Please Comment......Binder Agreement - Posted by Paul (Bklyn)

Posted by William Bronchick on March 01, 2002 at 07:23:13:

The actual terms I will not comment on, but rather on the concept of a binder agreement. As my law school real estate professor so eloquently put it, "only a f*ing idiot would use a binder" (his exact words in response to a wise-a student that said her mother was a realtor for 20 years and always used them).

The problem with binders is that they may or may not create a contract. If they do, you may be bound to something without adequate protection. If they are not, then you have no form commitment from the seller.

Do yourself a favor, meet with the seller and his atty, have a conversation, then write up a formal agreement.

Please Comment…Binder Agreement - Posted by Paul (Bklyn)

Posted by Paul (Bklyn) on February 27, 2002 at 21:20:32:

I’m looking to fax this binder agreement to the seller’s attorney tomorrow. I was wondering if I’m going to scare the seller away. I hope not. Any suggestions? Also are mold inspections common to do in the inspection process?


Property Address: Jersey City, New Jersey
Date: February 28, 2002
This offer, if not accepted and signed by seller, expires: March 01, 2002
As $ 500.00 initial payment is towards the purchase price, refundable if the transaction is not consummated.

Sales Price: $ Terms: The Buyer will be able to back out of this agreement if the Seller does not agree to the following conditions: 1) Seller agrees to pay one-half of the Buyer?s Closing Cost at the time of closing (the buyer will have full authority in how to proceed in completing the standard Comprehensive Due Diligence). 2) Seller?s Compliance to the attached Preliminary Due Diligence Checklist (exceptions are permitted if agreed upon by both parties).

Closing Date on or about: April 30, 2002

All monies shall be held in escrow for the benefit of both parties by Dennis Callen (Seller?s Attorney) and shall be credited towards the Buyer?s down payment at closing.
If for any reason this agreement is not reduced to a “formal” contract (i.e., one customarily used in the area in which the property sits) within seven (7) days of this agreement, Buyer may terminate this agreement and the escrow money shall be refunded immediately with no further recourse or obligations between the parties.


Preliminary Due Diligence Checklist:

Financial records:

-Rent Roll including term, deposit, and payment history

-Insurance: Insurance Policy; including all riders, risk assessments, and disclosure affidavit for carrier.
Current Title Insurance plus Liability Insurance.


-All Leases: entire copies plus any addendum or riders.
-Any service or advertising contracts: (Trash, extermination,
maintenance, management, commission agreements, union
agreements, vending, billboard, pay telephone, etc. and any
instrument or contract to be assumed by Purchaser)

-Copies of all recent appraisals, engineering reports,
environmental reports

-Survey (as-built), legal description, architectural and
engineering plans and specifications

-Physical Inventory of furniture, fixtures, and equipment, and supplies.

-Utility bills: Water, Sewer, Gas, Electric (for the last year) (or recap report from provider showing usage and cost)

-Bank Statements showing deposits for last twelve months

-Fire System inspection.

-Property Tax tickets for all the years owned (real estate
and personal)

-Litigation History: details of any past or pending litigation (if none, then affidavit from owner)