For example, the basic components of several contingencies could be included in one paragraph—which may come off less daunting and a little more palatable to a Seller. In other words, a buyer needs to identify components of the transaction, the absence of which would be a "deal-breaker." The buyer should have an inspection period that affords the buyer an opportunity to answer these questions, as well as provisions that obligate the seller to provide documentation regarding any outstanding proffers or other restrictions that may impact the property. Our firm has a long history in the area of land use and planning, representing landowners and developers before planning and zoning commissions and city councils, and, in some cases, representing government entities. The contract should also apportion liability for any roll-back taxes, which can be triggered by a rezoning of property in a land use tax abatement program. It should be noted that even where use is unchanged, a purchaser should obtain a zoning letter from the local planning commission assuring them that the use is indeed permitted. Nothing contained herein shall obligate Purchaser to make any specific efforts or to make any particlar inquiries or applications with respect to financing. It should be noted that a purchaser must anticipate the cost of (and be willing to pay for) the Phase I Assessment or the contingency serves no apparent purpose. Accordingly, a buyer should analyze a transaction and determine what other prerequisite assumptions it is making in its determination of the value of the purchase. This should be readily apparent in our discussion of some of the commonly-used contingencies discussed above. The exact terms of the contract will differ as they must be agreed upon by both buyer and seller. In the event Purchaser determines that the report is not satisfactory, Purchaser may provide notice to Seller within this ___ day period and terminate this Agreement.". Furthermore, it advised that the purchaser’s obligation to close the sale be predicated on detailed financing specifications. In the event Purchaser fails to obtain adeqate financing, Purchaser may provide notice to Seller witin this ___ day period and terminate this Agreement.". The parties typically agree to something that can roughly be described as a firm commitment from the purchaser to follow through with the closing of the sale, but never without some significant contingencies protecting the purchaser and its ability to carry out its intended use of the property. The financing must be obtained within a reasonable time period, which shall be no less than ___ days from the execution of this Agreement. Finally, the definitions of the approvals should be drafted carefully. A properly drafted contingency should include the following provisions: Seller cannot expect to eliminate a title and survey contingency. • Clause 26—Mortgage Contingency Clause: This clause is HUGELY important. All of your data shows that the nearby neighborhood has almost no vacancies, and tenant demand is starting to push the edges of … Contingency Clause. If you need to cancel the contract because of a contingency, your offer to purchase will include the precise method you need to use to notify the seller. An inspection contingency gives a prospective buyer the opportunity to be sure they know what they’re getting before the purchase is finalized. Appraisal Contingency. It is advised that most buyers should include some form of an environmental contingency in a purchase agreement, although its relevance may be substantially reduced in some settings. Furthermore, a purchase agreement should require Seller to provide all prior environmental reports with respect to the property, a review of which may aid Buyer in determining the need for another report and this contingency. When you add this up, you are looking at a minimum of 150 days or 5 months. For example, if a contingency states that a buyer will apply for a zoning variance and he does not make a good-faith effort to do so, then the seller could claim that the buyer has breached the contract and should forfeit their deposit. Extension periods provide a method for both parties to mitigate the risk posed by a prolonged approval process. Buyers and sellers should consider the following issues when drafting contract language governing zoning contingencies and related provisions. For its part, the seller should ensure that any changes made to the zoning of the property are made only with sufficient security for the risk that the buyer fails to close. Buyers should consult with local zoning departments to ensure that the intent for the land conforms to zoning. Further, undisclosed cash proffer obligations may have an impact on the economics of the transaction. Indeed, it is the ability of the Buyer to carve out these “escape clauses” that will give them enough comfort to commit to the purchase while retaining enough skin in the game to keep Seller satisfied that closing will more than likely occur. Appraisal: The buyer won’t be obligated to buy the home if the appraisal value is lower than the asking price. For tracts of land, this contingency may include approval of a legal survey, if one has not already been done. Whether the transaction involves raw land or a site primed for redevelopment, the provisions