How do I use or insert an an "escape clause" i.e., "This sale is subject to partners approval" in my state(AL.) General Sales Contract when I am putting a property under contract in my wholesale deals? Is this legal? I am a newbie and am trying to make sure that I deal with sellers ethically.
Well, the fact that you're putting a clause in about "partners approval" when you really don't have a partner (I assume you're looking to flip it) already speaks to your idea of "dealing with sellers ethically" while you're telling them that you're actually buying their property.
@Reginald S. I don't know if I would go the route of saying "partner approval" but maybe say "subject to financing" or "subject to inspection" or something, therefore, the deal is contingent upon those factors. And if you're wholesaling, you want your contract to be "assignable" more than "partner approval".
One strategy is simply offer an "Option to buy" You pay a small fee giving you the right to buy at a specific price. That way it is clear to your seller that you may not wind up buying the deal. The "option fee" can be as small as you can negotiate. If it is a $10 or $100 fee you risk only that amount if you walk.
Ned Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/
It really does help a deal go smooth if you are honest and upfront with the sellers at first. I tell every single seller the following,
"either I am buying this house or one of my business partners are going to buy this house. Nothing will change in our agreement, you will get that same price we agreed on."
If you approach the sellers like this, then it's fine to put "Subject to Partners Approval" in the addendum. You also want to give yourself and your buyers plenty of time to inspect the property, so put 15-30 day inspection period and you can walk anytime within that period if it does not pass your inspection.
My best advice would be that you should only lock up contracts that you are confident in... Trust me, you don't want to lock up houses that are not deals. If you know your numbers, then it is going to move. Stick to the numbers!!!
Thanks Everyone for the input !!
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