What are all the implications of going under contract on a multifamily property?

[Cole Baker]

BP Nation! Looking for you to come through again!

I was given an off market deal in the Houston, TX MSA. Based off of underwriting, the deal pencils. What are the implications of sending in an LOI and going under contract on the properties? What are the right reasons to back out, and what are bad reasons to back out?

Thank you for you help and I am looking forward to the answers!

[Brian Adams]

@Cole Baker the implications of sending in a Letter of Intent (LOI) and going under contract on a property depend on the specific terms of the contract and the local laws governing the property.

Generally, when an LOI is accepted and depending on the language of the LOI, the parties are not yet legally bound. The LOI builds the framework for the PSA (Purchase and Sales Agreement). Once you are under contract you are legally bound to perform (Close).

If a buyer fails to fulfill their obligations, they may be subject to legal action. Similarly, if a seller fails to fulfill their obligations, the buyer may be entitled to compensation. It is important to read through the contract carefully and understand all of the terms and conditions before signing.

In a PSA there is usually a DD (Due Diligence) period where you have access to the property to review the asset, financials, perform inspections, etc. The wording of the PSA is important as it can allow during DD to terminate the PSA.