concerning permitting and zoning are critical in allocating risk between the contract parties. However, securing a letter should not end the inquiry. In a Seller’s perfect real estate world, the signing of the purchase agreement would be the end of negotiation and the end of Seller’s concern with the property. Accordingly, every buyer entering into a purchase agreement must make some provision to address potential title and survey concerns. The contingencies discussed above may not each be needed in some transactions, and conversely, some additional contingencies may be absolutely necessary to other transactions. Some loan contingencies run all the way to closings, and other types might exist for a few weeks. A final concern is what happens if the contingency expires and the seller desires to continue the approval process in order to make the property more attractive for a successor purchaser. 3. Mr. Schleiffarth’s practice emphasizes superior client service, straightforward legal counsel and reasonable fees. The buyer should make sure to include further assurance provisions in the contract that obligate the seller to cooperate in any rezoning or permit applications. Define the Scope of the Contemplated Approvals. The parties may negotiate a contract contingency that allows the buyer to pursue certain entitlements from the locality that would permit the buyer’s proposed use. In the event that Purchaser does not provide notice of its election to exercise its rights pursuant to this paragraph within this ___ day period, this financing contingency shall be deemed waived by Purchaser.". ", "Purchaser’s obligations under this Agreement are contingent upon its securing adequate financing from a financial insitution, upon the following terms: $____; ___ _year term; ____% rate of annual interest; ____ closing fees. Loan contingency: Further investigations concerning the property or the borrower sometimes result in denail of a mortgage application—even if the buyer has a loan preapproval letter. For example, the adoption of a zoning map amendment, which generally includes proffered conditions by the applicant, would bind the seller and any successive purchaser in the event that the buyer does not close on the purchase of the property. Zoning Contingencies. Zoning contingencies can be an excellent way of finding a property that isn’t being put to best use. The relationship between a buyer and a seller can become more complicated in the event that a buyer determines that the current zoning of a property is not suitable for its proposed development. Due Diligence Contingency. The buyer may desire to have a longer approval period, in order to have sufficient time to secure the necessary entitlements. In cases where there is a perceived threat of market fluctuation, the seller has a particular interest in drafting a tight assignment provision that prevents the buyer from ratifying the contract at a favorable price, then assigning its purchase rights to an unrelated party twelve months later when market conditions have changed. Zoning Contingencies in Real Estate Contracts. A zoning conformance letter from the local jurisdiction can provide some assurance that a use is permitted and describe any associated conditions for such use. An inspection contingency (also called a “due diligence contingency”) gives … The contract should afford the seller the option to require the buyer to assign any permits or other applications that may be pending with the local jurisdiction in the event that the buyer terminates the contract or defaults. In most cases, buyers and tenants should begin investigating what approvals will be necessary and the amount of time required … Buyer shall have a period of thirty (30) days after the date hereof ("Due Diligence Period") to perform environmental evaluations and zoning, building and feasibility studies.This contingency shall be deemed satisfied unless Buyer notifies Seller of an unsatisfactory condition on or before thirty (30) days from the date hereof. The due diligence period should contemplate sufficient time to request these letters from the jurisdiction. Sellers, however, prefer and should request more broad terms, such as financing under “commercially reasona… The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. Inspection Contingency. For example, some additional considerations which might require purchase agreement contingencies in a particular transaction could include the following: While the above discussion of contingencies together with the extensive suggested language provides a meaningful framework for how to approach buyer’s contingencies, each transaction and each purchase agreement is unique. Nothing contained herein shall obligate Purchaser to make any specific effort or to make any particlar inquiries or applications with respect to financing. A purchaser’s title and survey language should be detailed and somewhat extensive in order to adequately protect the buyer against a variety of potential title and survey concerns. Somewhere between Seller’s simplistic ideal and Buyer’s unduly contingent ideal must be found enough common ground to keep both parties committed, satisfied and confident in the terms of the transaction. The scope of this language will be important to both parties’ understanding of what could allow the