Many times, in the course of my practice as a residential real estate attorney, I am asked to "look over" a proposed Purchase and Sale Agreement, normally in conjunction with representing a Lender in a mortgage loan transaction. The level of "looking over" in most instances varies. Some Buyers wish me to do a "once over lightly" kind of review, just to make sure that there are no "traps for the unwary" in the document; other Buyers wish me to do a careful and comprehensive review of the document, to make revisions where necessary and often to develop a Buyer's Rider, which has important protections for the Buyer outside of the ones I am going to discuss below. In many situations, I do my review without ANY additional charge for my services. When I do charge extra, I try to keep the additional fee minimal and ALWAYS get clearance, before hand, on the amount of my fee.
There follows some items in the standard Purchase and Sale Agreement which need to be addressed by a Buyer:
•1. A description of what is included in the sale. It amazes me how some people can review a Purchase and Sale Agreement without a copy of the signed Offer to Purchase in front of them. That document is a roadmap, which must be followed, and it should detail exactly what the Buyer can expect to find when doing a pre-closing walkthrough.
•2. An accurate description of the Financial Situation. How much was put down at signing the Offers, how much is due when the Purchase and Sale Agreement is signed; what is left over to complete the purchase (Buyer's funds plus Mortgage proceeds). All this material is set forth in the Offer to Purchase, but sometimes not accurately described in the Purchase and Sale Agreement.
•3. The Mortgage Contingency. Most transactions these days have a mortgage financing contingency. This is an area I spend some time redrafting, because it can be controversial in the event that the Lender does not deliver a timely financing commitment. I always make sure that the commitment is (a) in writing; (b) consistent in amount with what is set forth in the Offer to Purchase; and (c) contains no terms which the Buyer cannot reasonably be expected to satisfy. Once in a while, the Offer to Purchase says that the Lender's Appraisal must have a value, equal to, or in excess of the Purchase Price. If that language exists in the Offer to Purchase, I make sure it is included in the Purchase and Sale Agreement, as well.
•4. What happens if the Buyer Walks Away. People lose jobs between the time they receive a mortgage commitment and the closing. No Lender will close if that is the case. People get "cold feet" about their purchase, and do not want to go forward. The standard Massachusetts Purchase and Sale Agreement presents a "trap for the unwary" here. The standard document provides that the Seller may sue the Buyer for specific performance. That means that the Buyer may be liable for more than leaving his or her Deposit on the table. My revised Purchase and Sale Agreement provides that the retention of the Deposit constitutes the Seller's "sole remedy at law or in equity".
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