Objectionable Provisions

Provisions within the Buyer's Contract that are sometimes found objectionable by listing agents and sellers.

1. Provision 3 re Additional Security Deposit - This represents the place where the purchaser can request that the seller provide a security deposit (just like a landlord would request from a renter) in situations where the seller will be staying in the home for some period of time after the closing. Although this is conceptually a simple concept, the practical reality is that it is very rare for a purchaser to actually request such a deposit; for whatever reason, it is not customary in our market to do this. Understand that, if a purchaser does request such a deposit, the seller will likely have a less favorable reaction to the offer. Our experience is that the seller will view any security deposit they are required to provide as "lost money" and adjust the ultimate sales price accordingly to recover this "loss."
2. Provision 6 re Stake Survey Required for Title Insurance - The objection results from the reluctance on the part of the listing agent to ask his or her client to pay for the cost of a staked survey (which can be very expensive). In a typical offer scenario, where a purchaser is buying a residence in a traditional subdivision, this objection is not a problem (because the title company typically doesn't need a staked survey to provide a title policy without standard exceptions, which is the reason for the request for the staked survey in the first place). Accordingly, unless the property is located in a rural setting (which is indicated by the existence of a "metes and bounds" legal description), it is not a major issue if the listing agent objects to this language.
3. Provision 7 re Approval of Easements and Restrictions - This language is unique to this contract, although listing agents and sellers rarely object to this provision (because, to do so, they will look like they're trying to hide something). All that is being requested is information about any easements and restrictions that might apply to this particular property. Having said that, it is unfortunately common for the listing agent to shirk his or her responsibilities and not attend to this request in a timely fashion. Purchasers and their agents should be prepared to do their own investigative work if the listing agent fails to reply in a timely fashion.
4. Provision 11 re Closing Costs - Some agents think that the contract is requesting that the seller pay for certain closing costs that are not typically the responsibility of the seller. In reality, this is much ado about nothing, as a typical title company will always allocate the costs between buyer and seller in the same manner, irrespective of what the contract says. This is not a major issue.
5. Provision 16 re Risk of Loss - This is the provision most likely to be objected to by any good listing agent. This provision gives a prospective purchaser too much latitude in terms of potentially voiding the transaction at the last minute if there is "damage" (because "damage" is so subjective, and an unscrupulous purchaser could manufacture a reason to void the deal with little or no actual "damage"). There are ways to modify the language of this provision to maintain the protections afforded the purchaser while at the same time alleviating the seller's legitimate fears that leaving the language intact may create.
6. Provision 17 re Environmental Issues - This is another provision likely to be objected to by any good listing agent. This language gives the purchaser too much latitude in terms of suing the seller if there are any environmental issues, even if such issues are discovered years after the sale. Given the aggressive nature of this provision, a purchaser should expect most sellers to refuse the inclusion of this language.