Building a Clause Library
Transaction Talk Series
Consider the Situation
• Clients needs, wishes, and expectations
• Whether the circumstances dictate a
contingency or cove...
USTs, Radon, Sewer ‘oh my’
• Buyer at Buyer’s sole expense, during the
inspection period, reserves the right to
conduct a ...
Buyer’s Repair Addendum, Rep B
Buyer hereby removes the inspection contingency and
proceeds to close in exchange for the f...
Buyer’s Repair Addendum, Rep S
• Scenario:
– BRA based on home inspection
– Seller to repair the following furnace defects...
Repair Addendum, contd. Rep S
• Issue:
– Seller all ready agreed to repairs that (according to contractor)
are unwarranted...
Lender Required Repairs, Rep S
• Does the Seller occupy the property?
– Can/will the Seller pay for lender required
repair...
Lender Required Repairs, Contd.
All repairs shall be completed by a licensed, bonded,
insured contractor in good standing....
Appraisal, Rep Seller
• Appraisal comes in super low (CMA $500k; Appraisal
$440k
• Issue: Sale agreement contains 2 BD def...
Appraisal – Buyer Wants to Pay
• Parties agree to amend PP to $___. In the event property
does not appraise for $___, Buye...
Contingent Sale, Rep Buyer
• ‘Pending’ rather than ‘bumpable’
– Purchase subject to sale of Buyer’s current residence
loca...
Remove Personal Property, Rep B
• Scenario:
– Seller is “hoarder” – Buyer wants to ensure that the
persona property is rem...
Non DEQ Certified Woodstoves, Rep B
• Seller at Seller’s sole expense, prior to close of
escrow, shall remove all componen...
Existing Easements, Rep B
• [Covenant] Seller to provide Buyer for Buyer’s
satisfactory review the following documents:
• ...
Easements, Cont. Rep B
• Note: If easement is to be created… must do so prior to
closing or obligation merges (disappears)...
Non Refundable Earnest Money
Scenario: Rep Seller and Seller wants EM immediately released
• The release of EM should be i...
What Else??
• Other scenarios not covered here?
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Building a Real Estate Clause Library

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Building a Real Estate Clause Library

  1. 1. Building a Clause Library Transaction Talk Series
  2. 2. Consider the Situation • Clients needs, wishes, and expectations • Whether the circumstances dictate a contingency or covenent • The audience
  3. 3. USTs, Radon, Sewer ‘oh my’ • Buyer at Buyer’s sole expense, during the inspection period, reserves the right to conduct a sewer video inspection, radon test, and search of the property for any and all USTs and collect soil samples. – If a UST is found, Seller, at Seller’s sole expense, to decommision the tank to DEQ standards by a DEQ certified vendor and pay the DEQ closure letter fee.
  4. 4. Buyer’s Repair Addendum, Rep B Buyer hereby removes the inspection contingency and proceeds to close in exchange for the following repairs to be completed by Seller, at Seller’s sole expense, prior to close of escrow: 1. List repairs….. Be specific regarding license/bonding if necessary on a per-repair basis. 2. Re-caulk bathtub between floor and tub (does this really need to be a licensed/bonded contractor? Maybe yes, maybe no.
  5. 5. Buyer’s Repair Addendum, Rep S • Scenario: – BRA based on home inspection – Seller to repair the following furnace defects – _____ ______ ______ ______ – Seller signs BRA agreeing to repairs – Seller’s licensed/bonded HVAC guy says ‘no problem w/furnace’
  6. 6. Repair Addendum, contd. Rep S • Issue: – Seller all ready agreed to repairs that (according to contractor) are unwarranted… Buyer believes his home inspector even though Specialist always trumps Generalist… hmmmm – What should have happened (to protect seller from this conundrum)? Seller counters BRA: • Seller to have licensed/bonded contractor inspect furnace regarding issues raised by Buyer and will make any required repairs… [if not able to estimate cost… up to $...]
  7. 7. Lender Required Repairs, Rep S • Does the Seller occupy the property? – Can/will the Seller pay for lender required repairs? – Buyer shall complete the following repairs at Buyer’s sole expense: – 1. – 2. – 3.
  8. 8. Lender Required Repairs, Contd. All repairs shall be completed by a licensed, bonded, insured contractor in good standing. Upon completion buyer to pay all amounts due contractor for services rendered and shall provide a copy of the paid receipts to seller. Buyer assumes full responsibility and liability for any injuries or damage to the property due to contractor or subcontractor’s conduct and agrees to indemnify and hold harmless seller against any claims or related costs or fees. Buyer shall arrange for Buyer’s agent to provide access to the property and shall monitor the activity to ensure the property is secured.
  9. 9. Appraisal, Rep Seller • Appraisal comes in super low (CMA $500k; Appraisal $440k • Issue: Sale agreement contains 2 BD default period within parties may mutually resolve or terminate – What happens if 2 BD go by? Insert Clause: If appraisal comes in below purchase price, parties agree to extend timeline under sale agreement secion 3.2 to allow for appraisal review. (amending default timeline is cleaner and easier)
  10. 10. Appraisal – Buyer Wants to Pay • Parties agree to amend PP to $___. In the event property does not appraise for $___, Buyer shall pay the difference between the appraised value and the purchase price. • Note: If Buyer does not step up and pay the difference, Buyer’s only risk is the possible loss of EM.
  11. 11. Contingent Sale, Rep Buyer • ‘Pending’ rather than ‘bumpable’ – Purchase subject to sale of Buyer’s current residence located at 1234 Hip ST, Portland, OR currently under contract, through inspection (if you can make this claim), and due to close on (date).
  12. 12. Remove Personal Property, Rep B • Scenario: – Seller is “hoarder” – Buyer wants to ensure that the persona property is removed prior by closing/possession date • Address in sale agreement or repair addendum – Typically addressed in a covenenant , giving right to Buyer to pursue damages if Seller fails to comply – If Seller is to remain post-closing can address with Post Occ Doc – Possible to offer incentive if it seems warranted
  13. 13. Non DEQ Certified Woodstoves, Rep B • Seller at Seller’s sole expense, prior to close of escrow, shall remove all components and remnants of the non DEQ certified woodstove/insert (including but not limited to the flue, chimney, chimney box), appropriately cap the existing flu opening, repair any collateral damage, remove any debris and restore the property to a finished condition in a workman like manner.
  14. 14. Existing Easements, Rep B • [Covenant] Seller to provide Buyer for Buyer’s satisfactory review the following documents: • [Contingency] This purchase is contingent upon Seller providing Buyer for Buyer’s satisfactory review the following documents: – Copy of recorded easement – Copy of maintenance agreement – Copy of deed defining the scope of the easement
  15. 15. Easements, Cont. Rep B • Note: If easement is to be created… must do so prior to closing or obligation merges (disappears) when deed is recorded. • Seller at Seller’s sole expense, shall obtain a maintenance agreement with the owner of lot… (serviant tenant) within (10) BD of signing this agreement. The maintenance agreement shall be subject to Buyer’s satisfaction and Buyer’s attorney’s satisfactory review and approval within (5) BD of receipt. The maintenance agreement shall include a detailed description of the parties’ rights, responsibilities and remedies. Buyer agrees to cooperate and assist Seller in defining the appropriate terms.
  16. 16. Non Refundable Earnest Money Scenario: Rep Seller and Seller wants EM immediately released • The release of EM should be in consideration of something (i.e., and extended inspection period): • In consideration for [some benefit afforded Buyer], Buyer immediately releases to Seller $__________ in the form of non- refundable funds.
  17. 17. What Else?? • Other scenarios not covered here?

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