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More notes on contract due diligence

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Yesterday we talked about making sure a contract is good to go before submitting it. Today let’s look at a few more words of wisdom on this subject.

Here are a few more tips:

1) If one party has initialed arbitration and/or liquidated damages and the other party has not, and this issue has not been specifically clarified elsewhere, you must do this before depositing money in escrow.

2) Buyer’s agents must specify the removal of each contingency of sale so as not to give away rights.

3) Don’t try to write complex counteroffer or addendum clauses on your own – get legal counsel. Also, don’t use legally meaningless abbreviations in your clauses.

4) Don’t write clauses that fail to quantify what exactly is to be done, by whom, by when, with what right of approval, and what happens if completion or approval doesn’t occur by the time specified. Be specific.

5) Don’t change anything above the signature of the other party.

6) Don’t write non-binding clauses.

7) Don’t write that something will happen by a certain date and add “or sooner” – stick to a specific date.

8) Do not rely on verbal agreements as part of the purchase.

9) Don’t cross lines or paragraphs out of the contract or make written changes to the text of the standard contract itself.

10) Be certain to specify what specific personal property is to be included in the sale, and what fixtures are excluded.

11) Don’t have any agreements or addeda not provided to the lender – this is fraud.

12) Finally, as the buyer’s agent, be certain to specify the acceptable loan terms for the loan contingency – if you fail to do this, then your client can’t get out from under the financing contingency unless they get no loan whatsoever.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners-- and feeds the dreams of those who wish they could live in Tony Bennett's 'City by the Bay.' Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com

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