Bartos Group BLOG

In this blog Mary Bartos and legal expert, Peter Huy of Huy Jacob P.A., breaks down the critical distinctions agents, buyers, and sellers must understand when Navigating Real Estate Contracts in Southwest Florida. The conversation focuses on two prevalent contract “flavors” used locally — the As‑Is (often delivered on a Naples form) and the standard form (frequently referenced as FAR/BAR) — and explores how each handles inspections, deposits, financing contingencies, and the consequences of a default. This article distills those insights into a clear guide for anyone working through a residential purchase or sale.

Why Contract Selection Matters When Navigating Real Estate Contracts

Choosing the right contract is one of the earliest and most consequential decisions in a real estate transaction. The choice affects a buyer’s ability to walk away, a seller’s exposure to litigation, the handling of deposits, and how financing hurdles are managed. When Navigating Real Estate Contracts, parties should understand not just the label on the form, but the legal consequences of key clauses: due diligence, inspection rights, financing contingencies, and escrow instructions.

As‑Is vs. Standard Contracts: What Are the Real Differences?

At the core of the distinction are two practical approaches:

• As‑Is contracts — Typically grant the buyer broad discretion through a due diligence clause. If an inspection reveals issues, the buyer generally has the option to terminate the contract or proceed with identified defects. This places the greater benefit on the buyer’s side because they can walk if the property is not suitable.
• Standard (FAR/BAR) contracts — Contain inspection rights as well but place more pressure on the buyer to remain in the deal. The seller may be given the opportunity (but not the obligation) to make repairs for certain defective items identified during inspection. If the seller declines, the buyer can then decide to proceed or terminate.

Peter frames this difference with a practical analogy: a standard contract is like bowling with bumpers — rules and protections help guide the ball to the back of the alley. An As‑Is contract removes some of those bumpers, giving the buyer more freedom but also more responsibility during due diligence.

Due diligence and inspection outcomes

Both contract types allow inspections, but they differ in what happens next. Under an As‑Is/due diligence framework, negotiations during the diligence period can still occur — buyers often negotiate repairs or credits. Under a standard contract, the seller’s right to cure certain defects changes the bargaining dynamic; the seller can choose whether to fix major items (like HVAC failures) before the buyer decides whether to walk away.

Deposits: When Are They At Risk?

Deposits are among the most misunderstood elements when Navigating Real Estate Contracts. Two points stand out:

• Under the Naple’s form (often referred to as the “NEO” or Naples contract), only deposits actually delivered to the escrow agent are considered “made” and therefore at risk if a buyer defaults.
• Under the FAR/BAR contract, all deposits listed on the contract — even those not yet physically delivered — can be considered at risk. This means a buyer might face liability for future scheduled deposits referenced in the agreement.

Understanding which deposits are legally considered “made” is essential. Buyers should never assume that simply because a later deposit hasn’t been tendered it cannot be disputed. When Navigating Real Estate Contracts, examine the deposit language closely and confirm how the escrow agent will handle disputed funds.

Escrow Agents and Release of Funds

Escrow agents typically hold deposits in a trust account and follow the contract’s escrow provisions. However, escrow agents are often contractually prohibited from releasing funds without joint written instructions from the parties or a court order. If a buyer defaults and the seller demands the deposit, the buyer can instruct the escrow agent not to release funds, triggering potential litigation to determine entitlement.

As Peter explains, even when a seller appears clearly entitled to a deposit, collecting it can become costly and time consuming — sometimes involving significant attorney fees and a lawsuit that can take months or more to resolve.

Financing Contingencies: Automatic vs. Waived

Financing contingencies are another crucial area when Navigating Real Estate Contracts. The difference between the Naples form and FAR/BAR regarding finance contingencies can be dramatic:

• FAR/BAR — The financing contingency can be automatically waived under specific circumstances, so parties must be meticulous about deadlines and written waivers.
• Naples form — The financing contingency must be waived in writing. If the financing contingency date passes without action, the seller gains certain termination rights but the buyer does not lose the financing contingency unintentionally.

