cases litigation through the court is a more formal method of dispute resolution. These procedures include the opportunity for significant methods of discovery, including depositions and written discovery. The trier-of fact and law in the court system may be a sitting judge or a jury with the judge as the trier-of-law. The court system is strictly governed by the rules of evidence and procedure under the laws of California. An unfavorable award of the court may be appealed to a higher court.

DISADVANTAGES OF LITIGATION THROUGH THE COURT SYSTEM - Litigation conducted through the court system must follow strict procedural requirements imposed by the court. These procedures may include motions, discovery, conferences and appeals, all of which can take significant time. Due to the congestion in most court systems a dispute may take as long as from two to four years or longer before getting to trial. These procedures can be costly in terms of time, legal fees and legal costs. An award in your favor at a lower court may not be a final resolution of the dispute due to the opportunity for appeal.

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Dispute Resolution Alternatives - Mediation

Dear Client or Customer

The Residential Purchase Agreement ("Contract") you are about to execute contains a "Mediation" provision. This mediation provision imposes a requirement on the buyer and seller to initiate mediation to resolve a dispute prior to entering into Arbitration or Litigation through the court system. While mediation is a voluntary process the provision provides that "If any party commences an action based on a dispute or claim to which this paragraph applies, without first attempting to resolve the matter through mediation, then that party shall not be entitled to recover attorney's fees, even if they would otherwise be available to that party in any action."

It is important to note that there are advantages and disadvantages to every method of dispute resolution. It is therefore, STRONGLY RECOMMENDED THAT YOU SEEK LEGAL COUNSEL'S ADVICE if you have any questions on this subject matter.

In an effort to assist clients and customers in understanding the mediation method of dispute resolution, the following information is being provided. This information is not intended, however, to provide legal advice and/or in any way make an affirmative recommendation with regards to the subject matter. Clients, customers are recommended to obtain legal advice regarding this subject from their legal counsel.

The following is a brief list of some, but not all, of the advantages and/or disadvantages, which may be associated with mediation.

Mediation

ADVANTAGES OF MEDIATION - First and foremost, mediation is a voluntary process. There is no trier-of-fact or law who decides which party wins and which party loses, as in an Arbitration or Litigation through the court system. Instead, there is a facilitator. The facilitator works with each of the parties in order to get agreement on a joint resolution of the dispute. In mediation, the parties are in control and no one imposes an award or judgment on them.

Parties to mediation are entitled to select legal counsel representation. In most cases mediation is a less formal method of dispute resolution. The mediation is typically conducted outside the court system and therefore may avoid the strict procedural requirements imposed by the court. The facilitator (mediator) can be a retired judge, lawyer, or businessperson. There are many independent providers of this service. Judicial Arbitration and Mediation Services/Endispute ("JAMS") is one, the American Arbitration Association ("AAA") is another. The local telephone directory can provide many others who provide this service as well.

The disputed issues can be resolved very early through mediation in most cases, saving significant cost in terms of time, legal fees and legal costs.

DISADVANTAGES OF MEDIATION - The most significant disadvantage to mediation is that the resolution is dependent upon the parties' willingness to resolve the dispute. In most mediations each party must give a little in their respective positions to reach a compromised middle ground. If either party is unwilling to be flexible, the mediation in most cases will fail and the parties will move on to Arbitration or Litigation through the court system.

IMPORTANT NOTE - Mediation is a provision of the Contract and does not require an affirmative election.

If the mediation is successful, the parties typically sign an agreement outlining the points they have agreed on to resolve the dispute.

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Questions and Answers related to AS IS Sale vs.Warranted Sale

Dear Client or Customer:

The Residential Purchase Agreement ("Contract") provides for the property you are purchasing or selling to be sold in "AS IS" condition WITHOUT WARRANTY, in its PRESENT physical condition. The Contract also provides that a buyer and a seller may agree to a warranty of specific items and/or systems of the property as defined under the Condition of Property section of the Contract.

It is important, therefore, to note that there are advantages and disadvantages to each party as related to warranty issues. These issues are typically resolved as a result of negotiations between a buyer and a seller. In an effort to assist clients and customers in understanding the difference between "AS IS" and Warranty, the following Questions and Answers have been created. This Q & A is not intended, however, to provide legal advice and/or in any way make an affirmative recommendation with regards to the subject matter. Clients and customers are recommended to obtain legal advice regarding this subject from their legal counsel.

  1. Q. In an "AS IS" sale is the seller obligated to disclose adverse conditions of the property?

    A. The seller is obligated under law to disclose to a buyer all that they know about any adverse material conditions affecting a property. This is extremely important as nondisclosure of known defects may make the seller liable for correcting said defects and for monetary damages for failing to disclose the information.

  2. Q. In a Warranted sale is the seller obligated to disclose adverse conditions of the property?

    A. Yes, the seller's obligation to disclose the known condition of the property is governed by law and does not change whether the sale is an "AS IS" sale or a Warranted sale.

  3. Q. In an "AS IS" sale is the seller obligated to correct any defects which are disclosed to the buyer or discovered during escrow?

    A. In an "AS IS" sale a buyer is purchasing and a seller is delivering the property in its current condition irrespective of what that condition might be. Therefore, the seller is under no obligation to correct any adverse condition of the property unless said correction has been specifically agreed to as a condition of the Contract.

  4. Q. Is it important for a buyer to obtain inspections of the property in an "AS IS" sale?

    A. It is very important for a buyer to have as many inspections of the systems and components of a property as is appropriate to insure that they have a full and complete understanding of the property's condition. The buyer is purchasing the property in whatever condition it is and any defects discovered after close of escrow will be the obligation of the buyer and not the seller. However, thorough inspections are important for both an "AS IS" sale and a Warranted sale.