buyer to terminate the contract prior to closing. (See also Write Commercial Property Listings Yourself). Purchasers and tenants who need zoning and other land use changes prior to closing or rent commencement need to provide for adequate time in purchase agreements and leases. As discussed previously, purchase agreement contingencies are all about a buyer carving out “escape clauses” in the event some key component of the transaction or future use of the property falls through. While a Buyer must look at the potential deal-breakers to determine what sort of contingencies they will push for (or demand), a Seller must have an understanding of how far it is willing to bend to make the deal happen. From the seller’s perspective, a zoning contingency should be drafted carefully to narrow the scope of potential changes that a buyer can make to the property’s zoning. Multi-Family Zoning Contingency* See SS 714 Permits Contingency* See SS 716 Rezoning Contingency* See SS 726 School District Verification Contingency* See SS 636 Seller’s Property Disclosure Not Attached Contingency* See SS 730 Setback/Zoning Contingency* See SS 734 Survey Reveals Less Acreage, Buyer Contingency* See SS 322 C) release clause. B) contingency clause. Accordingly, Buyer’s perfect real estate world, boasting a purchase agreement peppered with contingencies and always coming with a full array of "strings attached," stands in stark contrast to Seller’s much simpler ideal. For example, the buyer could force the seller to sell the property even though the buyer was not able to obtain the zoning— the original contingency in the contract for sale. For example, let’s say you find a warehouse at the edge of a popular urban neighborhood that has a mix of baby boomers and millennials. Indeed, the time period (if any) between signing and closing would be nothing more than a waiting period to transfer ownership. Some buyers waive inspections in favor of the results from a pre-contract inspection, even though, for example, a separate inspection by a pest specialist did not take place. Copyright ©2020 MH Sub I, LLC dba Nolo ® Self-help services may not be permitted in all states. Purchaser shall have no less than___ days following the execution of this Agreement to obtain and review this report. Contingent on Use: for example, if the Buyer intends to use the property as a home office, or as a multi family residence, the contract can be made contingent on compliance with local zoning restrictions which pertain to that property. But, complication to the process enters with the Buyer, whose interest in and … With terms agreed upon and both parties’ signatures affixed, the purchase agreement is really more the starting point than the end goal in a real estate transaction. Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. If a financing contingency is going to be included in the purchase agreement, a Seller should press for the broadest language possible, focusing on Buyer’s ability to receive a general financing commitment with "commercially reasonable terms," while also requiring Purchaser to exert due diligence in pursuing and obtaining such a commitment. Contingency implies a promise to use one’s efforts to bring it … During a zoning contingency period, the seller remains the owner of the property, but the buyer takes the lead in pursuing the approvals that it desires. For example, the adoption of a zoning map amendment, which generally includes proffered conditions by the applicant, would bind the seller and any successive purchaser in the event that the buyer does not close on the purchase of the property. Furthermore, simpler agreements generally call for simpler language, even where a contingency is required. It should be noted that the importance of and need for this contingency is tied to potential liability for environmental contamination, even if such contamination occurred prior to a purchaser’s ownership of the property. An environmental conditions contingency specifies that Buyer’s obligation to close on the sale of the property is subject to a satisfactory report with respect to the environmental conditions affecting the property. Often, this contingency will spell out the terms of the required financing to keep the buyer from getting locked into a deal even if financing only comes at unreasonable rates. In the event Purchaser fails to obtain the Approvals, Purchaser may provide notice to Seller within this ___day period and terminate this Agreement.". However, a Seller should be diligent in not giving the Buyer an absolute right to terminate the agreement for reasons that are not overly burdensome. As the economic environment for real estate transactions improves, the land use entitlements associated with real property will continue to play an important role in the negotiation of a purchase contract, both from the perspective of the buyer and the seller. The mainstay of any real estate contract is the appraisal contingency. Essentially, Buyer Beware. For sample contingency clauses see Liquor License Contingency Clause (Restaurant Lease)Adequacy of Utilities Contingency Clause , (Restaurant Lease) (Pro-Tenant), and Paragraph 9(B)(5) in LexisNexis(R) Forms FORM 240-23.23 (granting a 60-day building permit Ultimately, a Seller of real estate has only one interest in the transaction—the money