All Forum Posts by: Satya Polavarapu

I’m exploring a potential deal and wanted to get some input from folks who’ve done similar creative structures.

Here’s the high-level idea :

Total agreed purchase price: $400K plus $150K due upon approval of permits to build a larger building on a site that currently has an income-earning smaller property.  Location: Wilimington, Delaware if that matters. 

Upfront payment at contract signing: $200K (seller’s existing loan is also about $200K).

The plan:

• I’d be in a second lien position behind the bank.

• Contract gives me 45 days for due diligence; I can back out during this period and have my $200K returned.

• If I proceed after due diligence, I’d make the final $200K payment, seller pays off their $200K loan, and I take title at closing. I start the permitting process and upon approval, will pay the seller the $150K. 

The twist:
If I don’t proceed after due diligence and the seller fails to repay my $200K upfront payment within the agreed timeframe, I would pay off the bank’s $200K loan and take ownership without contest. In that case, the seller would also forfeit the potential $150K contingent payment tied to permits. This reduces their incentive to default on repaying me just to trigger the bank payoff route.

My main questions:

1. Has anyone structured something like this where title can transfer quickly and without a prolonged foreclosure process if the seller defaults on repaying the initial amount?

2. What creative (but legal) mechanisms have you seen to protect the buyer’s interest in this kind of setup?

I’ve spoken with one attorney who said it’s possible, but I’d like real-world feedback from investors who’ve actually executed something similar — especially around complexity, enforceability, and state-specific considerations.