Contract on Home Question

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Rob54keep
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Contract on Home Question

Post by Rob54keep » Sat Nov 04, 2017 6:51 pm

I'm not a contracts guy thus I have a question on the following:

I have a sister-in-law who is undergoing a divorce who ask me the significance of a contingent clause in a contract where she is trying to sell her house.

Upon acceptance of this offer, Buyer & Seller agree that buyers will satisfy their inspection contingency. All other dates and deadlines will begin when Buyers receive a bona fide offer on their property.

It also states that the Seller may keep the property on the market and accept secondary offers after binding acceptance of this offer.

To me, this sounds like the Buyer can buy the house (if its still available) when there is an "acceptable" offer on their house. What's the point in such a contract. To me it appears useless for the Seller.

ResearchMed
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Re: Contract on Home Question

Post by ResearchMed » Sat Nov 04, 2017 7:00 pm

Rob54keep wrote:
Sat Nov 04, 2017 6:51 pm
I'm not a contracts guy thus I have a question on the following:

I have a sister-in-law who is undergoing a divorce who ask me the significance of a contingent clause in a contract where she is trying to sell her house.

Upon acceptance of this offer, Buyer & Seller agree that buyers will satisfy their inspection contingency. All other dates and deadlines will begin when Buyers receive a bona fide offer on their property.

It also states that the Seller may keep the property on the market and accept secondary offers after binding acceptance of this offer.

To me, this sounds like the Buyer can buy the house (if its still available) when there is an "acceptable" offer on their house. What's the point in such a contract. To me it appears useless for the Seller.
I would tend to agree with you.
And given the fact that the buyer isn't obligated to buy, and the seller can sell to someone else, I'm not sure what this "contract" means.

However, please note that I do not fully understand (or perhaps understand at all) this one part: "...accept secondary offers after binding acceptance of this offer".
What does "... binding acceptance of this offer" mean? (Also, is "binding" a verb here or an adjective?)

We would never accept any offer that is contingent in any way upon having the buyer sell their current home first.
Who knows how long that could take, or even if buyer has priced their home at all reasonably.
(Our response to such an offer would probably be some polite version of, "When you've sold your house, or are ready to make an offer that is not contingent upon selling your home, if our house is still on the market, by all means, please make us an offer if you are still interested."

RM
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Rob54keep
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Re: Contract on Home Question

Post by Rob54keep » Sat Nov 04, 2017 8:23 pm

Thank you for your comments. I believe the binding refers to the fact that they must respond to the offer by tomorrow (date specific). Not even one business day to decide!

I recommended that she seek an attorney for a review. Too many caution flags for me.

vaught
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Re: Contract on Home Question

Post by vaught » Sat Nov 04, 2017 8:37 pm

It sounds similar to a first right of refusal. I would expect some consideration for that if I was the seller.

adamthesmythe
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Re: Contract on Home Question

Post by adamthesmythe » Sat Nov 04, 2017 8:37 pm

Rob54keep wrote:
Sat Nov 04, 2017 8:23 pm
Thank you for your comments. I believe the binding refers to the fact that they must respond to the offer by tomorrow (date specific). Not even one business day to decide!

I recommended that she seek an attorney for a review. Too many caution flags for me.
A 24 hour limit on an offer is reasonable if it is a straightforward offer with the usual contingencies.

I am not a lawyer but I am not even sure the text you quoted makes sense.

I would consider replying with an acceptance with all of the unusual terms struck out. That might buy some time to get a lawyer on the case (which you would certainly need for an offer with atypical conditions).

denovo
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Re: Contract on Home Question

Post by denovo » Sat Nov 04, 2017 8:44 pm

It means they are selling their house and don''t want to commit to buying yours until they find an offer on their place that they find reasonable. I would not take this offer .
"Don't trust everything you read on the Internet"- Abraham Lincoln

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StevieG72
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Re: Contract on Home Question

Post by StevieG72 » Sun Nov 05, 2017 6:03 am

Is she using a Realtor? If so, this should be explained and advised upon by the Realtor.

This is not a big deal, offers contingent on the sale of current home are common.

While they are common, it adds unnecessary complexity for the seller.

As a previous poster mentioned simply decline this offer. Potential buyer can always submit another offer if / when their home sells.
Fools think their own way is right, but the wise listen to others.

