See Our Commentary in the San Francisco Chronicle on the insurance topic.

We start with the fundamentals: your names, the offer price, and the property address. The offer is only valid if it includes a specific expiration time and date—without one, it’s a nonstarter. The agreement is designed specifically for residential properties with up to four units, excluding commercial properties. However, through the cunning use of addenda, the SFAR Contract works for TIC and co-ops too.

PRACTICE SAYS: SClarify ownership structures early to avoid delays or confusion — especially if a lender is involved.

Both buyer and seller acknowledge their respective agent relationships, including disclosures for dual agency (only with everyone’s permission) or potential competing clients (usually from the same brokerage, rarely with the same agent.

In San Francisco, the roles of Escrow Holder and Title Insurance Company are often combined into a single company, unlike in Southern California, where they are typically separate entities. The buyer generally has the freedom to choose the title insurance provider, while the seller and their agent usually select the Escrow Holder. This neutral third-party company handles the financial transactions and title transfer details of the sale.

San Francisco agents often use “escrow” and “title” interchangeably due to this overlap. However, there are exceptions where buyer choice is limited, such as in certain probate sales, multiple TIC unit sales, or new construction transactions.

Fast Closings, Seamless Transactions

In San Francisco, speed is everything. While most places drag out escrows, most purchases are done within 25-30 days for homes and condos—and even faster for cash offers.

With years of experience navigating tight timelines, leveraging our clients’ strengths, and strategically assessing the competition, we consistently deliver phenomenal results.

Close watchers of this form (and we know you are), will notice that the line for “non-contingent” financing vanished in the last version of this contract. In fact, as we said before,  there is now no way to write a truly non-contingent contract using this document alone any more with the latest versions of this the contract.

The Initial Deposit is the only one we usually use in San Francisco unless there is a very long Escrow and that is usually 3 percent of the purchase price that needs to be wired to Escrow within 2 business days by the form, but in practice most listings agents want the Initial Deposit in within a single business day as it’s a question of giving sellers reassurance and certainty that the buyers are legitimate and serious ones. This 3 percent deposit is usually the most you can lose if you breach the contract and fail to close on your purchase. But beware: while rare, it’s important to note that there is a lingering risk that you could lose more than 3% of the purchase price if you never put your deposit into escrow in the first place depending on the circumtances. It could get messy.

Best advice: let’s be certain of the property before writing an offer on it!

We usually don’t use additional deposits or other financing here (e.g., seller financing/carry-back loans, construction loans or private, hard-money loans).

The cash balance total takes your 3% deposit into account. For example, if you’re doing a 20 percent cash down payment, 17 percent would be due when we close. Factor closing costs are usually in the 1 percent range of the purchase price and will include owner and lender’s title insurance policies, recording and notary fees plus any prorated property taxes due at close depending on where we’re at in the payment cycle (due 2x a year, once in April and in December). Don’t forget there will be a supplemental tax bill if we are paying more than the property’s assessed value the seller had.

Earlier editions of the contract made you keep track of all the various default deadlines separately. It was easy to lose track of the contingencies, terms and requirements too especially if you don’t do this every day. This is why the addition of a single chart early in the document was a substantial tool that people like. 

Now, about those pre-printed deadlines for any contingencies or obligations? They are inapplicable in most cases because: (1) the sellers would have already taken are of F to L by the time they hit the market and (2) for A to D, even if buyers were taking these contingencies, they would seldom ask for as long as the printed values are.  

The two paragraphs at 10 and 11 were among the biggest changes to the standard contract that actually tracked existing and the CARS statewide purchase contract.

Formally including the requirement of affirmatively demonstrating that you were writing a fully non-contingent offer by making a buyer submit the same form they would be as if they were asking for a contingency, is meant as a wake-up call to buyers to really double-check they are fine with proceeding without any contingencies (thereby putting their 3% deposit at risk).  

It may have seemed like this would be a bigger deal than it is, but by this point in our work together, the need to take the Financing Contingency should pretty well be known. But for those who are late to the market who need a little time to get their materials in order, the 3-day period makes sense on paper, but in reality, it depends. 

If a property is ultra-competitive or there is a sense of urgency being stressed, then asking for any amount of breathing room as a buyer will not get us very far because most sellers and agents will contract an acute case of severe impatience with everyone else easily succumbing to the condition as people just want to know if there is an agreement reached as we mentioned before.  

