Newbie purchase agreement Question?

[Wilmer Feliciano]

I downloaded the purchase agreement form from the free forms. And just wanted to know what goes in the Subject to section of the form and the $__________. if any seasond investors can help please.

[Michael Quarles]

Originally posted by @Wilmer Feliciano:

I downloaded the purchase agreement form from the free forms. And just wanted to know what goes in the Subject to section of the form and the $__________. if any seasond investors can help please.

Good to meet you... 

Here is our agreement. its fairly simple yet explains to the seller our intention and it explains the negatives of Sub-to to the seller. Which i think is important. 

PURCHASE AND SALES AGREEMENT

DATED: ________________

PARTIES: _____________________________________, as Seller, and ­­­­­_________.,as Buyer, whose mailing address is _____________ and telephone number is ______________. Buyer and Seller which terms may be singular or plural and will include the heirs, successors, personal representatives and assigns, hereby agree that the Seller shall sell and Buyer shall buy the following legally described Property.

I.THE PROPERTY DESCRIBED AS: _________________________________________________________ (Street address)

City of ______________________ State of _____ County of ___________ Assessor’sParcel Number ____________________:

II.FINANCING/TERMS/PURCHASE PRICE:

The Purchase Price Offered is: $_______________.00.

Deposit(s) to be held in escrow byCompany of Buyer’s choice. Deposit to be placed into escrow prior to the closing of escrow in the amount of: $ _______________. 00. Balance to close, (U.S. Cash, certified or cashier's check) not including Buyer’s closing costs and subject to adjustments and prorations Approximate Exact: $_______________.00.

• If checked All Cash Purchase.
• If checked Subject to Existing Mortgages/Loans: See Addendum #_____
• If checked Seller Financing and Terms: See Addendum #_____

III.CONSIDERATION RECEIPT AND SUFFICIENCY: Seller hereby acknowledges and accepts the amount of consideration as the total consideration for the sale of the property to Buyer. Seller is satisfied as to the amount of consideration and acknowledges the consideration to be a sufficient amount to purchase the aforementioned Property.

IV.APPRAISAL CONTINGENCY: This Agreement is contingent upon a written appraisal of the Property by a licensed or certified appraiser.The Buyer will order and pay for an appraisal on the property. If the appraised value is less than $__________ which is the amount quoted by The Seller as to what the house is Worth in its As Is Condition in Today’s Market, After Repair Value, the Buyer may, within three (3) calendar days of Buyer's receipt of the appraisal, at Buyer's sole option, declare this agreement null and void. Buyer is entitled to a return of all deposits, if any, less the appraisal fee and any other escrow expenses or fees chargeable to the Buyer. Thereafter,neither the Buyer, the Seller nor any brokersshall have any further rights, obligations, or liabilities under this contract.

V.CLOSING DATE: This transaction shall be closed and the Deed and other Closing Papers delivered in __________ days following the date of final acceptance or on _______________,20_____, or sooner, unless extended by other provisions of this Purchase and Sales Agreement, or by written agreement of the Parties and also at the sole option of the buyer.

VI.OCCUPANCY: Exclusive irrevocable possession and occupancy shall be delivered to Buyer, Buyer’s Assignees, or Buyer’s Agents at 5:00 PM on the date this agreement is signed by Seller,  on the date of Close of Escrow, on ________________, 20______ or no later than ___________ days after Close of Escrow.

• If checked Property shall be vacant at least __________ days prior to Close of Escrow.
• If checked Property is intended to be rented or occupied beyond closing, the fact and terms thereof shall be stated herein.

VII.CONDITION OF PROPERTY: Buyer is buying property in an “As Is” condition.

VIII.INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the Property and approve all matters affecting the Property. Buyer may in Buyer’s sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer.

IX.COSTS: Buyer shall pay for all normal closing costs. Costs shall not include voluntary or involuntary liens against the property.

X.NON-AGENCY RELATIONSHIP: A principal with Buyer is a Department of Real Estate Licensee. An Agency relationship between Buyer and Seller does not exist. Seller should seek advice from their legal counsel prior to agreeing to the terms of this Agreement.

XI.TIME FOR ACCEPTANCE AND EFFECTIVE DATE: This Offer shall be deemed revoked unless the Offer is signed by Seller indicating an Acceptance and a copy of the Signed Offer is received by the Buyer on or before _____:01 PM, on __________, 20_____. If a copy of the Signed Offer is not received by Buyer on or before the Date and Time stated above, the aforesaid Deposit(s) shall be, at the option of the Buyer, returned to Buyer and this offer shall thereafter be null and void.