Practically, this means agents and buyers must track financing deadlines closely. A missed date or an inadvertent waiver can eliminate a buyer’s critical protection and expose them to default remedies.

Can a Seller Back Out After Signing?

Once a binding contract is executed, a seller generally cannot unilaterally withdraw without risking breach of contract. Peter notes that sellers experiencing buyer’s remorse — perhaps after seeing dramatic market gains on older homes — sometimes hope they can simply walk away. In reality, breaking a contract can expose the seller to a lawsuit and a buyer’s legal remedies, including specific performance in appropriate circumstances.

While forcing a seller to convey title is not instantaneous — it typically requires litigation — the point is clear: contracts matter, and they are enforceable. Sellers should seek legal counsel before assuming they can cancel a signed agreement.

When Defaults Trigger Litigation: Costs and Realities

If a default occurs and the escrow agent cannot release funds by joint instruction, the aggrieved party often must pursue litigation to access the deposit. Litigation can be expensive — Peter cites the possibility of tens of thousands of dollars in attorney fees for a contested deposit claim — and time consuming. Even when the legal outcome favors the seller, recovering funds and fees can take a long time.

Buyers and sellers should therefore weigh the potential costs of dispute versus negotiation. Many disputes that begin as deposit fights get resolved through settlement because litigation carries high transaction costs.

Practical Checklist for Navigating Real Estate Contracts

To reduce risk and improve outcomes, the following checklist can help when Navigating Real Estate Contracts:

1. Identify whether the contract is As‑Is or standard and read the due diligence/inspection clause carefully.
2. Confirm which deposits are considered “made” and how the escrow agent will handle contested funds.
3. Track financing contingency dates and understand waiver requirements in writing.
4. Clarify seller cure rights and buyer termination rights following inspections.
5. Use written instructions for any changes to contingencies or deposit schedules.
6. Engage an experienced real estate attorney and a seasoned agent early — especially for high‑value or complex transactions.

Why Professionals Aatter

Peter and the Bartos Group emphasize a consistent message: this is why clients hire professionals. An experienced real estate agent who “understands contracts” and a closing/escrow team that knows escrow provisions can prevent many of the pitfalls that lead to disputes. When problems do arise, having knowledgeable counsel dramatically improves the odds of an efficient, cost‑effective resolution.

“This is why you hire professionals … you want to make sure your realtor is a professional that understands contracts … and then you want to get a closing company … that really understands what has to go into this.”

Conclusion

Navigating Real Estate Contracts in Southwest Florida requires more than selecting a form — it requires a careful read of due diligence rights, deposit rules, financing contingencies, and escrow procedures. Buyers benefit from the protections of a robust due diligence period in As‑Is contracts, while standard contracts impose more obligations that can favor sellers. Deposits and financing timelines often determine whether a buyer’s protections remain intact or are unintentionally lost. Above all, hiring experienced professionals — both real estate agents and legal counsel — is one of the best risk‑management decisions a party can make.

Frequently Asked Questions

Q: What does “As‑Is” really mean?

A: In this context, “As‑Is” typically means the buyer has a due diligence period to inspect the property and decide whether to proceed. The buyer can often choose to terminate based on inspection findings or proceed with the property in its current condition.

Q: Can an escrow agent release a deposit if one party objects?

A: Usually not without joint written instructions from both parties or a court order. If one party objects, the escrow agent will typically refuse to release funds until the dispute is resolved.

Q: Are all deposits listed in a contract automatically at risk?

A: It depends on the contract form. Under some forms (e.g., FAR/BAR), all listed deposits can be at risk even if not yet tendered. Under other forms (e.g., Naples form), only deposits actually made are at risk.

Q: What happens if a seller wants to back out after signing?

A: A seller cannot simply back out without potential legal consequences. The buyer may pursue remedies, and in some cases seek specific performance. Sellers should consult an attorney before attempting to cancel a signed contract.

Q: How can buyers protect themselves when Navigating Real Estate Contracts?

A: Buyers should confirm the type of contract, understand inspection and financing contingency deadlines, document all waivers in writing, and work with an experienced agent and attorney to avoid unintended consequences.