Proof of funds can be done by showing bank account statements or by having the lender confirm funds are okay (think about having one account or six and what impression that may give rightly or wrongly). 

As we talk about in our discussion about Property Disclosures, most listings will already come with a preliminary title report, which is also an offer by one of the established title companies to extend a title insurance policy to you as the property’s future owners and, if getting a mortgage, a policy that protects your lender.

Banks and lenders will require you get both policies as a matter of course. Your title insurance policy is good for the duration of your ownership and need not be renewed. A new lender’s policy will need to be in place if you refinance and/or get a new mortgage.

If you’re buying all-cash, a title insurance policy is ‘optional.’ In reality, there is no way you should buy a property without tittle insurance. Not only to protect you but also to protect yourself when you sell the property one day or will it to your heirs. Title insurance protects you from weird things from happening that harken back to Gold Rush days and people staking claims on properties, parcels and disputing those.     

This is the biggie — the inspection clause. Effectively a buyer’s remorse clause, this clause is one that sellers dislike and one seller agents will encourage people to forgo tacitly despite official admonishments otherwise. In the sellers’ markets that we’ve seen over the past 15 to 20 years in the Bay Area it was rare that you would see offers with inspection contingencies accepted. With 2022’s market change, however, we’re starting to see them come back in fashion and sellers accept offers with inspection contingencies. The clause works like this: during X number of days a buyer can investigate the property, its surrounds, the attendant circumstances related to the property, its potential future use and more. Once the period is up, a buyer has the “sole discretion” to decide if they want to proceed to Closing and complete the purchase. If not, the contract gets canceled, and the Initial Deposit is returned. Practically, and despite the use of an “as-is” addendum, the parties may attempt to negotiate a price reduction, repair or credits to be applied at close of escrow. Once the contingency is removed, however, there would be very few valid reasons for a buyer to cancel the contract and get their Initial Deposit back (the property burning down, death, or something that renders performance of the contract impossible), except for if there is a new TDS issued (see more on that below).   

Once a property is in contract it’s only natural to expect for a buyer to want to visit the property again. Some agents were reluctant to allow buyer visits during the pendency of an escrow for fear they’d ‘discover’ something new and make hay of it as a newly discovered Material Fact. This clause takes are of that by making the buyer acknowledge that post-acceptance visits are FOR Information only informational and that no new buyer inspections will be undertaken during those visits. Or, if something new turns up during such visit they don’t go asking the seller for a credit unless it is something that wasn’t disclosed accurately. See how it can get dicey? This is why this point is revisited again in paragraph 25.

Like we said before, this is new. Getting insurance is key to any property purchase and is essential to have as a homeowner — after all, this is usually your most valuable asset (or among them). Be sure to check early on about the insurability of the property you want to buy because certain areas like Wine Country, or other fire-prone areas (parts of Marin County under Mt. Tam for example) are places where insurance may be hard to get, pricy or is otherwise only available under California's FAIR plan. 

Much like the Financing Contingency, by the time we are here, these forms should already be done and in our possession with you having already reviewed them with us before we proceed making an offer especially if it is a non-contingent one.

Note there are 2 sources of law here: the contract itself and applicable statewide statutes. The scope of the documents we are to receive is very broad and is NOT time-limited. This is a something that is important to consider and review as it is uncommon to get all of the documents contemplated here. 

We discuss the form disclosure notices, questionnaires and their ilk in our Property Disclosure Review section here if you want to read about what this entails.  

The requirements change a little for trust and probate sales because the main owner is out of the picture, but there is still a requirement for the relevant party to fill-out as much of the San Francisco Seller Disclosure as possible as this is a contractual requirement. 

If something is bolted down or installed with the intention of being permanent, it’s a fixture. In San Francisco, purchase include fixtures, which usually includes items such as lights, curtains and window hardware as well as major appliances, unless otherwise stated (as per subd. C). Note that appliances won’t come with warranties from the sellers, this is why we usually get our clients a home warranty for the first year they own. There are times, however, where original manufacturer warranties apply if the sellers got new appliances for the sale. Also, sellers aren’t allowed to sell you a bricked smart house and must therefore give us means to access smart home devices with logins, passwords and instructions. Most sellers may just do a factory reset and tell where to look to setup various features as most homes do not come with existing Wi-Fi. 