  5. Q. What if a defect is discovered after close of escrow in an "AS IS" sale?

    A. In an "AS IS" sale if a defect is discovered after the close of escrow the seller has no obligation to buyer unless the buyer can prove that the seller had actual knowledge of the condition and failed to disclose it. By way of example, if the buyer discovers, after close of escrow, that the roof leaks and needs repair, the seller has no obligation to repair the roof unless upon inspection, buyer discovers that seller had placed buckets in the attic or can demonstrate other facts which would indicate knowledge of the adverse condition that the seller did not disclose to the buyer. The seller is obligated to make the same disclosure in a Warranted sale.

  6. Q. What if a defect is discovered after close of escrow in a Warranted sale?

    A. In a Warranted sale the seller is warranting the condition as of the close of escrow. In the event the buyer discovers an adverse condition that is covered by a specific warranty in the contract after close of escrow and it can be proven that the seller knew about the condition prior to the close of escrow, the seller would be obligated to correct the adverse condition.

  7. Q. What if a defect is discovered after close of escrow in a Warranted sale and it can not be proven that the seller knew about the condition prior to close of escrow?

    A. In a Warranted sale the seller is only warranting specific condition of certain systems and components of the property that are known to the seller or discovered during escrow, as of the close of escrow. If it can not be proven that the condition was known to the seller or discovered in escrow, the seller would have no obligation. By way of example, If it was discovered that the plumbing leaks after the close of escrow but it could not be proven that the leak was known to the seller or discovered during escrow, the seller would have no obligation to fix the plumbing even if the plumbing is warranted in the sale.

  8. Q. How long is the warranty good for in a Warranted sale?

    A. The warranty survives only until the close of escrow. It is important to note that the warranty is not warranting any future conditions, only the condition known as of close of escrow, unless it is later proven that the seller knew but failed to disclose the true condition of the property.

  9. Q. In a Warranted sale are all of the systems and components of the property covered?

    A. No, only the specific items covered in the language of the warranty arc covered. However, this does not take the place of the seller's obligation to be honest and truthful in making disclosures about the property. Even in an "AS IS" sale the seller can be liable after close of escrow for failing to disclose known adverse, material conditions that will affect the value and/or desirability of the property.

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Liquidated Damages

Dear Client or Customer:

The Residential Purchase Agreement ("Contract") you are about to execute contains a "Liquidated Damages" provision. This provision if initialed by the parties is an agreement that in the event of a breach of contract by the buyer the amount of damages the seller will be entitled to receive will be limited to the amount of the buyer's deposit. It is important to note that there may be advantages and disadvantages for the parties to a Contract if they elect liquidated damages. It is, therefore, STRONGLY RECOMMENDED THAT YOU SEEK LEGAL COUNSEL'S ADVICE if you have any questions on this subject matter.

In an effort to assist clients and customers in understanding liquidated damages, the following information is being provided. This information is not intended, however, to be provide legal advice and/or in any way make an affirmative recommendation with regards to the subject matter. Clients and customers arc recommended to obtain legal advice regarding this subject from their legal counsel.

The following is a brief list of some, but not all, of the advantages and/or disadvantages, which may be associated with liquidated damages.

ADVANTAGES TO LIQUIDATED DAMAGES - If initialed, liquidated damages establishes an agreed upon amount of damages in the event the buyer breaches the Contract. This amount can be any agreed upon amount but to be presumed valid, it may not exceed 3% of the purchase price for a transaction, which involves residential property, one to four units, one of which the buyer plans to occupy. In the event of a breach by the buyer, the seller does not have to prove that he/she has been damaged, only that a breach has occurred.

Not all cancellations are a breach of contract. For example, If the buyer is unable to obtain financing and notifies the seller during the financing contingency period in the Contract, the buyer's cancellation is not a breach of contract. Therefore, the seller would not be entitled to recover damages, either liquidated (if the provision is initialed) or actual (if the provision is not initialed).

DISADVANTAGES TO LIQUIDATED DAMAGES - In the event a seller has been damaged for an amount greater than the agreed upon liquidated damages amount the seller's recovery is limited only to the liquidated amount. An agreement to liquidated damages does not mean that the parties will avoid litigation. If the seller believes that the buyer has breached the Contract the seller will not receive the deposits held in escrow automatically, nor if the buyer believes that they have not breached the Contract will the buyer automatically receive the deposit back. The issue of whether the buyer has breached must still be agreed to between the parties or by a trier-of-fact and law. This could include Arbitration (if the provision is applicable) or litigation through a court of law. In most cases the escrow holder will hold the funds deposited in escrow until such time as the parties agree to distribution or a trier-of-fact and law orders the release of funds to either party.

However, all parties are obligated to sign an instruction to the escrow holder covering how the deposit is to be distributed if there is no good-faith dispute on this issue. Refusal to sign a release instruction, if required, could be followed by mediation, arbitration (if initialed), or litigation in court. If the seller is found to have had no good-faith claim for withholding the deposit, the seller may be ordered to pay, in addition to the withheld deposited funds, the prevailing party's attorney's fees and costs in addition to a penalty for refusing to release the deposit when no good-faith dispute exists.

Under California Law, Liquidated Damages is only agreed upon when all parties to die Contract have initialed the appropriate provision. In addition, only die initial deposit is covered by the Liquidated Damages provision in the Contract. If additional deposits are to be covered by the provision, an additional document (Receipt for Increase Deposit/Liquidated Damages CAR form RID- 11) must be executed by all parties otherwise additional or increased deposits arc not in most cases considered liquidated damages and can not be claimed by the seller as such.

IMPORTANT NOTE - The Liquidated Damages Provision must be initialed by all parties to the Contract for the provision to become a part of the agreement.