Ask an Attorney - Q&A

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The following questions were questions posed to Picket Fence Preview, which were then referred to interested attorneys. Disclaimer: The following answers are not intended as, and cannot be taken as, legal advice on any particular transaction. Seek advice specific to your situation.

Q1. Is a "knock out clause" the same as a "right of first refusal"? 

No. A knock out clause is a clause in a purchase and sale contract that allows a seller to continue accepting offers on the property even though they are already under contract with a buyer. Generally, the knock out clause allows the seller to cancel the first contract and accept a subsequent offer that comes in from another buyer for a reason such as a higher purchase price, fewer contingencies, etc. The reasons (such as higher purchase price, etc.) that invoke the knock out provision need to be provided in the original purchase and sale contract.

Conversely, a right of first refusal is an agreement whereby if a property owner receives an offer to sell their property, they must first give the holder of the right of first refusal the opportunity to purchase the property on the same terms.

Q2. Is a manufactured home on owned land handled similar to a traditional real estate transaction?

Yes. If the home is affixed to the real estate, then the transaction is handled similar to if the home were a traditional stick-built home. The buyer’s lender may require the satisfaction of additional requirements to prove the home is permanently affixed to the land and may also require an endorsement on the title insurance policy issued by the buyer’s attorney for the home being a manufactured housing unit. Otherwise the transaction proceeds similar to a traditional real estate sale.

Q3. I’m selling my condominium unit, do I need a fire safety inspection?

Yes. Properties other than an owner occupied single family residence are considered “public buildings” and therefore must be maintained in compliance with the most recently adopted Vermont Fire and Building Safety Code. The Code does not require inspections, but the only way to determine compliance is to have an inspection completed by the Division of Fire Safety (or municipal equivalent in certain municipalities). Failure to comply with land use permitting requirements can impair marketability of title. Therefore, the buyer’s attorney will want to see a recent fire safety inspection report showing no violations.

Q4. If the buyer is having a home inspection done does the seller still need to complete the Seller’s Property Information Report (SPIR)?

The SPIR covers items that the seller has knowledge of and those items may or may not be discoverable by a home inspector (such as instances when there has been water in the basement during the seller’s ownership, etc.). Therefore, many buyers like to have both a completed SPIR and home inspection. It is imperative on the SPIR that the seller be truthful and answer questions to the best of their knowledge.

Q5. It is getting close to my sale date and I have not heard from the buyer that everything is confirmed for the closing, should I begin showing my property again?

No. Unless you have a knock out clause or some other contingency that allows you to back out of the transaction in the purchase and sale contract, you are obligated to sell the property to the buyer through the closing date pursuant to the terms of the purchase and sale contract provided they do not back out of the transaction via one of their contingencies. Prior to re-listing the property, a termination of the prior contract needs to be signed by the parties.