Allocation of Purchase Price

The allocation of purchase price clause explains what amount of the price is for the land, buildings, and personal property. It is used for tax purposes. If the property is being purchased for investment the buyer usually would like as much of the purchase price as possible allocated to personal property that can be depreciated quickly. When buying a residence the buyer may not want any amount allocated to personal property if a higher basis in the real estate is desired. If other tax savings...

Ingress and Egress

Explanation The ingress and egress clause guarantees the buyer will have legal access to the property. The buyer wants to be sure there is legal access to the property and that he or she has a right to continued use of the access. In a platted subdivision this is not usually necessary, but when purchasing unplotted land it is very important. If the title policy or abstract indicates that there is no legal ingress and egress, the buyer probably will want to cancel the deal or require the seller...

Lien Affidavit

Explanation The lien affidavit clause guarantees the buyer that there are no financial claims against the property that will not be paid before he owns the property. The buyer wants the seller to provide an affidavit at closing stating that there are no liens on the property. This will usually be required by the closing agent and often includes such bills as for water, sewer, etc. The seller gains nothing by this option, but need not object to it. If there are hidden claims against the...

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Copyright 2001, 2003 by Mark Warda Cover and internal design 2003 by Sourcebooks, Inc All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems except in the case of brief quotations embodied in critical articles or reviews without permission in writing from its publisher, Sourcebooks, Inc. Purchasers of the book are granted a license to use the forms contained herein for their own...

Assignment

Explanation The assignment clause provides whether or not the contract can be assigned by the buyer to another party. The buyer would like the right to assign the contract to another purchaser, corporation, or trust. If the seller will be holding the financing, the buyer could avoid personal liability by assigning the contract to a corporation. A seller who is receiving all cash out of the sale probably wouldn't care who is buying it so assignability would not be a problem. However, where a...

Violations

Explanation The violations clause guarantees the buyer that the property does not violate any existing laws. The buyer does not want to find out after closing that the property is in violation of several codes and that thousands of dollars worth of repairs are needed. To be sure to be able to take advantage of this warranty a option should be added stating that the contract survives the closing. Seller's View The seller does not want to warrant anything.

Attorneys Fees

Explanation The attorney's fees clause provides whether either of the parties have to pay the other's attorney fees if an attorney needs to be hired to enforce the contract. Usual View If the loser will have to pay both parties' attorney's fees in a lawsuit then neither party will be as eager to file a lawsuit unless they have a very good case. Stipulating that the loser will pay both sides attorney's fees makes litigation less likely in a close case. Alternate If one party has a lawyer in the...

Lead Gets In The Body In Many Ways

1 out of every 11 children in the United States has dangerous levels of lead in the bloodstream. Even children who appear healthy can have dangerous levels of lead. People can get lead in their body if they Put their hands or other objects covered with lead dust in their mouths. Eat paint chips or soil that contain lead. Breathe in lead dust especially during renovations that disturb painted surfaces . Lead is even more dangerous to children than adults because Babies and young children often...

Termites

The termites clause provides who will pay for a termite inspection and what will be done if infestation is found. The seller should deliver the premises free of wood-destroying organisms and pay for inspection and treatment. The buyer should have the option to back out of the deal if infestation is discovered. The buyer would prefer that a major national company do the inspection because a small one might go out of business and not be available if it turns out that termites were missed by the...

Lead Based Paint Clause

Explanation The lead-based paint clause is a disclosure by the seller to the buyer about whether lead-based paint has been used on the premises. In most cases the buyer will want to be sure that the property is free of lead-based paint hazards because these may cause him a problem when he or she wants to sell the property. Laws are changing around the country and at some point it may be difficult or impossible to sell a property with lead-based paint. Of course the price of the property will...