Contract terms, any thoughts?

Question

Here are the terms of my contract for a home I am interested in. I am paying $500 cash for it because the house is in such bad shape. Are my terms good enough to get me out of the contract if the property would cost too much to fix up. Houses in the neighborhood average about 30K tax assessor value. I don't want to put too much money into but at the same time I plan to buy and hold this one for a while.

1)	Buyer will assume ALL liabilities of property upon final closing.

2)	Closing to be set as soon as possible for all parties, but no later than 1 August 2011 without written addendum to this agreement. If closing is not executed on or before 1 August 2011, this contract becomes void.

3)	Property sold â€œas isâ€ with no warranties implied or stated from seller.

4)	This contract is contingent upon buyer being able to get all needed repairs done and property brought back into code for the sum of no greater than $25,000.00 USD. This will be determined after repair quotes for said  property are obtained.

5)	Seller is to provide buyer with written permission no later than 24 hours after this document is signed by both parties to access property solely for the purposes of evaluate repairs needed and appraisal of said property.  If property is vacant, Seller shall provide Buyer with a key to access property specifically for the reasons above.

6)	Any furniture, fixtures, attachments, and debris located in and around property not removed within 1 day of closing become ownership of buyer.

Angelo Russo · Answer

Simple purchase agreement:
60 days due dilligence to examine the property
Property sold as-is where is
title to be free and clear of all encumbrances but current taxes
(are you prorating taxes, I assume not with that price)
Title insurance (if you go through a title company) has a minimum, make sure they give you the minimum coverage as it covers more and gives you discount if you sell 10 years later or finance out some cash.

email me and I'll send you a simple purchase agreement for this.  It's a one pager.  I don't like it for most deals, but I think it would fit in here perfectly.

Bill Gulley · Answer

The simplest soultions are usually the best. You could just ask and go in there and get your due diligence completed, then contract!

Brian Levredge · Answer

Is this property in TN?  If it is, you should just use a TN residential purchase agreement, which is something like seven pages.  You also have the disclosures, which are separate and will run another six pages or so.  There are boxes and spaces on the contract to put in additional contingencies, but as Bill stated, most of that stuff is already in the contract.

Furthermore, TN is a passive contingency state.  Meaning that if for instance your due diligence period comes and goes and you fail to notify the other party of any concerns or request an extension (in writing) then that contingency is assumed to be satisfied and automatically removed, which can put you in default.

Bill Gulley · Answer

1 page? Can you actually read it without a magnifying glass? Sounds like the terms for a credit card or a cell phone contract...LOL Might be sufficient for an attorney to use! That's just plain scary......be a sport, post it!

As you mentioned, it might just work for this deal. I'd have to agree that in some instances, like those where the buyer just wants an option, of sorts, to get to the settlement table.

All any contract does is that it gets a buyer and seller to a settlement, after the deal is done, it's all over.

Shawn Dandridge · Answer

James,

Like I have said before this property has been completely destroyed and I also want to run a title check. Just want to make sure I have enough time to get everything done. You might be right on the 60 days though. 45 days is probably something more acceptable.

James Vermillion · Answer

60 days is a very long time. If you have your stuff together it should only take a few days or a week (several weeks max!) to figure out the cost to renovate.  The longer period you ask for the weaker your offer is going to look.

Shawn Dandridge · Answer

Seems like a better option would be to just ask the owner for 60 days of permission to access the property and gather my info. I don't think he would have a problem with this.

Bill Gulley · Answer

Your #1, if you go to settlement and close, this is totally unnecessary as you will then be "liable" anyway. The seller is not liable for anything after closing for issues going forward. Extremely Redundant!

#2 Closing to be on or before August 1, 2011. Time is of the essence and seller agrees to close upon three days notice of settlement arranged by buyer.

If it is not closed by that date you are "out of contract" so address the issue of default not the contract being voidable, what you want is to say that default is unenforceable. There is a difference!

#3 Okay.

#4 So, what that says is that you will have the work done for code compliance within the time period. ?????? NO! Buyer to obtain acceptable bids for work and materials to be provided which are required for code compliance within XX days. You're not getting the work done. What happens if you fix it up and get to the last 5K and find out you can't get it done for that? Gonna walk away? LOL

5. Buyer has the right to enter upon the subject property at reasonable times for inspections. (Is it occupied?, if so address it, with notice to tenant being given XX hours/whatever)

6. Seller shall remove all personal property prior to settlement. All personal property remaining upon the subject property at the time of settlement shall be deemed to be abandoned without recourse.

You really need to go to someone locally and get help! Use a standard agreement. You really need to get assistance. Do not write your own contract!

Contract terms, any thoughts?

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