Posted by Steven-UT on March 07, 2006 at 15:58:32:
Should I then just have it say Subject to my Partners aproval (Since he has the financing) then and contingent upon delivery of clean title?
As well as keep (or lose) Inspection to be performed within ____ days of effective date of this contract. Buyer to notify Seller in writing within _____ days after home inspection if Buyer intends to cancel contract. This contract can be assigned. Property is being sold in “AS IS” condition?
Posted by Steven-UT on March 06, 2006 at 15:58:30:
I need help clarifying four of the clauses that I have to make them more simple and straight forward.
What would you recommend or how would you word them?
Here they are
SPECIAL CLAUSES: Seller is responsible for any and all Due on Sale clauses on the property, and Buyer is to be held harmless from any and all Due on Sale clauses on the property.
(This next one is a long one)
SPECIAL CLAUSES: This contract is subject to my partner’s approval and Buyers final inspection at the (Buyers/Sellers) expense, and final approval before closing, and after performing due diligence and verifying all information as to suitable financial performance of investment, and Buyer securing suitable financing. If after reviewing the entire package I/my partner/company determine this purchase to be non-performing we can’t proceed. Inspection to be performed within ____ days of effective date of this contract. Buyer to notify Seller in writing within _____ days after home inspection if Buyer intends to cancel contract. This contract can be assigned. Property is being sold in “AS IS” condition.
SPECIAL CLAUSES: This contract is subject to Seller signing the “Seller Acknowledgement.”
SPECIAL CLAUSES: This contract is sunject to Seller/Tenant vacating by __________, 20 _____. Seller agrees to subtract $ __________ per day for each day the property is occupied past the vacating date, as liquidated damages and not as a penalty. Final move out date __________, 20 _____. Seller’s initials _____ _____ Buyer’s initials _____.
Posted by DaveD (WI) on March 07, 2006 at 07:53:42:
… your competition in UT isn’t giving you a lot of additional clauses to boot. Then you will have your contracts so loaded up you will never get anything accepted. Your competition will have clean offers subject only to good title… and get all the deals.
Assuming the “Seller Acknowledgement” is something like Kaiser’s BDD, just refer to it in the contract as Addendum “A”, or “Z”, depending on how many other attachments you are cluttering up your deal with. Corey and others are right… you need to keep things simple so your deal gets signed off.
I just received my monthly newsletter form the organization that got me started in this business some 14 yrs ago. In the article entitled “17 Mistakes that will Undermine Your Success”, points 8 and 9 may have a bearing. Here’s the gist of those points.
#8)Getting too Creative with the Contract:
“Many sellers view the buyer as an adversary.Presenting a confusing contract with clauses that all lean towards your best interest is not going to warm the seller to your offer. But that doesn’t mean you can’t throw in a few perks for your side.”
The rest of the point focuses on using familiar contracts (ie doctored local ones ), without the clauses you don’t want and leaving in the ones you absolutely must have.
#9)Always Angling For Escape:
" If you use too many weasel clauses you end up looking like a weasel.You should be able to tell within 5 to 10 days whether or not you want to buy the property. That is plenty of time to have an inspection done and find out if the property pesents any obstacles to getting a mortgage.If you have a Right to inspect and Right to cancel without penalty and a Right to cancel without penalty if your financing doesn’t work out (standard on most locally used cotracts), then what more do you need?"
Just food for thought. These guys guided me when I got started and I have always found their advice and strategies sound; resulting in success for me.
Re: I need help with clauses - Posted by John Corey
Posted by John Corey on March 06, 2006 at 18:12:56:
Steven,
See if you can get legal help on the legal forum. Even better is to pay a lawyer to draft something.
General advice. Keep your deals clean and simple. Complex agreements turn off sellers, are hard to enforce and will not be looked upon positively by a judge. You do not really want to spend time in court so the agreement a set of instructions and not a club. As Realtors and others related to RE deals get sued a fair amount the local standard contracts tend to cover a lot of ground. Best to start with the local contract people recognize and then add the few bits that you might feel are missing.
As to the clauses posted.
This will stop many subject-to deals. This clause is not the same as a simple disclosure statement. If you really expect the seller to deal with the DOS then you should not be doing subject-do deals.
Largely crap that says you do not have confidence in your deals. Do your homework and drop most of this clause. Work from the standard contract used in your area so that you do not scare the seller. There is little that you have said in this clause that is not covered there. The items that are not covered are more related to you doing your homework. That is something that should not be handled with a clause.
No comment as this only ties two documents together. ‘See addendum A’ or similar works. It is what is in the addendum that could require specific wording.
You can pick this one up from many standard contracts. The wording you are using is not correct (liquidated damages for what is more or less a rent back situation). This is either a clause to say the deal is off if the property is not delivered vacant or it is a clause setting the rental terms. Right now it accomplishes neither. If you want to set the rental terms then get a rental agreement that meets the local laws and make it part of the master agreement. $X a day is fine but your rights as a landlord are not spelled out just because you have set a day rate.
#2 makes it sound like you want to sign a contract on every property out there, then renege on the ones that don’t perform the best. Instead, #2 should read something like “contingent upon deliver of clean title, excluding: … lien 1, lien 2, etc” - this assumes the deal works with lien 1 and lien 2 accounted for. You should only sign contracts on deals you intend to carry out. If the facts of the deal change later on (i.e. more liens, etc) then fine … but anything else is unethical … “just because you changed your mind”. You’re tying up people’s properties during a vital time, don’t waste their time and risk their financial standing unless you plan on doing the deal.
Re: I need help with clauses - Posted by Steven-UT
Posted by Steven-UT on March 08, 2006 at 15:51:52:
OK, So what part of # 2 would you keep?
And on #4 how would you word it? It is not going to be a rental. I just plan on fixing it up a bit, then resell it.
SPECIAL CLAUSES: This contract is subject to my partner’s approval and Buyers final inspection at the (Buyers/Sellers) expense, and final approval before closing, and after performing due diligence and verifying all information as to suitable financial performance of investment, and Buyer securing suitable financing. If after reviewing the entire package I/my partner/company determine this purchase to be non-performing we can’t proceed. Inspection to be performed within ____ days of effective date of this contract. Buyer to notify Seller in writing within _____ days after home inspection if Buyer intends to cancel contract. This contract can be assigned. Property is being sold in “AS IS” condition.
SPECIAL CLAUSES: This contract is sunject to Seller/Tenant vacating by __________, 20 _____. Seller agrees to subtract $ __________ per day for each day the property is occupied past the vacating date, as liquidated damages and not as a penalty. Final move out date __________, 20 _____. Seller’s initials _____ _____ Buyer’s initials _____.