promised in exchange for its transferring the property. In particular, any proffered terms or payments should require prior approval by the seller, as they will run with the property upon adoption by the jurisdiction. For example, if the property is subject to proffers made in connection with an earlier rezoning, these obligations will not always appear in a title report. The attorney listings on this site are paid attorney advertising. Environmental contingencies are important in any type of purchase, but understandably increase in their relevance when there is a history of an environmentally disfavored use of the property (ex: service station with an underground storage tank) or when the intended future use of the property is environmentally sensitive. Indeed, the purchase agreement sets the process in motion, but the road to closing remains filled with disagreements, negotiation, expenses and potentially dead-ends. Sample Mortgage Contingency Clause: The following is an example of a mortgage contingency clause that you may find in a purchase contract. The seller may prefer a shorter approval period if it anticipates other likely suitors for the property. This article explores Buyer’s justified interest in carving out as many “escape clauses” as possible while counterbalancing Seller’s desire to keep Buyer committed to closing and moving the process towards completion. "Purchaser’s obligations under this Agreement are contingent upon its receipt of a satisfactory report regarding the environmental conditions directly and/or indirectly affecting the Property. The contract language should also address appeals of any action by the jurisdiction. This "contingency period," between the signing of the purchase agreement and the closing of the transaction, is critically important to both Buyer and Seller. Financing contingencies are generally relatively short and simple in their language. "Purchaser’s obligations under this Agreement are contingent upon its securing a general financing commitment from a financial institution or any other party, upon commercially reasonable terms, within ___ days of the execution of this Agreement. The term boilerplate, as it’s used in law, has been definedas “A description of uniform language used normally in legal documents that has a definite, unvarying meaning in the same context that denotes that the words have not been individually fashioned to address the legal issue presented.” The problem though is that virtually all the language in commercial real estate leases has been individually fashioned, and while it may reflect the desires of the drafting party, it may not meet the needs or intentions of the s… Depending on the seller’s leverage in the transaction, these extensions may obligate the buyer to pay a fee rather than a deposit, which would not be credited to the contract purchase price at closing. What is the owner not allowed to do with the property? © 2020 Williams Mullen All Rights Reserved. In a Seller’s perfect real estate world, the signing of the purchase agreement would be the end of negotiation and the end of Seller’s concern with the property. Submitted by tharris on March 7, 2013 - 9:48am. Buyer needs to obtain an updated title commitment and preferably an updated survey of the property. While far from common knowledge to the average investor, contingencies need to be introduced into your common vernacular. Buyer will want to be assured the opportunity to obtain any required approvals and permits from the local governing body before they will close on the deal. For example, the contingency clause may state, “The buyer’s obligation to purchase the real property is contingent upon the property appraising for a price at or above the contract purchase price.” Both residential and commercial transactions routinely include a financing contingency for the Buyer. Most agreements to purchase real estate ultimately end up fitting in somewhere between the unrealistic ideals of both Buyer and Seller. Purchaser shall exert due diligence to obtain the Approvals and in the event that Purchaser does not provide notice to Seller of its election to exercise its rights pursuant to this paragraph within ___ days from the execution of this Agreement, this contingency shall be deemed waived by Purchaser.". Purchaser shall have ___days from the execution of this Agreement to obtain the Approvals from the appropriate entities. Both the buyer and the seller face a decision when negotiating the contract regarding how long they are willing to be locked into the transaction. "Purchaser’s obligations under this Agreement are contingent upon its securing adequate financing from a financial institution, upon terms acceptable to Purchaser in Purchaser’s sole discretion, within a reasonable period of time, which shall be no less than ___ days from the execution of this Agreement. Any purchaser understands that their valuation of the property is largely dependent on their ability to use the property as intended. Flood, earthquake, asbestos, radon, lead, and water inspection contingencies, if applicable for your area. If Buyer demands that a zoning and land use contingency be included in the purchase agreement, Seller must be careful to specify the desired change / approval and require buyer to take diligent and timely effort to pursue these