Indemnification clause in seller's addendum? - Posted by WadeM (GA)

import · July 10, 2002, 7:26am

Posted by JT-IN on July 10, 2002 at 10:16:42:

Wade:

You pretty well have it figured out. You are indemnifying the Corp, including agreeing to defend them, if necesary.

And yes, you are probably being a Nervous Nellie, here too.

Teh best way to indemnify yourself for this risk is a steep discount on the price. Most times the Corp ios selling at below mkt price to somewhat motivate an informed buyer, based upon the small amount of risk you are likely assuming for this seller.

This should have been a point of contention in the negotiations, not as to the language, but as to the price you are willing to pay, based upon your assumption of their risk… but it sounds as if it may be too late for that, if you have already agreed upon a price. I suppose it never hurts to ask for an additional discount or concession, even if at this point. But, forget about trying to get them to delete/amend the addendum. Compensate for this in dollars…

Just the way that I view things…

JT-IN

import · July 10, 2002, 7:26am

Indemnification clause in seller’s addendum? - Posted by WadeM (GA)

Posted by WadeM (GA) on July 10, 2002 at 07:26:17:

My wife and I are in the process of negotiating a contract on a house for our personal residence that is currently corporate owned (previous owner was transferred and the house is vacant).

We were able to negotiate a good deal on price/terms and have verbally committed to the purchase contract (we?re supposed to sign the contract tonight 7/10), but I?m concerned over the language in the addendum to the contract that the corporation is requiring. The corporation has indicated that they are not willing to negotiate the language in the addendum.

The contract includes the following indemnification clause:

Buyer agrees to release, indemnify and hold harmless Seller, previous owners and their respective agents, servants, employees, directors and assigns (?Indemnified Parties?) from any and all claims, losses, damages, costs or expenses (including attorney?s fees and court costs) which the Indemnified Parties shall incur based upon (1) any defects in the Property, whether obvious or latent, known or unknown, easily discoverable or hidden, and (2) the information contained in or that should have been contained in the tests, inspections and disclosure statements set forth above.

The house looks in great shape and is only in need of minor cosmetic improvements (mostly paint and landscaping). The seller has conducted an inspection and is in the process of addressing the items raised by the inspection. In addition, we plan on having our own inspection as well.

My concern is that when we sell the house (probably in 5-7 years) that if the future buyer has some sort of problem with the house and decides to sue the previous owners (including the current corporate owner) is that we?ve agreed to defend the corporation in court. The corporation is a Fortune 500 corporation with deep pockets, so if there was a problem it could be very expensive to resolve.

The only issues that I can think of that could result in a ?major? law suite are major structural damage or some sort of environmental problem with the house. I guess I?m trying to figure out if I?m just being a nervous Nellie or if I should be really concerned? I was also wondering if it would be possible to purchase the house through a trust to limit the liability. Any thoughts?

Sorry for the lengthy explanation.

Thanks

wade