Contingency Teeth - Posted by bert G (ND)

Posted by JPiper on May 20, 1999 at 14:06:43:

I would just make your offer subject to the receipt to the seller’s Schedule E no later than a particular date, and your approval thereof. Forget the partner business.

Just to state the obvious, it’s not uncommon to see a tax return where the expenses are higher, and the income is lower. Because of this, I’m not all that concerned about whether I see a Schedule E. You should have a good feel for the expenses without that particular document if you’ve done your due diligence.

What’s more important to me are contingencies regarding inspecting the existing leases and tenant applications and information, and my approval of those. These are going to tell me what I’m inheriting.


Contingency Teeth - Posted by bert G (ND)

Posted by bert G (ND) on May 20, 1999 at 13:26:04:

I’m on the verge of making an offer on a rental property (6-plex). I plan to include a clause stating that the seller will provide P&L’s for the past 3 years.

OK, he gives me his scheudle E or whatever, he’s complied with the clause. How do I word it to say that if the figures aren’t as good as I want, I can get out of it? I’ve seen a case where the difference between the listing info and the sched E was over $10K NOI. (Fortunately that was before I made an offer.)Can I state something to the effect that its subject to aproval of my “partner”, although my “partner” has four legs and sheds on the furniture?

Bert G

Re: Contingency Teeth - Posted by Dave T

Posted by Dave T on May 21, 1999 at 17:14:08:

Here is a set of contingencies I used in a recent offer on a 7-unit condo package. I just added an addendum to the standard Purchase and Sale Agreement that contained all these contingencies. Seller accepted all except the right to put signs on the property. I had already requested and received the last two years income and expense statements prior to making my offer.

  1. Anything not specifically excluded will be included, whether or not affixed to the property or structures.

  2. Buyer will endeavor in good faith to obtain financing for 80% of agreed purchase price. Buyer is not required to accept a loan with an interest rate higher than 8% over 30 years and payments exceeding $1650/month and buyer is not required to accept any loan which requires more than $10,000 in points, closing and/or other fees.

  3. Closing date may be extended an additional 15 days if lender requires additional documentation, paperwork or actions from the buyer and said delay is not due to the fault of the buyer.

  4. Buyer reserves the right to inspect leases, contact the property manager and tenants. Seller shall provide buyer with an accounting and assignment of security deposits at closing. Seller agrees to defend and indemnify buyer for any and all claims, judgements and lawsuits related to the wrongful withholding of security deposits that arose out of events or circumstances arising before closing of title. This paragraph shall survive the closing of title.

  5. Buyer shall be entitled keys and be entitled to access to show partners, lenders, inspectors and/or contractors prior to closing. Buyer may place an appropriate sign on the property prior to closing for prospective tenants.

  6. Seller warrants that all appliances, roof, plumbing, heating and ventilation systems are in good and working order at time of closing. This clause shall survive closing of title.

  7. Purchase is contingent upon Buyer’s review and acceptance of the Codes, Covenants, and Restrictions (or equivalent documents), and statement of financial condition and operating budget of the Condominium Owners Association. Seller to obtain and deliver said documents within 10 calendar days of acceptance of contract. Buyer to have 5 workdays to review and accept documents.

  8. At date of settlement or prior, any special assessments levied prior to closing and/or their arrearages shall be paid by seller.

  9. For each individual property, Seller agrees to convey by marketable title and deliver a proper general warranty deed, if applicable, free of encumbrances with all documentary stamps affixed thereto. Seller agrees to pay all documentary stamp taxes and statutory deed recording fees as applicable.