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jfn111
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Re: Contract on Home Question

Post by jfn111 » Sun Nov 05, 2017 8:01 am

If I'm reading your post correctly it's just a simple Inspection Contingency. In MN we usually give the Buyer's 10 days to complete the Inspection. During that 10 days it's a virtual "get out of jail free card" for the Buyer because they can back out, and get their earnest money back, for any minor thing the Inspector finds.
So.. to protect the Seller we can keep the house "Active" on the market and accept backup offers in case the Buyer backs out of the deal.
In some hot markets Buyer's will waive the Inspection Contingency but in our market it's pushed by the lenders and Commerce Dept. so it's unusual to waive it. (Except for cash Buyer's buying AS-IS Investment properties.

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Rob54keep
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Re: Contract on Home Question

Post by Rob54keep » Sun Nov 05, 2017 8:28 am

jfn111 wrote:
Sun Nov 05, 2017 8:01 am
If I'm reading your post correctly it's just a simple Inspection Contingency. In MN we usually give the Buyer's 10 days to complete the Inspection. During that 10 days it's a virtual "get out of jail free card" for the Buyer because they can back out, and get their earnest money back, for any minor thing the Inspector finds.
So.. to protect the Seller we can keep the house "Active" on the market and accept backup offers in case the Buyer backs out of the deal.
In some hot markets Buyer's will waive the Inspection Contingency but in our market it's pushed by the lenders and Commerce Dept. so it's unusual to waive it. (Except for cash Buyer's buying AS-IS Investment properties.
This is helpful. Thanks.

ResearchMed
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Re: Contract on Home Question

Post by ResearchMed » Sun Nov 05, 2017 9:00 am

Rob54keep wrote:
Sun Nov 05, 2017 8:28 am
jfn111 wrote:
Sun Nov 05, 2017 8:01 am
If I'm reading your post correctly it's just a simple Inspection Contingency. In MN we usually give the Buyer's 10 days to complete the Inspection. During that 10 days it's a virtual "get out of jail free card" for the Buyer because they can back out, and get their earnest money back, for any minor thing the Inspector finds.
So.. to protect the Seller we can keep the house "Active" on the market and accept backup offers in case the Buyer backs out of the deal.
In some hot markets Buyer's will waive the Inspection Contingency but in our market it's pushed by the lenders and Commerce Dept. so it's unusual to waive it. (Except for cash Buyer's buying AS-IS Investment properties.
This is helpful. Thanks.
I don't think this is a "simple inspection contingency" at all.

A regular [or "simple"] "inspection contingency" would be something along the lines of "... subject to a satisfactory home inspection within [7 or 10 or ?] days...".

There is often/usually also a financing contingency that might include some limited terminology such as XX5 down and/or an interest rate/range. These specifics would be to prevent the buyer from basically keeping the property off the market while "searching" for impossible financing.

But those would not typically have any contingency about the buyer selling or renting their own home, etc. That is quite different.

And yes, in most cases, that inspection contingency is a temporary freebie, as one could declare "we didn't know the back doorknob was loose" (making that up as a rather absurd example, but what a prospective buyer might find unacceptable from an inspection is... up to that buyer alone - and why there is usually a rather short time limit).

This is what makes it *very* different: "All other dates and deadlines will begin when Buyers receive a bona fide offer on their property."
Aside from what would be considered "bona fide", there is also no deadline here.
This has nothing to do with an inspection of the seller's property.

RM
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michaeljc70
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Re: Contract on Home Question

Post by michaeljc70 » Sun Nov 05, 2017 9:06 am

Doesn't she have an attorney? This is a big transaction which she clearly doesn't understand. Where I live (Chicago), everyone uses an attorney for real estate transactions.

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Rob54keep
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Re: Contract on Home Question

Post by Rob54keep » Sun Nov 05, 2017 9:11 am

Yes,,,,I'm having here contact an attorney. There's a lot of moving pieces here with the house and the divorce settlement. Her current divorce attorney appears either clueless or not interested in diving deeper to clarify and advise her.

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jfn111
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Re: Contract on Home Question

Post by jfn111 » Sun Nov 05, 2017 9:45 am

ResearchMed wrote:
Sun Nov 05, 2017 9:00 am
Rob54keep wrote:
Sun Nov 05, 2017 8:28 am
jfn111 wrote:
Sun Nov 05, 2017 8:01 am
If I'm reading your post correctly it's just a simple Inspection Contingency. In MN we usually give the Buyer's 10 days to complete the Inspection. During that 10 days it's a virtual "get out of jail free card" for the Buyer because they can back out, and get their earnest money back, for any minor thing the Inspector finds.
So.. to protect the Seller we can keep the house "Active" on the market and accept backup offers in case the Buyer backs out of the deal.
In some hot markets Buyer's will waive the Inspection Contingency but in our market it's pushed by the lenders and Commerce Dept. so it's unusual to waive it. (Except for cash Buyer's buying AS-IS Investment properties.
This is helpful. Thanks.
I don't think this is a "simple inspection contingency" at all.

