Re: Regarding Assignment of Purchase Contracts - Posted by Brent_IL
Posted by Brent_IL on October 25, 2003 at 11:44:31:
As you know, I give the seller an option to cancel by paying a fee. If I left that in, no one would want to pay for an assignment. The seller warrants that almost everything but the paint will be in good operating order for 18 months after closing. It wouldn?t be fair to pass that on because most sellers don?t understand the nature of warranties and it could easily be abused.
Most of the items pertain to the financing or the collateral.
There?s stuff that I include in the notes and security instruments, e.g., rights to discounts, the right to renew, debt service limited to 90% of net income, etc. that make my notes to the seller non-negotiable.
Since I make frequent use of substitution-of-collateral and subordination clauses, the contract elaborates on how different types of collateral are valued as security for PMM loans. The method to accomplish in-substance defeasance, and the formula for the collateralizing value of shared ownership interests and interests that are liened or bought on margin, are given in the purchase contract.
The agreement for the performance mortgage and a hold-harmless agreement are built in also.
This was designed to give me maximum flexibility before and after closing, so that the only thing I have to worry about when negotiating is making the deal. I can figure out the best exit afterward.
Over the years, when something came up that obstructed what I was trying to do, I’d include a countering option in the next contract revision, so I wouldn’t have to reopen negotiations when I wanted the sellers to do something.
As collateral, I may want a seller to take an I.O.U. written on a paper napkin with a swizzle stick dipped in lime juice, but I don?t feel comfortable giving my buyer the same right.