Common use of Practice Tip Clause in Contracts

Practice Tip. To prepare an Agreement that is contingent upon the sale and settlement of other Property owned by Buyer, include an addendum stating that the provision concerning Seller’s right to terminate based on sale and settlement of other property does not apply. PAR Form SSP (Sale & Settlement of Other Property Contingency), Form SSPCM (Sale & Settlement of Other Property Contingency with the right to Continue Marketing), and Form SSPTKO (Sale & Settlement of Other Property Contingency with Timed Kickout) all have the appropriate language. If Buyer’s current Property is already under an Agreement, use Form SOP (Settlement of Other Property). Note: Lenders will often issue an approval with conditions (e.g., “This commitment conditioned upon borrower providing copies of income tax returns.”). The language in this provision provides that Buyer has 7 days from the deadline — not the date the approval is received — to clean up any of these contingencies. Buyers are encouraged to leave at least 7 days between the deadline and Settlement Date to allow for the operation of this provision; leaving at least 10 days is even better, as that permits time to provide appropriate notice for settlement or to clear up any remaining issues before settlement. Further, this provision in the Agreement provides an incentive to lenders to issue a second “clean” approval letter once contingencies are met, to help Seller know that the conditions have actually been removed. Seller has the right to terminate the Agreement until the time Buyer provides them with the loan approval. Until Seller terminates, Buyer is still obligated to seek financing. If financing is not received by the Settlement Date, the Agreement expires. The Settlement Date cannot be extended except by written agreement of the parties. Remember that Buyer is under an obligation to submit a valid mortgage application and has a general duty to cooperate in the processing of that application. If an inability to obtain financing is due to action or inaction by Buyer that violates these obligations, Buyer may be in default.

Practice Tip. To prepare an Agreement that is contingent upon the sale and settlement of other Property owned by the Buyer, include an addendum stating that the provision concerning the Seller’s right to terminate based on sale and settlement of other property does not apply. PAR Form SSP (Sale & Settlement of Other Property Contingency), Form SSPCM (Sale & Settlement of Other Property Contingency with the right to Continue Marketing), and Form SSPTKO (Sale & Settlement of Other Property Contingency with Timed Kickout) all have the appropriate language. If the Buyer’s current Property is already under an Agreement, use Form SOP (Settlement of Other Property). Note: Lenders will often issue an approval with conditions (e.g., “This commitment conditioned upon borrower providing copies of income tax returns.”). The language in this provision provides that the Buyer has 7 days from the deadline — not the date the approval is received — to clean up any of these contingencies. The Buyers are encouraged to leave at least 7 days between the deadline and Settlement Date to allow for the operation of this provision; leaving at least 10 days is even better, as that permits time to provide appropriate notice for settlement or to clear up any remaining issues before settlement. Further, this provision in the Agreement provides an incentive to lenders to issue a second “clean” approval letter once contingencies are met, to help the Seller know that the conditions have actually been removed. There is an exception here for conditions that are generally handled at or near the time of closing. For example, where lenders require confirmation of employment just before settlement, it may be unreasonable to permit the Seller has the right to terminate over such a routine contingency. This doesn’t mean that the Agreement Buyer can just put off satisfaction of contingencies until the time Buyer provides them with the loan approval. Until Seller terminatessettlement, Buyer is still obligated to seek financingthough. If financing is not received by the Settlement Datecontingency can be satisfied within 7 days, the Agreement expires. The Settlement Date cannot be extended except by written agreement of the parties. Remember that Buyer is under an obligation to submit a valid mortgage application and has a general duty to cooperate in the processing of that application. If an inability to obtain financing is due to action or inaction by Buyer that violates these obligations, Buyer may be in defaultmust do so.

Practice Tip. To prepare an Agreement that is contingent upon the sale and settlement of other Property owned by the Buyer, include an addendum stating that the provision concerning the Seller’s right to terminate based on sale and settlement of other property (referenced above) does not apply. PAR Form SSP (Sale & Settlement of Other Property Contingency), Form SSPCM (Sale & Settlement of Other Property Contingency with the right to Continue Marketing), and Form SSPTKO (Sale & Settlement of Other Property Contingency with Timed Kickout) all have the appropriate language. If the Buyer’s current Property is already under an Agreement, use Form SOP (Settlement of Other Property). Note: Lenders will often issue an approval a commitment letter with conditions (e.g., “This commitment conditioned upon borrower providing copies of income tax returns.”). The language in this provision provides that the Buyer has 7 days from the deadline mortgage commitment date — not the date the approval commitment is received — to clean up any of these contingencies. The Buyers are encouraged to leave at least 7 days between the deadline Commitment Date and Settlement Date to allow for the operation of this provision; leaving at least 10 days is even better, as that permits time to provide appropriate notice for settlement or to clear up any remaining issues before settlement. Further, this provision in the Agreement provides an incentive to lenders to issue a second “clean” approval commitment letter once contingencies are met, to help the Seller know that the conditions have actually been removed. There is an exception here for conditions that are generally handled at or near the time of closing. For example, where lenders require confirmation of employment just before settlement, it may be unreasonable to permit the Seller has the right to terminate over such a routine contingency. This doesn’t mean that the Agreement Buyer can just put off satisfaction of contingencies until the time Buyer provides them with the loan approval. Until Seller terminatessettlement, Buyer is still obligated to seek financingthough. If financing is not received by the Settlement Datecontingency can be satisfied within 7 days, the Agreement expires. The Settlement Date cannot be extended except by written agreement of the parties. Remember that Buyer is under an obligation to submit a valid mortgage application and has a general duty to cooperate in the processing of that application. If an inability to obtain financing is due to action or inaction by Buyer that violates these obligations, Buyer may be in defaultmust do so.