Usually related to leased solar panels, this clause is a more technical one in that it speaks to any additional creditor obligations that can be tied to the home’s title apart from the seller’s mortgage. We’ve seen this arrangement used for state-sponsored programs where AC is installed or other energy or home improvement elements. They will likely be used more in the future as the Bay Area comes to terms with the all-electric mandates for home systems coming online in 2030. In any case, looking to the terms of the lien, if they can be transferred (if you want to assume them) or if they need to be paid off with the sale is something the title folks should assist on too as these items should be listed in the preliminary title report.

If you are buying into a homeowner association (usually a condominium in San Francisco, but there are some neighborhoods with an HOA too), you are agreeing to be bound by the covenants, conditions and restrictions that govern this particular collection of homes. While most HOAs are pretty chill and relaxed in San Francisco (as most San Francisco HOAs are 2-, 3- and 4-unit types), there are examples of hyper serious and involved ones where personalities conflict and conflict in a big way (think: bigger, amenity-rich, high-dues type of mid- and high-rises). Understand what buying into a HOA means by asking us questions, researching the DRE website or asking a lawyer or by, well, reading the documents! 

There is a lot of commentary about HOAs and what it means - you are agreeing to abide by the existent CC&Rs, Bylaws and House Rules. They are little pieces of private government in your hands (or, potentially out of your hands). We have a lot of discussion about it here. 

If you are buying an investment/income property or a home with a rental unit, you are meant to get details about the tenants along with documents such as leases, deposits, utilities and contact information for tenants too. While a seller can request, tenants may not return a tenant Estoppel Certificate, the form on which a tenant can claim protected renter status, which will have a substantial impact on the property’s value — as in hundreds of thousands of dollars in some cases. Understanding any tenant-related component of a property (including a vacant one and how it became so) is important because San Francisco is such a pro-tenant type of place. 

Important: Unlike other places and other states, the sale does not mean the tenancy agreement(s) are broken, nullified or reset in any manner. All the agreements, leases and the such remain in effect even if you never made them. You are stepping into the shoes of the seller who themselves may not have been the people who rented to the tenants.  For this you may want to consult an attorney who practices in this very fraught area.

In San Francisco, you’re very likely to encounter properties with ‘unwarranted’ improvements or ‘illegal units’ which is living area (usually on basement levels) that isn’t reflected in or included with the Assessor’s tax record information for the property.

This is when the construction was done in the past and where you will see the seller agent or seller note that some of a property’s space is ‘unwarranted,’ or ‘illegal’ or added ‘without benefit of permit.’ It may have been built to code, but was never checked by City inspectors for various reasons — ignorance of the law, an owner thinking a project didn’t rise to the level of needing a permit, or because people wanted to avoid breaking their Prop 13 property tax protection. If you ever decide to ‘legalize’ the space in question with permits or plan a remodel that adds living space, this space will be added to your property tax basis and will likely raise/change your assessed value (which is probably why people never pulled permits for unwarranted spaces in the first place). The good news is that reassessments for new square footage aren’t usually based on prevailing market dollar-per-square-foot rates.

This is a nice change where they tell you who pays what when we close. The Escrow Holder will send out draft Closing Statements and Closing Disclosure documents before we close so you know what’s coming. 

There are various point-of-sale items San Francisco requires of sellers to do before we close, usually in the form of an inspection for energy and water conservation purposes. It’s during these inspections that most sellers will have the same vendor install smoke detectors and carbon monoxide detectors (which will need to be in place before any appraisal takes place). This is usually taken care of before or shortly after a property hits the market. There are times when the work gets delayed or deferred to buyers of fixer/probate properties.

While we like new, new, new in most other context, if the seller discovers a new material fact after they accepted an offer contract, they are obligated to tell you and to update and relevant documents. If the new material fact is significant enough, it may mean the seller issues a revised TDS (Transfer Disclosure Statement), which now gives the buyer a new, 5-day period during which the buyer can rescind the contract AND get their Initial Deposit back even if all contingencies have been removed or were initially waived. Introducing information under these circumstances is important enough, the Legislature has said and courts have affirmed, to override any previous waiver or removal.

This is an important paragraph that can be a bit contentious and a little philosophical too in a chicken and egg-type of way or tail-wagging-dog kind of way.  Because the same right to cancel is not the outcome if the buyer fails to appreciate a previously disclosed fact.  There is another twist because you should know that most buyer investigations are limited to non-destructive testing absent a seller’s permission.