XII.ASSIGNABILITY: Buyer may assign this Agreement.

XIII.Resell: Seller is aware that Buyer intends on reselling the property for a HUGE PROFIT. All profits made by Buyer during this transaction relating to the reselling of the property are the sole interest of and solely owned by the Buyer.

XIV.TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten provisions inserted herein or attached hereto as Addenda shall control all printed provisions in conflict therewith.

XV.NOT A LOAN TO SELLER TRANSACTION: Seller acknowledges that the buyer is not lending to the seller any monies and this Purchase and Sales Agreement is an agreement to purchase the aforementioned Property only. All monies shall be given to the seller on the day escrow closes as defined in section II.

XVI.SECURITY DEPOSITS: Security deposits, if any, shall be paid to the Buyer. All Rents collected shall be prorated and said prorations paid to Buyer.

XVII.LIENS: Seller shall, both as to the Property and Personally being sold hereunder, furnish to Buyer at time of closing an affidavit attesting to the absence, unless otherwise provided for herein, of any financing statements, claims of lien or potential lienors known or reasonably expected to be known to Seller and further attesting that there have been no improvements to the Property for ninety days immediately preceding date of closing.

XVIII.PLACE OF CLOSING: Closing shall be held in the county wherein the Property is located, at the office of the attorney or other closing agent designated by Buyer.

XIX.TIME: Time is of the essence of this Agreement. Any reference herein to time periods of less than six days shall in the computation thereof, exclude Saturdays, Sundays and legal holidays, and any time period provided for herein which shall end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of the next business day.

XX.ATTORNEY FEES AND COSTS: In connection with any litigation including appellate proceedings arising out of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs.

XXI.DEFAULT BY SELLER: In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Buyer's default; (i) Buyer may enforce specific performance of this Agreement in a court of competent jurisdiction and in such action shall have the right to recover damages suffered by Buyer by reason of the delay in the acquisition of the Property, or (ii) may bring suit for damages for breach of this Agreement, in which event, the deposit made hereunder shall be forthwith returned to Buyer, or (iii) declare a default, demand and receive the return of the deposit. All rights, powers, options or remedies afforded to Buyer either hereunder or by law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law.

XXII.DEFAULT BY BUYER: In the event Buyer should fail to consummate the transaction contemplated herein for any reason, except default by Seller or the failure of Seller to satisfy any of the conditions to Buyer's obligations, as set forth herein, Seller shall be entitled to retain the earnest money deposit, such sum being agreed upon as liquidated damages for the failure of Buyer to perform the duties and obligations imposed upon it by the terms and provisions of this Agreement and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages, and no other damages, rights or remedies shall in any case be collectible, enforceable or available to Seller other than as provided in this Section, and Seller agrees to accept and take said deposit as Seller's total damages and relief hereunder in such event.

XXIII.MEMORANDUM OF CONTRACT RECORDABLE, PERSONS BOUND AND NOTICE: Buyer may cause to be recorded, at Buyer's option and expense, in the public records of the county in which the property is located, an executed Memorandum of Contract. This Agreement shall bind and inure to the benefit of the Parties hereto and their successors in interest. Whenever the context permits, singular shall include plural and one gender shall include all. Notice given by or to the attorney for either party shall be as effective as if given by or to said party.

XXIV.PRORATIONS AND INSURANCE: Taxes, assessments, rent, interest, insurance and other expenses and revenue of the Property shall be prorated as of date of closing. Buyer shall have the option of taking over any existing policies of insurance on the Property, if assumable, in which event premiums shall be prorated. The cash at closing shall be increased or decreased as may be required by said prorations. All references in the Agreement to prorations as of date of closing will be deemed date of occupancy if occupancy occurs prior to closing, unless otherwise provided for herein.

XXV.OTHER AGREEMENTS: No prior or present agreements or representations shall be binding upon any of the Parties hereto unless incorporated in this Agreement. No modification or change in this Agreement shall be valid or binding upon the Parties unless in writing, executed by the Parties to be bound thereby.

