Building a Clause LibraryTransaction Talk Series

Consider the Situation

• Clients needs, wishes, and expectations

• Whether the circumstances dictate a

contingency or covenent

• The audience

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.

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.

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’

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 $...]

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.

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.

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)

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.

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).

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

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.

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

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.

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.

What Else??

• Other scenarios not covered here?