But if something comes up, the parties will look to the facts of each situation and attempt to find the right outcome whether it be acceptance, negotiation or termination. 

We usually get our buyers Home Warranties for the first year they own. It is a great way for us to be there while not being there. This highlights the fact there are no warranties from the seller (unless you are buying new construction or something that has been at least 80 percent rebuilt, which is hard to determine and it may be moot if the property’s first occupancy certificate predates the work being done (this is a whole other issue we can discuss with you).

For new condos in new developments you would likely be using a different contract for new construction, so you may want to stop reading now). New appliance manufacturers warranties should apply if they are indeed new and transferrable.

With utilities left on and all the information and stuff you need. 

One of the documents that is usually just a routine one is the seller affidavit saying they are not a foreign investment company, national or entity. Most people buying and selling in San Francisco tend to be U.S. citizens, nationals or corporations (especially with flips and new developments). Many times, the seller is usually a living trust that individuals create to protect their assets from the costly and time-consuming probate process (which we usually advise our clients to consider after they close). There are times when there really is a foreign company on the other end of the transaction or, more commonly, where the seller is an absentee owner of an investment property. In these instances, the buyer and escrow company are obliged to send 3 1/3rd% of the sale proceeds to California’s Franchise Tax Board.  The Escrow Holder usually takes care of this aspect during the escrow period but we wanted to highlight this so that you know (and confirm) what is happening.   

While it may seem they are, by presumption offers are not confidential.

IN PRACTICE: Unless a seller says otherwise, realtors are obligated to answer truthfully if there have been offers on a given property, but they won’t necessarily tell you what the terms were however or how many and when other offers may have been made. Think about how this plays in with our theme of information asymmetry, days on market and seasonality. 

Take a careful read through these. Note that DAYS are calendar days for the most part but are also Business Days in others. 

E-signatures are also considered valid. 

As we’ve said at the beginning on this journey, the MLS is the best, most accurate, vital and important clearinghouse of most of San Francisco’s home sales that have taken place over the past 30-40 years. Part of that are the pictures, statistics, comments and agent-provided remarks that are uploaded onto the MLS.   Ensuring data fidelity and quality means being as inclusive as possible if we are to have any hope of understanding San Francisco’s housing market. Indeed, the MLS is key in setting values and keeping the marketplace operating as smoothly and efficiently as possible. Some folks are, of course, more inclined to be more private. If, for some reason, you want interior photos or other details about the property you are buying made private (i.e., only agents can access previously published photos) let us know BEFORE WE CLOSE. Otherwise the default we practice as listing agents ourselves and as our earlier position states, pictures will remain up on the web. Also, remember that the MLS syndicates data but other external sources like Zillow, Redfin or Realtor.com may well archive listing information (including photos) on their own servers that are beyond the MLS’s control.

Like most contracts these days, the purchase contract contains mediation and arbitration provisions. In fact, the contract won’t be considered valid unless both sides agree to these forms of dispute resolution. As a lawyer and trained mediator, Kevin can say that arbitrations are effectively a trial without a jury and expedited evidence rules before an impartial arbitrator (usually a retired judge or attorney). There are rules and procedures that govern the process which is faster and less expensive than an ordinary trial would be should there be a dispute that arises after the fact. Most disputes usually involve a seller’s failure to disclose a condition or defect, or, in other cases such as new construction, construction and/or design defects (Google S.B. 800 for more on this; keep in mind that a property has to be 80 percent rebuilt to qualify for those remedies and warranties and/or the first certiciate of occupancy must be recent). One note on available damages. The 3 percent cap on liquidated damages applies only to a failed purchase in most cases (it’s the same amount as the Initial Deposit), but if there are more serious matters like breaches of various seller and seller agent obligations and duties owed to a buyer, damages may be much higher.

And one last note on this. There is an Attorneys’ Fees provision that says the winning party is entitled to the their attorney fees. This is meant to be disincentive for people to to act in bad faith initially while also ensuring the aggrieved party isn’t responsible for their own lawyer bills, which, at hundreds of dollars per hour, are a factor in these types of proceedings.