XXVI.Clerical Error Waiver:In the event the Buyer at any time discovers that any of the documents executed in connection with this transaction contain an error caused by clerical mistake, calculation error, computer malfunction, printing error or similar error, all parties agree, upon notice from the Buyer, to re-execute any documents that are necessary to correct such error(s). Seller agrees that no party to this transaction will be liable to the Seller for any damages incurred by the Buyer that are directly or indirectly caused by any such error(s).

XXVII.MARKETING: Seller authorizes Buyer to market property during escrow for Buyers benefit. Marketing is defined as, but not limited to, placing the property for sale in the Real Estate Multiple Listing Service (MLS), advertising in the Newspaper or other periodical, and placing a for sale sign on the property.

XXVIII.Meeting of the Minds Acknowledgement:Seller has thoroughly and completely reviewed the Purchase and Sales Agreement and understands completely all terms and conditions contained therein. Seller further acknowledges having no confusion, uncertainty about any aspect of the Purchase and Sales Agreement and has sufficient experience in real estate transacting to be able to sign the Agreement with absolute confidence in Seller’s ability to comprehend all matters related to it and to the sale of the property. Seller further understands and agrees to have been given sufficient time to read through this Agreement and has also been given the opportunity to seek advice from Seller’s legal council prior to agreeing to the terms of this Purchase and Sales Agreement. The Buyer, their representatives, or Seller’s current situation has not forced Seller into signing this Agreement.

XXIX. ADDITIONAL TERMS:

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_____________________________ ____________________________________________ _______________

Buyer Date BuyerDate

_____________________________ ___________________________________________________________

Seller Date Seller Date

Addendum #_____

Subject to Existing Mortgages/Loans:

Buyer is buying property Subject to the Existing Mortgage(s)/Loan(s) encumbering the property in the amounts not to exceed: $______________. 00. (AMOUNT OF THE INVOLUNTARY AND VOLUNTARY LIENS THAT THE SELLER SAID WAS DUE)

If the existing balances at the time of closing are less than the amounts stated above, purchase price will be reduced by the difference. If balances are higher than shown, then Seller’s proceeds will be reduced accordingly.

Buyer have entered in to a certain Purchase and Sales Agreement date herewith, the parties fully understand, acknowledge and agree as follows:

• 1.Seller and Buyer are fully aware that the Mortgage(s)/Deeds of Trust securing the property Described in Section I contain(s) provisions prohibiting the transfer of any interest in the property without satisfying the principal balance remaining on the underlying Loan(s) and/or obtaining the Lender’s prior written consent (i.e., a “Due-on-Sale” Clause), and that this transaction may violate said Mortgage(s).
• 2.Seller specifically understands that the Loan Payment(s) will be paid on a monthly basis by Buyer, and that the Loan(s) will NOT be assumed or paid off completely at Closing, and that the Loan(s) and Loan Payments will remain in Seller’s name and may continue to appear on Seller’s credit report.
• 3.Seller and Buyer execute this disclosure form after having had the opportunity to seek legal counsel as to the legal and financial implications of the Due-on-Sale Clause included in the Mortgage(s)/Deed(s) of Trust. The parties agree and understand that if said Due on Sale Clause is enforced by the Holder(s) of said Mortgage(s)/Deed(s) of Trust, the entire balance then due under said Mortgage(s) must be paid in full. In this event, Seller understands that if the Mortgage(s) is/are not paid in full, the Lender can file a Notice of Default on the property and report such to the credit bureaus, affecting the Seller’s Credit Report. Buyer understands that in the event that the underlying debt is not paid in full, the Lender holding the Deed(s) of Trust may foreclose the property, which will extinguish Buyer’s interest in the property.
• 4.In the event there is an escrow account for taxes, insurance, waste fees, association fees, or any other impounds or escrow, said funds shall be transferred to Buyer without adjustment. The current loan balance and prepayment penalty shall be deducted from sale proceeds and if there is an escrow shortage same shall be charged to Seller at closing.
• The Borrower/Seller shall indemnify, defend and hold harmless the buyer and all persons or assigns, regardless of responsibility, from all costs, expenses, suits, liabilities, damages, attorney fees and claims of every type, including but not limited to those arising out of injury to any person, or damage to any real or personal property to any person, including the borrower and said financial institution, for; (i) any items resulting from the buyer buying the property, (ii) information furnished by the borrower or (iii) those items relating to the financial information, or (iv) the ability or inability to pay for or continue to support the debt of which the buyer is agreeing to.