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This section is intended for experienced Developers. We skipped Development
101, 201, and 301, and move directly to practical development for the Developer
who already has a substantial foundation and with whom these tips and
recommendations will have instant recognition and value.
Drafting a good contract for your real estate purchase starts with knowing
what contract and what addendums you need. It starts with knowing what
contingencies you need to cover, and how to specifically address each
contingency.
For Joe Average home buyer, having a good Purchase & Sale Agreement is
important, but for the Developer, it is life or death. It is how you make your money.
Any experienced Developer can tell stories about the one that got away, because
he did not have an enforceable purchase contract. When there are millions of
dollars on the line, it makes no sense to draft a shoddy agreement.
My notion of practicing preventive law for Developers has always been to draft a
clear and unambiguous contract with all terms and contingencies clearly stated,
timelines included, and to give the other side absolutely NO ammunition to shoot at
you.
Aggressive development that is profitable and consistent, must be both
offensive and defensive. What do I mean by this? I mean:
In this day of massive government regulations and overwhelming forces opposing
development, a Developer cannot afford to get into litigation, either with the
Seller of the property, a third party associated with the property or who may claim
an interest in it, or with any government agency. The delays and costs of
litigation play heavily in favor of any party opposing a Developer. All they
have to do is delay long enough and cost the Developer enough attorney's
fees, and the project eventually becomes unfeasible.
I strongly recommend being very cautious about attorney's and their agreements.
First, few attorneys really know real estate. Most are jacks of all legal trades. An
expert in real estate that does not make. Second, attorneys are more often than
not deal killers. Everyone in real estate knows that.
If your using a Realtor, the Northwest Multiple Listing Service agreements that your
Realtor may use are pretty good, but only as good as the user. There are three
(3) critical things your Realtor must do, and each one must be done
exceedingly well, or you will pay (in lost deals, additional costs, or litigation, or all of
these).
A Developer has to know a lot, and he knows a lot because he has experience,
which means he has made his share of mistakes. The last thing an experienced
and successful Developer needs is a major screwup in the documentation.
Recommendation. Let a competent and trustworthy professional translate your
experience into legal documents that are facilitating your project and not hindering
or killing it. It is my strong conviction that a good professional is worth his weight in
gold, because he'll make you far more money than you ever would make without
him.
101, 201, and 301, and move directly to practical development for the Developer
who already has a substantial foundation and with whom these tips and
recommendations will have instant recognition and value.
Drafting a good contract for your real estate purchase starts with knowing
what contract and what addendums you need. It starts with knowing what
contingencies you need to cover, and how to specifically address each
contingency.
For Joe Average home buyer, having a good Purchase & Sale Agreement is
important, but for the Developer, it is life or death. It is how you make your money.
Any experienced Developer can tell stories about the one that got away, because
he did not have an enforceable purchase contract. When there are millions of
dollars on the line, it makes no sense to draft a shoddy agreement.
My notion of practicing preventive law for Developers has always been to draft a
clear and unambiguous contract with all terms and contingencies clearly stated,
timelines included, and to give the other side absolutely NO ammunition to shoot at
you.
Aggressive development that is profitable and consistent, must be both
offensive and defensive. What do I mean by this? I mean:
- A good offense requires a Developer to do his homework on the property and
to have professionally drafted agreements without holes in them. - A good defense means a Developer has not given the other side any
ammunition to shoot at him, and that his professionals have managed every
detail so that: a.) the probability of getting into litigation is substantially
reduced because the opposing attorney can't find any major arguments, and
b.) even if the opposing party commences a suit or forces litigation, they
have not just no legal support for their position, but that they don't stand a
snowball chance.
In this day of massive government regulations and overwhelming forces opposing
development, a Developer cannot afford to get into litigation, either with the
Seller of the property, a third party associated with the property or who may claim
an interest in it, or with any government agency. The delays and costs of
litigation play heavily in favor of any party opposing a Developer. All they
have to do is delay long enough and cost the Developer enough attorney's
fees, and the project eventually becomes unfeasible.
I strongly recommend being very cautious about attorney's and their agreements.
First, few attorneys really know real estate. Most are jacks of all legal trades. An
expert in real estate that does not make. Second, attorneys are more often than
not deal killers. Everyone in real estate knows that.
If your using a Realtor, the Northwest Multiple Listing Service agreements that your
Realtor may use are pretty good, but only as good as the user. There are three
(3) critical things your Realtor must do, and each one must be done
exceedingly well, or you will pay (in lost deals, additional costs, or litigation, or all of
these).
- Your Realtor must know which agreements and attached addendums are
needed for your particular transaction, and there are many documents to
choose from; - Your Realtor must draft the specific and unique language for your
addendums (and there will be many, and this language is not boilerplate),
and he must draft it to the highest standard of a lawyer (perfectly), or you will
pay; - He must be darn good at negotiating and dealing with difficult parties, and he
must be persuasive, or you will pay too much.
A Developer has to know a lot, and he knows a lot because he has experience,
which means he has made his share of mistakes. The last thing an experienced
and successful Developer needs is a major screwup in the documentation.
Recommendation. Let a competent and trustworthy professional translate your
experience into legal documents that are facilitating your project and not hindering
or killing it. It is my strong conviction that a good professional is worth his weight in
gold, because he'll make you far more money than you ever would make without
him.
| Drafting a Good Purchase Contract |
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| Read this true story about a Builder's experience litigating in Pierce County with a recalcitrant Seller. |
"Two recent clients
(who did not know
each other) made
written offers that
were accepted on
vacant property, and
without developing the
property, assigned the
contracts for over
$800,000. That's a
nice profit. This is
one of the reasons
you want a very well
drafted Purchase &
Sale Agreement and
Contingencies."
Chuck Marunde
(who did not know
each other) made
written offers that
were accepted on
vacant property, and
without developing the
property, assigned the
contracts for over
$800,000. That's a
nice profit. This is
one of the reasons
you want a very well
drafted Purchase &
Sale Agreement and
Contingencies."
Chuck Marunde