Remember, the seller side usually pays commissions for all the agents involved absent an agreement otherwise from the sale proceeds and recorded. In those cases, the buyer would pay the buyer agent fees (2.5-3%), which actually becomes more common when properties hit the $5 million, $10 million and $25 million mark because seller-paid transfer taxes would otherwise by taxed at an extra high transfer tax rate (a luxury tax).

IN PRACTICE: This is why you may see agent-only notes saying that even though a recorded sale price was $4.99 million, the contract price was $5.x million with buyers paying $150,000 in commissions to their agent for example. 

In an era of phishing scams and fraud, we always implore our clients to call their title officers to confirm wire codes, SWIFT numbers and codes, routing, lender and account information before wiring Initial Deposits, Downpayment Funds and, for sellers, where sale proceeds go once the sale is closed.

Missing a deadline is bad but, sometimes unavoidable. If, for some good-faith reason, a contractual deadline for a contingency removal or close of esrow date gets delayed we will work with the other side to prepare a written Addendum or Extension of Time document prepared in advance of the deadline.

The more advance notice the better. The more context offered as to why there is a delay, the better. Among the most common (and acceptable) reasons for delays: lender underwriting has a last-minute question about buyer finances or HOA dues/assessments, the buyer’s liquidation of the balance due is taking longer than expected, there were travel plans, or, the seller needs more time for closing because they are going into a 1031 exchange, remodeling work isn’t yet done on the property and the like. While not good, apart from some grumbling, these reasons are within the margin of error.

Most delays will range from a day to a week, anything longer becomes more challenging. (New construction, however, the grace period should be at least a month or two). When delays are longer than a few days, then the talk between the parties may turn to daily PITI carrying costs or extra fees for a lender to maintain a mortgage rate lock. This will usually end up with the Escrow Holder being asked to credit one side or another X amount at Closing.    

But if the delay isn’t something foreseeable or is otherwise unusual and puts the entire transaction at risk, the purchase contract tracks statewide practice where sellers must give buyers an opportunity to cure a breach/missed deadline before moving to terminate the contract whereby it becomes clear why the Initial Deposit is also the Liquidated Damages amount.

Whereas the statewide contract gives folks 3 days to cure a breach, the San Francisco contract gives just 2 (calendar) days to cure once a Notice of Perform is sent by the non-breaching party. Oh and yes, a seller can issue a Notice to Perform 2 days before a deadline comes due. Why? Usually this may mean there is a higher and better back-up offer waiting just behind you snapping at your heels that the seller would rather close with instead of you.

Take away point: communication and planning are key and buyer’s remorse is NOT a valid reason for terminating a contract, well it may be  your reasons, but don’t expect your initial deposit back if this is why you are moving to terminate.

Risk of Loss. That code section says that if the property is damaged by a natural disaster before title or possession is given to the buyer, either buyer or seller can cancel the contract and a buyer is entitled to the return of any portion of the purchase price paid. But, after the buyer has taken possession or has received title, the buyer bears the risk of loss or damage to the premises (assuming the seller had nothing to do with the damage). This is why we have insurance people! 

California adopted the Statute of Frauds long ago in its Civil Code that says changes (and offers) for real property must be in writing and signed to be effective. E-signatures are fine for these purposes.

In years past, especially when it was a sellers’ market, it was almost unheard of to use this contingency in San Francisco successfully, but with a changed market where inventory is tight and rates are relatively higher, these types of coordinated sales may stand a chance. But even so, there are still logical times when this approach should be used. After your property is in contract with your buyers putting in their Initial Deposit is the minimum we’d suggest (we’d send the deposit receipt along as proof). Also, because we are asking the seller to put their fate in the hands of not only you but of yet another set of buyers, we should make the offer strong otherwise in terms of price, closing time and few, if any, other contingencies. We had one time where someone put in a well-under list price offer contingent upon the sale of a condo in a building with very high dues that was not yet on the market in a neighborhood that was severely impacted by the Pandemic’s reshuffling of desirable neighborhoods. While that offer went nowhere and the property sold for oodles more than the offer price, you still can’t blame people for trying.    

UPDATE: This is now dealt with in a separate document. See Paragraph 10. 

This is pretty straight forward, right? Usually, yes.

Just because all the conditions have been removed doesn’t mean sellers are absolved from telling buyers if something material happens, gets disclosed or is revealed. But this is not the same as failing to appreciate something that was already disclosed.