approvals. The person benefitting from the contingency usually has the right to waive the clause, such as a buyer dropping an inspection contingency. If you have a clause that you would like to share, use the Comments section following the article. Review the clauses in our Library of Clauses. Zoning/Land Use Contingency Any purchaser has an … This requires investigation and preparation prior to finalizing the contract or lease. While prior or outdated title policies can provide some peace of mind, these are not adequate to protect Buyer’s interest in the property. But, complication to the process enters with the Buyer, whose interest in and commitment to the transaction is dependent on numerous external factors. Therefore, for a “basic” land use contingency this writer, at a minimum, wants 180 days with a reasonable extension period if proceeding in good faith (90 days). For example, a 30-year-old facility should not be judged with the same standards as one that is new or nearly new. With proper forethought and investigation into land use matters, buyers and sellers can avoid being shackled to a contract that turns out to be a vastly different deal than the one they bargained for. As one might expect, a financing contingency dictates that the purchaser’s obligation to close on the transaction is contingent on their ability to acquire appropriate (and/or desirable) financing of the purchase price. When parties enter into a retail lease, a line from the movie “Casablanca” might come to mind: “I think this is the beginning of a beautiful friendship.” Ideally, every lease strikes a reasonable balance between the interests of the landlord and the tenant, and lays the groundwork for a mutually beneficial relationship. Otherwise, the buyer’s only remedy would be to terminate the contract. This … A Buyer should always include a financing contingency in a purchase agreement unless they are paying with cash already sitting in their bank account. In the event Purchaser fails to obtain adequate financing, Purchaser may provide notice to Seller witin this ___ day period and terminate this Agreement. They include Engineering, Environmental and Feasibility Studies, Soil Study (perc test) and Zoning. A Seller should consider implementing the following provisions: A purchaser should include a "catch-all" contingency giving them the right to terminate the purchase agreement in the event of their dissatisfaction with the physical condition or economic feasibility and/or suitability of the property. The following conditions shall not be considered in Purchaser’s determination of the satisfactory nature of the report and/or property: ______, ______, _______. In addition, a buyer will likely want to include in the purchase agreement some language about obtaining necessary permits and zoning for the commercial property. Doing so raises a number of issues for both the buyer and the seller. The buyer will want to preserve the right to appeal an action by that body that is adverse to its interest. Naturally, this further lengthens what in many cases is a particularly drawn out process, so the seller may wish to require additional fees or deposits. When contemplating the acquisition or sale of property, both the buyer and the seller should anticipate the course of any entitlement approval process, should any be necessary, and provide means for offsetting the risk to both parties. Relevant information is typically obtained through a Phase I Environmental Assessment performed by a licensed and qualified environmental testing specialist. However, when the use is going to be changed in any degree, a diligent purchaser must be satisfied that their intended use is permitted by local zoning ordinances. The check must be turned in within If you feel any of them will help to enhance or clarify your contractual position, consult the real estate attorney on your team and evaluate changes to make consistent with your state law. These deal-breakers should be warded against by appropriate contingency language. If the contract covers a portion of property, with the residue to be retained by the seller and potentially sold to third parties, the buyer may desire to obligate the seller to make reasonable efforts to secure agreements with adjacent purchasers to share in the cost of common improvements, such as access roads or stormwater facilities. Whether the buyer is entitled to pursue an amendment or a permit, both processes place the timeline of the transaction at the mercy of the local jurisdiction’s administrative and legislative processes. The buyer should ensure that it has sufficient time to procure the approvals needed, while reducing any downside risk in the way of deposits or non-refundable fees. A financing contingency is probably the most common type of buyer’s contingency. 