Pittsburgh, PA · Member since 2013 · 82 posts · 17 votes
We are looking @ purchasing SFR house that needs a lot of work, probably $45K in renovations. The property has a section 8 tenant that is mo. to mo. and seller is willing to evict prior to close. These tenants have basically destroyed the property so we are ok with this. My partner made the point that the tenants could possibly do damage before they leave and we would like to eleveate the risk with a clause stating: " Closing of transaction is subject to condition of property meeting acceptable conditions based on initial inspection and remaining in said condition as of day of closing. Seller and Assignor will hold harmless buyer for withdrawal from contract to purchase based on any excessive damage caused by tenants causing a significant change in condition of property at time of final walk thru." We are purchasing thru a wholesaler and he has in his assignment contract that basically has a non-refundable deposit clause. He said today that he hasn't and would not enforce that clause and would refund the deposit if we walk away. Should I use the clause or take him for his word?
I am not a lawyer but if your wholesaler is not licensed they cannot represent the seller and cannot impose any conditions on the seller on your behalf (unless they draw up a new PA with the seller). They can offer to hold you harmless in regards to their fee. By all means have the clause relating to the wholesaler holding you harmless written into the assignment contract. A verbal promise is not enforceable. The best protection is not to have any your funds tied up before the closing. The wholesaler can get their assignment fee if and when you purchase. I have purchased through a wholesaler and have done it this way. If the wholesaler is insisting that you show earnest funds make sure they are held in escrow until the sale is completed.
A standard realtor "as is" contract does state that the property shall be delivered in the same condition as it is at inspection. So I'd certainly add this clause if you suspect anything will happen. And of course document the current condition with plenty of photos and inspection results (toilets function, drains function, etc.)
When I close on a property, my realtor and I always do a final walkthrough with the house and make sure nothing has changed since time of inspection. If in fact something significant had change that would break a deal, I would then be able to pull out of contract receiving back my earnest money or renegotiate an offer that the bank can either accept or deny. Don't quote me but I think this is just standard procedure with your basic REIN contract. This is in VA btw.