A regular [or "simple"] "inspection contingency" would be something along the lines of "... subject to a satisfactory home inspection within [7 or 10 or ?] days...".

There is often/usually also a financing contingency that might include some limited terminology such as XX5 down and/or an interest rate/range. These specifics would be to prevent the buyer from basically keeping the property off the market while "searching" for impossible financing.

But those would not typically have any contingency about the buyer selling or renting their own home, etc. That is quite different.

And yes, in most cases, that inspection contingency is a temporary freebie, as one could declare "we didn't know the back doorknob was loose" (making that up as a rather absurd example, but what a prospective buyer might find unacceptable from an inspection is... up to that buyer alone - and why there is usually a rather short time limit).

This is what makes it *very* different: "All other dates and deadlines will begin when Buyers receive a bona fide offer on their property."
Aside from what would be considered "bona fide", there is also no deadline here.
This has nothing to do with an inspection of the seller's property.

RM
You could well be right. Every State uses different verbiage in their contracts.
Here we don't mix the Inspection Contingency with a Sale of Buyer's Property Contingency. (This could be just the way the OP presented it in her question)

ResearchMed
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Re: Contract on Home Question

Post by ResearchMed » Sun Nov 05, 2017 9:54 am

jfn111 wrote:
Sun Nov 05, 2017 9:45 am
ResearchMed wrote:
Sun Nov 05, 2017 9:00 am
Rob54keep wrote:
Sun Nov 05, 2017 8:28 am
jfn111 wrote:
Sun Nov 05, 2017 8:01 am
If I'm reading your post correctly it's just a simple Inspection Contingency. In MN we usually give the Buyer's 10 days to complete the Inspection. During that 10 days it's a virtual "get out of jail free card" for the Buyer because they can back out, and get their earnest money back, for any minor thing the Inspector finds.
So.. to protect the Seller we can keep the house "Active" on the market and accept backup offers in case the Buyer backs out of the deal.
In some hot markets Buyer's will waive the Inspection Contingency but in our market it's pushed by the lenders and Commerce Dept. so it's unusual to waive it. (Except for cash Buyer's buying AS-IS Investment properties.
This is helpful. Thanks.
I don't think this is a "simple inspection contingency" at all.

A regular [or "simple"] "inspection contingency" would be something along the lines of "... subject to a satisfactory home inspection within [7 or 10 or ?] days...".

There is often/usually also a financing contingency that might include some limited terminology such as XX5 down and/or an interest rate/range. These specifics would be to prevent the buyer from basically keeping the property off the market while "searching" for impossible financing.

But those would not typically have any contingency about the buyer selling or renting their own home, etc. That is quite different.

And yes, in most cases, that inspection contingency is a temporary freebie, as one could declare "we didn't know the back doorknob was loose" (making that up as a rather absurd example, but what a prospective buyer might find unacceptable from an inspection is... up to that buyer alone - and why there is usually a rather short time limit).

This is what makes it *very* different: "All other dates and deadlines will begin when Buyers receive a bona fide offer on their property."
Aside from what would be considered "bona fide", there is also no deadline here.
This has nothing to do with an inspection of the seller's property.

RM
You could well be right. Every State uses different verbiage in their contracts.
Here we don't mix the Inspection Contingency with a Sale of Buyer's Property Contingency. (This could be just the way the OP presented it in her question)
I don't see those being "mixed". They are two separate "terms", and presented that way.
(But I'm not sure what "being mixed" would look like, in terms of wording, so perhaps these *are* mixed??)

And the verbiage isn't necessarily state specific, although there might be some generalities, and there certainly could be differences among the "templates" (offers or P&S docs) that are often used as defaults.
As long as the contract is in writing, and signed, and no one was subject to coercion/fraud (etc.), there are all sorts of ways to write specific contracts that meet the needs of the two parties.

RM
This signature is a placebo. You are in the control group.

denovo
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Re: Contract on Home Question

Post by denovo » Tue Nov 07, 2017 5:54 am

michaeljc70 wrote:
Sun Nov 05, 2017 9:06 am
Doesn't she have an attorney? This is a big transaction which she clearly doesn't understand. Where I live (Chicago), everyone uses an attorney for real estate transactions.
This varies widely by state. Attorney review is not part of the process in California.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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