2. This provision will state that the offer to purchase a property is contingent upon the buyer’s ability to procure financing for the property. A buyer may attempt to draft contingency provisions in the contract that allow any cash proffers not disclosed by the seller prior to ratification to be offset against the purchase price. First, we should know the definition of a contingency in a real estate purchase agreement. Even when a Purchaser has obtained a firm loan commitment prior to the execution of the purchase contract, some form of financing contingency should still be included. "Purchaser’s obligations under this Agreement are contingent upon its securing the following approvals from __________: __________ (the “Approvals”) with respect to the Property. Because aspects of rezoning will affect the property whether or not the buyer proceeds to closing, the seller should insist upon the right of prior consent for any actions by the buyer that would create an obligation for the seller or otherwise encumber the property. "Purchaser’s obligations under this Agreement are contingent upon its securing the required permits, lot changes, zoning changes and any and all other land use approvals (the “Approvals”) necessary to use and operate the Property according to its intended plans as a _______. If an environmental conditions contingency is demanded by the purchaser, Seller should seek to limit Buyer’s discretion in determining the satisfactory nature of the Phase I report. Things don’t always […] This article is for informational purposes only and should not be construed as legal advice with respect to any particular party, property, transaction or circumstances. Purchaser shall exert due diligence in pursuing, applying for and obtaining such a commitment. While the legislative body of the jurisdiction may deny an application, the applicant may still be entitled to an appeal. The satisfactory nature of any such report shall be determined in the reasonable judgment of Purchaser and in consideration of similarly situated properties. Without them, most buyers and sellers would be unable to find the common ground necessary to mutually commit to the transaction. Ultimately, a Seller of real estate has only oneinterest in the transaction—the money promised in exchange for its transferring the property. D) due-on-sale clause. Home inspection: This gives the buyer the right to order a professional home inspection and back out of the sale if major unreported damage is found. For example, the adoption of a zoning map amendment, which generally includes proffered conditions by the applicant, would bind the seller and any successive purchaser in the event that the buyer does not close on the purchase of the property. For example, the adoption of a zoning map amendment, which generally includes proffered conditions by the applicant, would bind the seller and any successive purchaser in … Some examples: 1. Although it is available to any prospective buyer who may need zoning/land use approval, the use of a zoning contingency in a real estate transaction is … Indeed, the time period (if any) between signing and closing would be nothing more than a waiting period to transfer ownership. To this end, the sale agreement should contain a provision clearly specifying that Buyer’s obligation to close on the transaction is contingent upon their approval of a title and survey report or commitment dated after the date of the agreement. Some contingency clauses are commonly used when making an offer. On the other hand, the seller continues to bear some risk that the market conditions changed in the buyer’s favor between the time that the contract was ratified and the time the buyer closed on the purchase of the property. The satisfactory nature of any such report shall be determined in the sole discretion of Purchaser. When the future use of the property will require any type of local government approval (such as a special use permit, lot consolidation, lot split or variance) Buyer should include a relevant contingency in the purchase agreement. This means that zoning changes or variance may be needed. From the seller’s perspective, a zoning contingency should be drafted carefully to narrow the scope of potential changes that a buyer can make to the property’s zoning. A clause in a purchase contract that protects the buyer and allows him to cancel the contract if unable to secure financing from a lender is a(n) A) acceleration clause. When the future use of the property is identical to the prior use, there is often little reason for concern. The buyer can receive more time if needed, but then pays for the privilege with additional deposits or non-refundable fees. A “hard contingency” requires you to sign off physically, but a “soft contingency” simply expires at a certain date. Mortgage availability: This gives the buyer time to find financing for the home. Purchaser shall have a reasonable amount of time to obtain the Approvals from the appropriate entities, which shall be no less than ___ days from the execution of this Agreement. On Seller’s end, while you cannot expect to bypass this contingency, Seller can and should seek language in the contingency that is limited in its application and very clear in its specifics. HOLDING CHECK CLAUSE Avoid holding a check for an earnest money deposit. Maybe the most common contingency clause in a real estate agreement concerns financing. With each of these considerations, the author cannot emphasize enough the unique nature of each transaction and the pertinence of molding the specifics of a contingency provision to match that unique nature. This means that it is imperative that a contingency clause is placed in the contract that permits the buyer to use the land as he or she intended even if there is a change needed to the current use. "Purchaser’s