It clearly defines the disposition of Earnest Money during the contract period.This is important because it protects you from losing the EMD. 

It takes a lot of time to establish a relationship with the contact in charge of dispositions, it's almost like reverse sales. 

(Back ground on the situation before I show the lawyers response/conclusion) I am living in Canada and I'm trying to do my operational and legal due diligence before I go through with the disposition steps of virtual wholesaling which I have solely learned from people living in the US doing it state to state never personally being at the property.

From a bird's eye view:If you elect the de minimis safe harbor, capitalize.If you forgo the DMSH and apply the BAR tests, capitalize.Probably take a partial asset disposition on the old heating system. 

The actual method of disposition os the deal is what gets heavily regulated in different states.

They can take a fee upon disposition (re-sale) of the property. 

How are 1) cash flows and 2) any equity gains upon disposition treated in multifamily syndications?

If it must be capitalized, we'd generally take a loss (disposition) for the prior water heater if it's on the depreciation schedule or was capitalized into the building basis. 

Then my dispositions managers partners the deal up with an investors.

Post sale of the notes, the seller will need updates on the disposition of the assets so that they can report this to HUD.We have a liquidation model for our funds so we'll sell these to a 3rd party at foreclosure sale or take them back as REOs and sell those on the market.