obligations under this Agreement are contingent upon its receipt of a satisfactory report regarding the environmental conditions directly affecting the Property. *Jim Schleiffarth practices in the areas of real estate and land use law, specializing in sale transactions, leasing, financing, zoning matters and all types of investment, development and management transactions. Does the contingency cover site plans, which in many jurisdictions are a ministerial approval, or even building permits, certificates of occupancy, or environmental permits? Do Not Sell My Personal Information, Purchaser may purchase survey and title reports, Purchaser to notify seller of objectionable or problematic title/survey matters, Seller should have a period to investigate/correct, Purchaser may elect to proceed regardless of the problem, Satisfaction of reports determined solely by Purchaser, Purchaser should be obligated to immediately notify Seller of title/survey objections, Purchaser’s satisfaction of reports should be held to a standard of reasonableness, If Seller cures the problems, Purchaser should be obligated to proceed to closing, Purchaser should have a limited time frame in which to raise title objections, Satisfactory condition of any improvements on the Property, ongoing cooperation of key business partners or joint-venture participants, obtaining tax abatement or other financial incentives with respect to the property, ability to acquire necessary insurance coverage, ability to reach agreements with necessary lessees, vendors or other parties. As you can see, there is a lot to consider in just this clause. For its part, the seller should clarify that all costs related to such applications are borne solely by the buyer. For additional information, please contact Jim Schleiffarth, Schleiffarth Law Firm LLC, St. Louis, MO, (314) 315-4117, [email protected]. Public hearings, which typically are held both at the planning commission and legislative body level, require thirty-day notice or more, prior to which there may be other deadlines as staff review the proposal and make a recommendation to the elected body. While adding complexity to the transaction, buyer’s contingencies are ultimately what make deals happen. Parties may waive any contingency clause that was inserted for their benefit. This … At the center of any real estate transaction is the assumption that that the Buyer is getting what they think they are getting, with respect to the property. Location will likely be one of your top considerations. If the contract allows the buyer to pursue an outright rezoning of the property, the seller should ensure that this is the final contingency, and should offset this risk with additional deposits from the buyer when all other contingencies have been satisfied. What must an owner do with the property? On the other hand, if the buyer’s desired use can be achieved with a special use permit or special exception from the board of zoning appeals, the seller does not bear as significant a risk. “A contingency clause defines a condition or action that must be met in order for a real estate contract to become binding.” (Investopedia, 2013) Therefore, in this case, the home must pass an inspection in order for the purchase to be completed. • Clause 25—Warranties and Representations: Unless something to the contrary is included in the P&S, this clause states you are not relying on anything the Seller and their agent told you. In some states, the information on this website may be considered a lawyer referral service. Additional clauses which are part of the RVAR Suggested Lot/Land Purchase Agreement, should be used when appropriate. A contingency clause typically states that a buyer’s offer to buy property is contingent upon certain things. In some cases, the approval period could last for six months or longer. This poses some risk to the seller, as a short approval period may simply mean that the clock runs out on one buyer while sending the transaction back to square one when the next buyer comes along. Purchaser shall immediately obtain such report and in the event that Purchaser does not provide notice to Seller of its election to exercise its rights pursuant to this paragraph within ___ days from the executon of this Agreement, this contingency shall be deemed waived by Purchaser.". If the buyer can’t find financing, either party can cancel the deal. Our practice includes resolution of land use issues through lobbying for legislative changes, arbitration and litigation. A prospective buyer of a property needs to ask several questions when agreeing to purchase real property:  What is the owner allowed to do with the property? Ultimately, the substance of the purchase agreement contingencies and the substance of the ensuing contingency period will be determined by the priorities of the parties in each transaction. Whether you’re a service … Without limiting its rights, such a provision should specifically reference such matters as: Seller should be sure any such contingency contains clear definitions, specifics and standards, so as to limit the effectiveness of the contingency and prevent Buyer from having an unduly easy exit from the agreement. Furthermore, it would be beneficial to disclaim any known environmental conditions. 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